WIND IS ENERGISING THE FUTURE
Wind power deployment in Middle East and Africa (MENA) is set to finally take off as national authorities take advantage of falling wind costs to diversify their energy resources
The year 2021 came to an end with offshore wind additions reaching 11 GW, almost double compared with last year, according to the International Energy Agency (IEA) report which says this is driven by expansion in China, where developers have rushed to secure the favourable Feed-in-Tariff
8 (FIT) before it expired with the last day of 2021.
While China’s growth will slow down through the upcoming period and until 2026, annual offshore wind capacity additions are expected to reach 21 GW by then with rapid expansion in new markets.
IEA’s main case scenario sees the share of offshore capacity in overall annual wind additions reaching over 20 per cent, up from 5 per cent in 2020, breaking a record at the end of the forecast period.
Large-scale projects are expected to be commissioned beyond the established markets of the United Kingdom, Germany, Belgium,
Denmark and the Netherlands in the next five years, with a boost to the global installed capacity set to come from France, Taiwan, South Korea, Vietnam, Japan, and the United States.
Based on the upcoming projects from these new markets, in addition to new installations in the established markets, IEA anticipates cumulative capacity to reach almost 120 GW by 2026 in its main case and 134 GW in the accelerated case.
IEA’s accelerated case considers faster offshore and onshore grid expansion in the United Kingdom and the European Union, rapid cost decline and strong provincial-level policies in China, and the early-commissioning of large-scale pipeline in the United States, which together could push cumulative global offshore wind capacity to adding 14 GW more than in the main case.
As for the main case looking at the new markets, France’s offshore wind capacity is expected to take off in 2022 with the full commissioning of the 480 MW project in SaintNazaire. By the end of 2026, offshore wind capacity in France is forecast to reach 3.7 GW, with seven large projects expected to come online.
In South Korea, cumulative wind energy generation capacity is expected to almost triple by 2026, with offshore wind providing the majority of the expansion. Wind energy projects in South Korea are not eligible for fixed-price contracts and instead rely on wholesale market revenues and renewable energy credits (RECs), both of which have declined over the last four years.
“According to our estimates, remuneration for all large-scale renewable energy projects has halved since June 2017. Future remuneration remains the largest forecast uncertainty for technologies beyond solar PV, for which fixedprice auctions provide revenue stability”, IEA says in the report.
For Vietnam, IEA expects that tenders in the country’s planned auction scheme will mostly target wind capacity, based on the new draft national Power Development Plan (PDP8), which assumes 11 GW of new wind capacity until 2030.
Along with several nearshore projects under development or construction, Vietnam now also has large-scale offshore wind projects planned, including the 3.4 GW Thang Long, whose first phase could go online until 2026.
Wind power deployment in Middle East and Africa (MENA) is set to finally take off as national authorities take advantage of falling wind costs to diversify their energy resources. Saudi Arabia is expected to award some 1.2 GW of wind capacity this year while Morocco and Egypt will also see strong growth.
Over the next 10 years, MENA wind growth will come in two phases as emerging market openings are followed by maturing market activity, according to Sohaib Malik, Senior Analyst at Wood Mackenzie Power & Renewables.
By 2023, Egypt, Morocco and Saudi Arabia will spearhead strong growth and raise installed wind power capacity in MENA to over 11 GW.
“We see Egypt, Morocco and Saudi Arabia all adding over 2 GW each during the first phase of market development,” he says.
During a second phase running from 2024 to 2027, around 12 GW of wind capacity will be installed in MENA, Malik says.
“This phase is defined by a maturing wind market... Saudi Arabia, Egypt and Morocco will have become regional heavyweights...with a cumulative capacity of over 14 GW through the outlook period, which will be roughly 55% of the overall capacity that MENA will have installed by 2027,” he says.
The second phase will see the emergence of markets like Oman, Malik noted. Oman is reportedly planning to build around 550 MW of wind power capacity by 2024.
Saudi Arabia is due to become the Middle East’s largest wind power market in the next decade, according to new analysis, with the desert kingdom accounting for nearly half of new additions in the region by 2028.
