The pipe­line for so­lar power projects in the Mid­dle East and North Africa (MENA) is set to dou­ble this year, with Saudi Ara­bia ac­count­ing for more than half of all projects

Utilities Middle East - - FRONT PAGE -

A look at the fu­ture of so­lar in the GCC and the un­der­ly­ing busi­ness prospects

The United Arab Emi­rates is mak­ing progress on the con­struc­tion of the first nu­clear power plant in the GCC re­gion. In July, the Emi­rates Nu­clear En­ergy Cor­po­ra­tion (ENEC) an­nounced that the first nu­clear re­ac­tor would come on­line to start gen­er­at­ing elec­tric power in late 2019 or early 2020.

CThe GCC re­gion has a plan to wean its econ­omy off oil. In the biggest sign of what the fu­ture of the Gulf would look like, Saudi Ara­bia’s crown prince, Mo­hammed Bin Sal­man re­cently signed a me­moran­dum of un­der­stand­ing with Ja­panese multi­na­tional Soft­bank to build 200GW of so­lar power by 2030 at a cost of $200bn.

Soft­bank and Saudi Ara­bia reached an agree­ment in March to launch the mas­sive so­lar power project, one that if com­pleted would sig­nal a dra­matic ramp­ing up of the re­new­able en­ergy in­dus­try in one of the world’s most suit­able spots for so­lar power.

If built, that so­lar-power plant will be about 200 times the size of the biggest so­lar plant op­er­at­ing to­day. It would more than triple Saudi Ara­bia’s ca­pac­ity to pro­duce elec­tric­ity, from about 77GW to­day.

Two-hun­dred gi­gawatts is four times the so­lar ca­pac­ity in the United States and four times China’s an­nual pace of so­lar power ex­pan­sion. As of the end of 2016, the world as a whole had in­stalled only 303 gi­gawatts of to­tal so­lar pho­to­voltaic ca­pac­ity.

With cur­rent tech­nol­ogy, so­lar pan­els ca­pa­ble of gen­er­at­ing 200GW would likely cover 5,000 sq km—an area larger than the world’s largest cities.

And, yet, these are not un­re­al­is­tic fig­ures. Based on data from Bloomberg New En­ergy Fi­nance (BNEF), the global so­lar in­dus­try pro­duced about 100 GW worth of so­lar pan­els last year, and pro­duc­tion ca­pac­ity is ramp­ing up quickly.

“We have just signed an MOU to cre­ate the world’s biggest so­lar power gen­er­a­tion project,” Masayoshi Son, Soft­Bank’s CEO said soon af­ter sign­ing the agree­ment. “The King­dom has great sun­shine, great size of avail­able land and great en­gi­neers, great neigh­bors, but most im­por­tantly, the best and great­est vi­sion.”

Saudi Ara­bia that will build so­lar pan­els and in­vest in bat­tery tech­nol­ogy. Ini­tially, there would be two large Saudi so­lar elec­tric­ity gen­er­a­tion projects, one with a ca­pac­ity of 3 gi­gawatts and one at 4.2 gi­gawatts.

Ac­cord­ing to the me­moran­dum, ex­port­ing ei­ther pan­els or some of the power gen­er­ated by them is a pos­si­bil­ity. Saudi Ara­bia is also seek­ing a role in so­lar re­search and de­vel­op­ment.

Although in­dus­try an­a­lysts were scep­ti­cal that the plan will emerge as it is be­ing de­scribed, it is in­dica­tive of the grow­ing ap­petite for so­lar en­ergy in a re­gion that has for years de­pended on its vast sup­plies of fos­sil fu­els to gen­er­ate elec­tric­ity.

In Fe­bru­ary, Saudi Ara­bia head­quar­tered ACWA Power was awarded the 300MW Sakaka so­lar project in Saudi Ara­bia by the coun­try’s Re­new­able En­ergy Project De­vel­op­ment Of­fice (REPDO). ACWA Power signed the power pur­chase agree­ment (PPA) for one of the low­est ever so­lar tar­iffs of Halala 8.7815/kWh (~US$2.342) with the prin­ci­pal off-taker, the Saudi Power Pro­cure­ment Com­pany (SPPC).

The project is ex­pected to in­volve a to­tal pri­vate sec­tor cap­i­tal in­vest­ment of about $300mn and will cre­ate job op­por­tu­ni­ties for more than 400 in­di­vid­u­als, as Saudi Ara­bia takes its first step

on the road to en­ergy di­ver­si­fi­ca­tion and re­new­able en­ergy lead­er­ship.

Saudi Ara­bia re­vealed last year that it was plan­ning to pro­duce 10% of its power from re­new­able sources in the next six years. The drive by the world’s top oil ex­porter will see the king­dom de­vel­op­ing 30 so­lar and wind projects by 2023 to boost its elec­tric­ity gen­er­a­tion and re­duce crude oil burn­ing.

