WHY THE FUTURE IS BRIGHT FOR RENEWABLES
Tariffs have continued to fall across the spectrum of clean energy projects in the region with adoption growing
Arabian Gulf countries are expected to forge ahead in 2018 with the momentum started last year in developing renewables projects that will help them diversify their energy mix, especially as solar and wind tarrifs continue to slide.
Tariffs for solar photovoltaic and concentrated solar power projects continued to fall as economies in the Gulf worked harder towards realising looming targets to increase the renewables components of their energy mix.
The UAE is aiming to generate 75 per cent of its electricity from renewables by 2050, while Saudi Arabia,the world’s biggest oil exporter, has ambitions of adding 9.5 gigawatts of renewable energy to the grid by 2023, which approximates to 10 per cent of its energy mix.
“I fully expect the kingdom of Saudi Arabia to announce their energy mix for 2030 and in that mix, I fully expect to see a significant amount of renewables – 40 to 50 per cent levels,” said Paddy Padmanathan, chief executive at Riyadh power and water developer Acwa Power. “Saudi Arabia is the sort of later entrant to this reality, but it’s a big volume and this will be the most exciting.”
Several Gulf countries are developing the renewables and nuclear sectors to lower their dependence on fossil fuels to generate power and desalinate water.
The UAE expects this year to start commissioning its first nuclear plant, the first in the region, as the country leads in diversifying its energy mix.
Adoption of renewables is expanding across the whole of the Middle East.
“Dubai will continue to accelerate its deployment, Abu Dhabi will get into the act, you see that Jordan is doing more. Oman is a new entrant coming in 2018 into renewables,” said Mr Padmanathan. “Egypt, you’ll see now deals starting to be financially closed, so the logjam has been broken, so I expect to see acceleration.”
In October, Saudi Arabia’s first solar power project initiated as part of its National Renewable Energy Programme received the world’s lowest bids for a PV project.
A consortium led by the UAE’s state-owned renewable energy firm Masdar as well as French energy company EDF submitted a bid of 1.79 US cents per kilowatt hour for the 300 megawatt Sakaka project.
This year there will be an uptick in project activity, particularly from Saudi Arabia as it looks to add more renewables capacity as part of its Vision 2030, an economic overhaul plan aimed at weaning itself off oil.
Saudi Arabia can also expect an acceleration of its nuclear energy programme as the kingdom targets generation of about 17GW of power from nuclear energy and plans to deploy 16 nuclear reactors over the next two decades.
The year 2017 also marked a few landmarks for the UAE, which unveiled the world’s largest CSP project in September.
State utilities provider Dubai Electricity and Water Authority selected a team of Acwa Power and China’s Shanghai Power to build a 700MW extension to the Mohammed bin Rashid Al Maktoum Solar Complex after it submitted a bid to deliver energy at 7.3 US cents per kWh – one of the lowest last year.
Analysts studying the UAE market also foresee an increase in the number of consumers optimising renewables into their personal grids this year.
“In Dubai, around 450 households have installed rooftops [at the last count]. In addition to that [we see] a push for electric vehicles, vehicle charging stations across the UAE and partnerships with the likes of Tesla and other big industry space, you see a lot in the telecommunications space as well,” says Adham Sleiman, senior vice president at Booz Allen Hamilton Mena.
“In the utilities space, you see a lot of investments going into upgrading the grids in the field, but also the systems internally to be able to deliver better customer experience.”
Solar aside, wind is also set to add power to regional grids, with Saudi Arabia also
expected to invite bids on its first wind power project this year. The project at Dumat Al Jandal will be developed under the independent power producer model and add an estimated 400MW to the grid.
Oman also moved ahead with its 50MW wind power project at Dhofar in the south after developer Masdar awarded engineering, procurement and construction contracts to a team that included GE and Spain’s TSK in August.
It remains to be seen how tariffs for wind will fare, but if recent developments are any indication, the prices are set for further downward spirals.
“Renewable energy is increasingly competitive with conventional power generation methods, and has become a highly attractive asset class in its own right,” said Bader Al Lamki, executive director of clean energy at Masdar.
“We have seen technology costs continue to decline in both the wind and solar power sectors, allowing for more power generation capacity for every dollar invested. This is making these technologies more commercially viable and opening up new markets.” However, not everyone is upbeat over the potential renewables can play in the national grid.
Rashid Alleem, chairman at Sharjah Electricity and Water Authority, which supplies power and water to Sharjah said the provider “was taking it easy” when it came to renewables.
Environmental factors such as sand and high humidity are likely to obstruct largescale deployment of panels in the emirate.
With the implementation of value-added tax this year set to add to rising expenses in the UAE, Sewa is encouraging its consumers to develop their own “mini-grids” to save up on electricity bills.