Developers will add 6.2GW of new wind capacity in Saudi Arabia between 2019 and
2028 — 46% of the region’s 13.5GW total capacity additions in this period — according to Wood Mackenzie Power & Renewables.
However, the country will fall short of the revised 16GW target under its Vision 2030 program — a package of economic, energy and public sector goals for Saudi Arabia to achieve by the end of the next decade.
Elsewhere, against a backdrop of regional volatility, Wood Mackenzie expects an extra
2GW of new wind power installations online in the Middle East by 2021, 6GW by 2024, and 13.5GW by 2028.
Saudi Arabia’s Renewable Energy Project Development Office (Repdo) is due to award a total of 850MW of wind capacity, with the projects expected online between 2021 and 2022.
Last year, construction began at the biggest wind project in the GCC. Dumat Al-Jandal is a 400MW onshore wind farm development that will become Saudi Arabia’s first utility-scale wind power source.
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It is being developed by a consortium of EDF Renewables (51%) and Masdar (49%) under an award by the Renewable Energy Project Development Office (REPDO). With an estimated $500m cost, the project will contribute $150m to the country’s GDP.
The wind farm forms the second part of the first round of procurement under the National Renewable Energy Programme (NREP), which is aiming to reduce carbon emissions. It will allow the first phase of NREP’s target of 9.5GW renewable energy by 2023 to be achieved. This is in accordance with Saudi Arabia’s Vision
10 2030, which intends to reduce the country’s oil dependence.
It has been forecast that the project will generate 800 jobs during the construction phase and an additional 150 posts during the operation and maintenance phase.
The project is expected to offset 994,000t of carbon emissions a year while making an annual saving of 894,000 barrels of oil-equivalent fossil fuels.
Dumat Al Jandal wind farm will be located in the Al Jouf region of north-west Saudi Arabia, 900km from capital city Riyadh. The Al Jouf province lies in close proximity to the entrances of Al Sarhan Valley, the Arabian Peninsula, Iraq and Syria.
The wind farm will comprise 99 units of Vestas V150-4.2MW wind turbines. The developers have signed a 20-year power purchase agreement with the Saudi Power Procurement Company to use the electricity generated by the project.
The Vestas V150-4.2MW turbine has a rated power of 4,000/4,200kW and a cut-in speed of 3m/s. It can operate at a frequency of 50/60Hz and is fitted with a rotor, having a diameter of 150m and a swept area of 17, 671m².
As well as the wind power tender won by EDF and Masdar, Repdo also awarded a 300MW solar PV project to Middle Eastern developer ACWA Power.
Over the next 10 years, MENA wind growth will come in two phases as emerging market openings are followed by maturing market activity, according to Malik.
By 2023, Egypt, Morocco and Saudi Arabia will spearhead strong growth and raise installed wind power capacity in MENA to over 11 GW.
“We see Egypt, Morocco and Saudi Arabia all adding over 2 GW each during the first phase of
11
market development,” he said.
During a second phase running from 2024 to 2027, around 12 GW of wind capacity will be installed in MENA, Malik says.
“This phase is defined by a maturing wind market... Saudi Arabia, Egypt and Morocco will have become regional heavyweights...with a cumulative capacity of over 14 GW through the outlook period, which will be roughly 55% of the overall capacity that MENA will have installed by 2027,” he says.
The second phase will see the emergence of markets like Oman, Malik noted. Oman is reportedly planning to build around 550 MW of wind power capacity by 2024.
Large areas of the MENA region benefit from healthy wind resources and falling wind costs have boosted demand. Technology improvements, increasing digitalization and operation and maintenance (O&M) efficiencies are all helping to lower the cost of wind power and improve the reliability of assets.
Morocco and Egypt have already signed power purchase agreements (PPAs) at $30/MWh and
12 $38/MWh and MAKE estimates the cost Saudi Arabia’s first 1.2 GW of projects will be below $30/ MWh, around half the current average cost of energy in the kingdom, Malik said.