The king­dom is tar­get­ing 9.5 gi­gawatt (GW) of re­new­able en­ergy by 2023. The re­new­ables ini­tia­tive in­volves in­vest­ment es­ti­mated be­tween $30bn and $50bn. Ten­ders for a 300MW so­lar plant in Sakaka and 400MW wind plant in Du­matAl-Jan­dal were an­nounced last year.

The pipe­line for so­lar power projects in the Mid­dle East and North Africa (MENA) is set to dou­ble this year, with Saudi Ara­bia ac­count­ing for more than half of all projects, ac­cord­ing to a new re­port re­leased in March by the Mid­dle East So­lar In­dus­try As­so­ci­a­tion (MESIA).

The pipe­line for 2018 will in­clude nearly 13 gi­gawatts (GW) of so­lar power projects, with So­lar pho­to­voltaic (PV) sys­tems ac­count­ing for 90 per­cent of the project pipe­line (11.86 GW) and Con­cen­trated So­lar Power (CSP) projects mak­ing up 1.2 GW.

The 2018 project pipe­line is more than dou­ble the 5.7 GW fore­cast in MESIA’s 2017 re­port. Projects cur­rently in the plan­ning stage amount to 8.7GW, while those at the ‘Bid Stage’ stood at 3.08 GW.

The rest of the pipe­line con­sists of 1.23 GW of projects in the pre­qual­i­fi­ca­tion stage and a 50 megawatt (MW) project in the fi­nan­cial close stage.

Ac­cord­ing to the re­port, the low price of so­lar en­ergy has led pol­i­cy­mak­ers, reg­u­la­tors and in­dus­try lead­ers to take a num­ber of steps to in­crease and ac­cel­er­ate the adop­tion of so­lar power through­out the MENA re­gion.

“Most no­tably, coun­tries that were late to adopt so­lar en­ergy strate­gies and poli­cies have now put for­ward am­bi­tious tar­gets. Coun­tries with so­lar plans in place in terms of megawatts in­stalled have sub­stan­tially in­creased those tar­gets,” says Wim Alen, Gen­eral Sec­re­tary of MESIA.

“Fi­nally, scal­ing up the size of so­lar projects has al­lowed na­tions to cap­ture value across the value chain,” he adds.

Saudi Ara­bia’s 6.4 GW of PV projects ac­counts for more than half of the 2018 pipe­line, fol­lowed by the United Arab Emi­rates’ 1.5 GW of PV, Egypt’s 1.15 GW (800 MW of PV and 350 MW of CSP) and Morocco’s 800 MW (a com­bi­na­tion of PV and CSP), the re­port said.

Last year, the UAE’s Dubai Elec­tric­ity and Wa­ter Author­ity (DEWA) achieved a world record by award­ing the 700MW $3.86bn fourth phase of the Mo­hammed bin Rashid Al Mak­toum So­lar Park. It is the largest sin­gle-site Con­cen­trated So­lar Power (CSP) project in the world, based on the In­de­pen­dent Power Pro­ducer (IPP) model. Con­struc­tion on the project com­menced in March

Dubai also made a ma­jor leap to­wards achiev­ing a sus­tain­able en­ergy mix with the launch of the sec­ond phase of the Mo­hammed bin Rashid Al Mak­toum So­lar Park last year. The 200MW plant has enough ca­pac­ity to gen­er­ate clean en­ergy for 50,000 res­i­dences in Dubai and will re­duce 214,000 tonnes of car­bon emis­sions a year.

Kuwait has also an­nounced that it is look­ing to is­sue a ten­der for the build­ing of the es­ti­mated $1.2bn Dib­dibah so­lar-power plant in the first quar­ter of 2018 as part of the coun­try’s plans to pro­duce 15% of power from re­new­able en­ergy by 2030. Dib­dibah is ex­pected to pro­duce half of the coun­try’s planned re­new­able en­ergy out­put.

In­ter­est in rooftop so­lar tech­nol­ogy reached an all-time high last year with res­i­den­tial cus­tomers, small- and medium-sized en­ter­prises (SMEs), and large or­gan­i­sa­tions in UAE, Saudi Ara­bia, Oman and Kuwait in­vest­ing heav­ily in the sec­tor which is al­ready reap­ing re­wards.

Dubai build­ings with so­lar rooftops have nearly dou­bled to 435 be­tween Novem­ber 2016 and Novem­ber 2017 as the emi­rate works to have all rooftops fit­ted with pho­to­voltaic (PV) pan­els. More than 200 new build­ings have been equipped with so­lar power since Novem­ber 2016 with a to­tal ca­pac­ity of 15.6MW as part of DEWA’s Shams Dubai ini­tia­tive. The ini­tia­tive, launched in 2015, aims to have so­lar pan­els on all rooftops across the emi­rate by 2030.

In 2017, the MENA re­gion had 4,903 MW of so­lar un­der con­struc­tion, 1,142 MW un­der ten­der or awarded and 1,363 MW in op­er­a­tion. Oman’s en­hanced oil re­cov­ery project of 100 MW ther­mal, which started com­mer­cial op­er­a­tions, was men­tioned separately.

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