Notes from a leader

Mo­hamed Salama, head of global bank­ing – UAE at Stan­dard Char­tered Bank, charts the evo­lu­tion of the coun­try’s clean en­ergy am­bi­tions

Gulf Business - - CONTENTS -

UAE edges closer to clean en­ergy goals

IN MAY, DUBAI took another big step to­ward its goal of be­com­ing the world's green­est city when the in­au­gu­ra­tion of the 200MW first project of the 800MW third phase of the Mo­hammed bin Rashid Al Mak­toum So­lar Park brought the emi­rate's clean en­ergy share of its to­tal in­stalled ca­pac­ity to 4 per cent. This fol­lowed Sheikh Mo­hammed bin Rashid Al Mak­toum, Vice Pres­i­dent and Prime Min­is­ter of the UAE and Ruler of Dubai, in March break­ing ground on the so­lar park's 700MW fourth phase.

Dubai plans to have the world's low­est car­bon foot­print by 2050, when it tar­gets clean en­ergy sources such as so­lar power to ac­count for 75 per cent of the city's power out­put, up from a tar­geted 7 per cent by 2020 and 25 per cent by 2030.

Fur­ther ca­pac­ity to be added over next two years

It will add fur­ther clean en­ergy ca­pac­ity when the sec­ond and third stages of the third phase – each sup­ply­ing 300MW – are com­pleted in 2019 and 2020 re­spec­tively.

The so­lar park's third phase achieved a world record in June 2016 when a bid of just 2.99 US cents per kilo­watt-hour was ac­cepted from a con­sor­tium led by Abu Dhabi clean en­ergy com­pany Mas­dar and Élec­tric­ité de France (EDF) Group. This was nearly half the win­ning bid for the plant's 200MW sec­ond phase, which at 5.84 cents was it­self at the time a world record low. The Mo­hammed bin Rashid Al Mak­toum So­lar Park was launched in 2012 as part of the Dubai Clean En­ergy Strat­egy 2050 and has al­ready claimed a num­ber of world records. The sprawl­ing so­lar park is the largest sin­gle-site gen­er­a­tor of so­lar en­ergy in the world, with a ca­pac­ity to pro­duce 5,000MW by 2030. It is also the largest re­new­able en­ergy plant in the Mid­dle East. Once com­plete in 2030, it will cover 214 square kilo­me­tres.

Fourth phase also break­ing records

The fourth phase is also break­ing world records. It will have the world's tallest so­lar tower, at a height of 260m, and the world's largest ther­mal stor­age ca­pac­ity. The first stage of the con­cen­trated so­lar power (CSP) fourth phase will be com­mis­sioned to­wards the end of 2020.

Con­cen­trated so­lar power stores power that can be re­leased when the sun is not shin­ing, such as at night. Although more ex­pen­sive than so­lar PV, Dubai's so­lar ther­mal tech­nol­ogy will al­low up to 15 hours of stor­age, mean­ing it can re­lease elec­tric­ity into the na­tional grid 24 hours a day.

De­mand for power is ris­ing in the Mid­dle East, but the pre­car­i­ous­ness of fos­sil fuel de­pen­dency, as shown by the crash in oil prices in 2014 and the po­lit­i­cal fall­out of cli­mate change, is mak­ing re­new­able en­er­gies such as so­lar power more at­trac­tive propo­si­tions, par­tic­u­larly as prices fall, and none is fall­ing faster than so­lar. In April 2016, the Gulf Co­op­er­a­tion Coun­cil states pledged to pump $100bn into re­new­able en­ergy projects over the fol­low­ing 20 years. The $3.8bn fourth phase has achieved the world's low­est lev­elised cost of elec­tric­ity, at 7.3 cents per kilo­watt-hour.

So­lar power costs tum­bling

In many parts of the world, the cost of so­lar power is plum­met­ing to a point where it will soon be met by ris­ing costs for elec­tric­ity gen­er­ated by coal or gas. Part of the rea­son for this is that once a so­lar plant is built, the mar­ginal cost of the power it pro­duces is next to noth­ing, whereas for fos­sil fu­els, these re­sources need to be con­stantly sup­plied.

In 2016, the amount of so­lar pho­to­voltaic ca­pac­ity added around the world rose around 50 per cent, con­tin­u­ing a stel­lar growth from lit­tle more than zero at the turn of the mil­len­nium.

One con­cern about so­lar power has been that it is only avail­able when the sun shines, and that be­cause of this it will still be nec­es­sary to main­tain base load gen­er­a­tion from fos­sil fu­els. But this ob­jec­tion col­lapses in the face of CSP.

