Time has come for oil to take a backseat in the region as renewables take centre stage
For years, Abu Dhabi International Petroleum Exhibition and Conference had been the UAE’s and the region’s most anticipated event.
Oil prices were at US$100 highs and renewables were at best treated as a window dressing opportunity for the oil producers of the Arabian Gulf region.
However, things have changed – and how. Today the move to renewables is one of the most exciting business opportunities in the region. The sheer volume of projects is enormous. During this year’s Abu Dhabi Sustainability Week (ADSW), the most anticipated announcements came from Saudi Arabia, the world’s largest oil exporter, which is currently on a mission to add, for the first time, solar and wind capabilities so that it can free up crude for export.
During ADSW the kingdom’s renewables agency announced it will tender 3.25 gigawatt of solar power and around 800 megawatt of wind through eight projects in two rounds this year.
However, the forerunner for the shift to renewables in the region is the UAE, which was the first to develop a carbon neutral city as well as set in motion targets to achieve a cleaner mix for power generation.
Last year, the UAE announced its ambitions to cut carbon dioxide emissions by 70 per cent by 2050, increase clean energy use by 50 per cent and improve energy efficiency by 40 per cent by the middle of the century, resulting in savings worth Dh700 billion.
The Vision 2021 plan has put environmental and infrastructure sustainability at the heart of the national agenda.
The Government has expressed a need to generate 27 per cent of the country’s energy from clean sources and reduce oil consumption to 5 tonnes per capita by 2021.
The UAE, which currently derives around 98 per cent of its energy needs from gas, has set a target to meet 44 per cent of its energy from renewables, 38 per cent from gas, 12 per cent from fossil and the remainder from nuclear. The Barakah nuclear power plant near Abu Dhabi – the UAE’s first – should be fully operational in 2020; while the Shams1 solar plant and the Sir Bani Yas wind farm – which boasts the world’s largest wind turbine – are already active. Masdar, which will host the ADSW 2018, has made huge investments in offshore wind farms.
Abu Dhabi is planning a second solar power plant and will invite bidders by the middle of the year as the country looks to increase project activity to meet its ambitious targets.
The Energy Minister Suhail Al Mazrouei, said in a recent interview with The National that at least “1 gigawatt” of renewable projects needed to be tendered on an annual basis in order to meet 44GW from now until 2050.
“I think is achievable because it makes sense economically and most of that is going to be for the private sector,” he said.
Opening up to the private sector will remain the biggest challenge for the industry. While the projects tendered are of a huge scale and best developed by established players, there will be smaller pieces of the pie for smaller private outfits to handle. For more companies to enter the market, banks need to be willing to lend and help move the industry forward.
I think it [44GW of renewables by 2050] is achievable because it makes sense economically
SUHAIL AL MAZROUEI
UAE Energy Minister