“Wind is cost competitive with most of the energy sources in the Middle East and North Africa today,” he says.
Economic diversification is also supporting renewable energy growth in MENA. For example, Egypt, Jordan and Morocco are all looking to diversify their energy supplies and support the creation of jobs in the wind power industry.
Saudi Arabia is restructuring its power sector as part of its Vision 2030 plan to diversify its economy away from hydrocarbon resources.
The kingdom aims to install 9.5 GW of renewable energy capacity by 2023.
In many MENA countries, growth will be supported by rising power consumption per capita from a growing middle class, Malik says.
“We have the examples of Egypt, Morocco and Jordan where the per capita consumption is only in the range of 1000 to 2000 [kWh/year] which is far, far less when you compare that with OECD countries or emerging economies,” he says.
“These countries, with improvements in their economies, are going to demand more power,” Malik says.
While design innovations are increasing turbine efficiency, improvements in transport and O&M practices are also helping to reduce costs and increase lifespans, Rainer Karan, Vestas’ Vice President for Mediterranean East, told the conference.
Effective site studies and design optimization at the start of the project are also key to maximizing the value and success of a wind project, particularly in emerging markets, he said.
Smart data and the latest site-identification software allow project partners to increase the accuracy of site analysis and design selection, Karan said.
Early-stage design optimisations should include electrical pre-design and detailed balance of plant engineering so that the design of the wind farm and surrounding infrastructure reduces construction and operations risks, he said.
“With these measures you drive 80% of a successful wind project,” Karan he says.
In one example, Saudi Arabia’s ACWA Power implemented a detailed wind and climate measurement plan in order to optimize site selection and costs for two 50 MW wind farms in Egypt’s Ras Ghareb region, Alberto Gil Garcia, Senior Manager, Wind Technology at ACWA Power, said in April 2017.
The developer used mesoscale weather modelling to build a detailed picture of the underlying wind resource. A years’ data unveiled some surprising characteristics about wind resources and turbine optimization.
“We found out that there is a gradient increase in wind speed when you move towards the south and also when you move [East] towards the sea,” Garcia said.
ACWA Power estimated this increase in wind speed would raise annual energy production (AEP) by around 10% for sites towards the southeast, he says.
In addition, the company modelled the wake effects from wind farms on nearby plots and found that this reduced AEP by between 3 and 5% for south-eastern sites, Garcia says.
The results of these wind resource studies, along with predicted economies of scale from developing adjacent project and access to planned substations, prompted ACWA Power to choose two adjacent plots in the south-eastern corner of the designated land area, he says.
Clear, long-term energy policy initiatives and targets are necessary to attract wind power developers and investors, Malik says.
For example, Saudi Arabia plans to allocate 1.2 GW in 2018, but has provided little information on subsequent tenders.
“In Saudi, whoever you talk to-- any stakeholder in the wind industry-- their obvious question is what lies beyond 1.2 GW,” Malik says.
To support localization, policy makers must provide clear signals that a pipeline of projects will be built in order to attract the required investments, Ranjan Moulik, Managing
Director- Head of Power & Renewables, at Natixis investment bank, says.
“It’s a volume game...There is a certain critical mass that you need to reach and that critical mass has to be credible and the actions that you take need to be credible and consistent,” he says.
Elsewhere, Wood Mackenzie expects volatility in the Middle Eastern wind market to remain.
Following strong positive growth in 2018, project development is due to slow in Jordan (185MW last year) and Iran (63MW) this year, the analysts forecast.
Lebanon is expected to award licences for between 200MW and 400MW of projects this year, adding to the 202MW it has already permitted.
The region is due to add 2GW of new wind power capacity between 2020 and 2021, Wood Mackenzie forecasted, up from a combined total of 675MW today.
Meanwhile, the outlook for solar PV is much more positive, reflecting the region’s “world class solar energy resources”, Malik says.
While 6GW of wind power capacity is expected to be added by 2024, 53GW of new solar PV is due online by this date.
Wind power developers will increasingly struggle to compete against solar PV on price in low-wind markets such as Bahrain and the United Arab Emirates.