In­deed, CSP holds so much prom­ise that the In­ter­na­tional En­ergy Agency pre­dicts up to 11 per cent of global elec­tric­ity gen­er­a­tion could come via CSP by 2050.

Spain and the United States ac­count for nearly 90 per cent of in­stalled CSP ca­pac­ity, but by 2016 there were fa­cil­i­ties be­ing built in Saudi Ara­bia, Aus­tralia, Chile, China, In­dia, Mex­ico and South Africa among oth­ers, while Morocco brought on­line the 160MW first phase of its Noor- Ouarza­zate so­lar power sta­tion, to be built by a con­sor­tium led by Saudi pri­vate elec­tric­ity com­pany ACWA Power. This plant will grow to 580MW when fully op­er­a­tional by the end of 2018, mak­ing it the world's largest CSP plant.

Abu Dhabi is sim­i­larly com­mit­ted to in­creas­ing its share of re­new­ables in its en­ergy mix, and is home to Mas­dar City, which it plans to be the world's most sus­tain­able eco-city. The Mas­dar City So­lar Pho­to­voltaic Plant is the largest of its kind in the Mid­dle East, pro­duc­ing about 17,500MW-hours of clean elec­tric­ity a year.

Mas­dar has also con­trib­uted a num­ber of re­new­able en­ergy world firsts over the past decade in­clud­ing Shams 1, which at the time of its in­au­gu­ra­tion in 2013 was the world's largest CSP plant. An even larger CSP plant will be built in Abu Dhabi for a to­tal cost of Dhs3.2bn ($870m). The Noor Abu Dhabi is planned to gen­er­ate 1,177MW from the sec­ond quar­ter of 2019. Mas­dar is also de­vel­op­ing a wasteto-en­ergy plant in Shar­jah to as­sist in that emi­rate's ef­fort to reach its zero waste-toland­fill tar­get by 2020 and help the UAE to achieve its 2021 goal of di­vert­ing 75 per cent of solid waste from land­fills.

Greater in­volve­ment of pri­vate com­pa­nies

Sev­eral coun­tries in the GCC have re­cently moved to­wards al­low­ing greater par­tic­i­pa­tion by the pri­vate sec­tor in re­new­able en­ergy schemes, mainly in­volved in build­ing and run­ning power plants, and the Mo­hammed bin Rashid Al Mak­toum So­lar Park is one of the first projects con­tracted un­der an in­de­pen­dent power pro­ducer en­vi­ron­ment by the Dubai Elec­tric­ity and Wa­ter Author­ity. Its fourth phase will be co-de­vel­oped by ACWA Power, while Shang­hai Elec­tric will serve as con­trac­tor for the engi­neer­ing, pro­cure­ment and con­struc­tion el­e­ments. As the UAE has some­what higher elec­tric­ity prices than oth­ers in the GCC such as Saudi Ara­bia and Bahrain, which have some of the low­est util­ity prices in the world, there is greater in­cen­tive there to push re­new­ables - par­tic­u­larly so­lar power. But even in Saudi Ara­bia, then oil min­is­ter Ali Al-Naimi told re­porters in 2015: “I be­lieve so­lar will be even more eco­nomic than fos­sil fu­els”.

Dubai has es­tab­lished a ‘Dubai Green Fund' worth Dh­s100bn ($27.2bn) to pro­vide easy loans for in­vestors in the clean en­ergy sec­tor at low in­ter­est rates, and through tax-free busi­ness zones it is seek­ing to at­tract clean en­ergy com­pa­nies from around the world. Ev­ery rooftop in the city is also planned to have a so­lar panel in­stalled by 2030.

Key ar­eas of im­prove­ment to grow the CSP in­dus­try at a faster rate will be cost re­duc­tion and ther­mal ef­fi­ciency. In­vest­ments in the Mo­hammed bin Rashid Al Mak­toum So­lar Park's re­search and de­vel­op­ment cen­tre will reach Dh­s500m ($136m) by 2020, the Dubai Elec­tric­ity and Wa­ter Author­ity said early this year. The cen­tre will fo­cus on the per­for­mance of pho­to­voltaic pan­els in se­vere con­di­tions and their long-term ca­pa­bil­ity, as well as smart grid tech­nolo­gies, re­new­able en­ergy and stor­age and other cut­ting-edge re­search.

HIGH MAS­DAR IS ALSO DE­VEL­OP­ING A WASTE- TOENERGY PLANT IN SHAR­JAH TO AS­SIST IN THAT EMI­RATE’S EF­FORT TO REACH ITS ZERO WASTETO- LAND­FILL TAR­GET BY 2020 AND THE UAE TO ACHIEVE ITS 2021 GOAL OF DI­VERT­ING 75 PER CENT OF SOLID WASTE FROM LAND­FILLS.

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