Bright outlook for UAE renewable energy sector
A look at how the UAE is pursuing its clean energy strategy to keep pace with power demand
By the end of this year, 10 per cent of all citizens’ homes in Dubai will be energy self-sufficient with free solar power as the UAE works to implement its energy goals. The project, which began last month, will see the installation of photovoltaic solar panels as well as energy-saving lights and water-savers to rationalise the use of electricity and water in the homes of UAE nationals. The homes will then be connected to the Dubai Electricity and Water Authority grid.
Solar power is among a mix of renewable energy sources being deployed across the UAE — and the wider region — as governments seeks to keep pace with rising demand for electricity, thanks to rising populations, industrialisation and urbanisation. As announced in the UAE Energy Strategy 2050, the nation wants to double the contribution of clean and nuclear energy in the total energy mix and reduce the carbon footprint of its power generation processes by 70 per cent.
The UAE has aggregate peak demand of around 20 GW, with the largest portion of demand coming from the commercial sector, reflecting the growing services orientation of the economy.
Electricity demand has run to about 5 per cent of the average annual growth rate over the past few years in the UAE, according to Mordor Intelligence, but is set to slow over the coming years. “The UAE has aggregate peak demand of around 20 GW, with the largest portion of demand coming from the commercial sector, reflecting the growing services orientation of the economy,” says Andy Barrett, Senior Advisor — Global Gas and Power at global information provider IHS Markit.
“The high growth rates of the last decade (over 7 per cent average annual increase) have recently subsided.”
Investments in power sector
Consequently, the UAE will lead investment in the regional power sector with an expected outlay of $33 billion (Dh121.2 billion) by 2022, says Claudia Konieczna, Exhibition Director, Informa Industrial Group, organiser of Middle East Electricity trade show. The event starts today and runs until Thursday at the Dubai World Trade Centre.
“Investments in the power sector will continue to be a priority across the region and is expected to reach $109 billion over the next five years,” Konieczna tells GN Focus, citing the MENA Power Industry Outlook 2019. “By 2020 the Middle East will be the world’s second largest market for energy consumption, according to the 2017 World Energy Outlook. As a result, governments across the region have taken major steps towards pursuing clean energy strategies, with the goal to get on track for sustainable growth.”
Investments in the power sector will continue to be a priority across the region and is expected to reach $109 billion over the next five years.
Four of the GCC’s top ten renewable energy projects are solar developments in the UAE. These include Phases 3 and 4 of the Mohammad Bin Rashid Al Maktoum Solar Park, the Dh3.2-billion Sweihan photovoltaic plant in Abu Dhabi, and a 200 megawatt project being developed at Falaj Al Mu’alla in Umm Al Quwain to serve the northern emirates.
By 2050, the UAE will have invested Dh600 billion to meet its growing energy demand and generated Dh700 billion in savings while ensuring sustainable economic growth, according to official projections. To meet these targets, the UAE will need to have invested $163.3 billion in clean energy and household efficiency policies, or about $4.6 billion annually, S&P Global Ratings reports.
Sustainable energy in focus
Renewable energy has emerged as an attractive option for the UAE for several reasons. Sunlight is an abundant, renewable resource, with the country receiving an average of ten hours a day for 350 days a year.
As a signatory to the 2015 Paris Climate Agreement, the nation has committed to reducing carbon dioxide emissions by 70 per cent, also by 2050.
Finally, significant cost reductions have brightened the case for renewables. As of March 2018, Dubai’s costs of producing solar energy were the lowest in the world. At the same time, technology has evolved to allow cost efficiencies in other areas.
“From a technical perspective, one significant development in the solar energy space has been a fall in the cost associated with storage technology infrastructure over the past two years,” says Martin Haupts, CEO, Phanes Group, an international end-to-end solar provider headquartered in Dubai. “This has seen storage emerge as a source of competitive advantage among solar developers, just as demand for storage and hybrid technologies has increased as a component of photovoltaic solar projects. Storage will only increase in importance as advancements continue to be made, and we’ll surely see the life cycle and efficiency of batteries rise and rise.”
This has seen storage emerge as a source of competitive advantage among solar developers, just as demand for storage and hybrid technologies has increased as a component of photovoltaic solar projects.
Nuclear in the energy mix
Nuclear power and waste are other resources that the UAE is looking at to diversify away from oil and gas sources. The four reactors of the $24.4 billion Barakah power plant, the first in the Arab world, are expected to meet 25 per cent of the nation’s combined electricity needs by producing 5,600 MW of power.
Meanwhile, five waste-to-energy projects are underway across the UAE, with the Sharjah Waste to Energy Facility leading the way. The 30 MW project, a joint venture between sustainability pioneer Bee’ah, and Masdar, will process more than 37.5 tonnes of municipal solid waste per hour to generate electricity sustainably and divert more than 300,000 tonnes of municipal waste away from landfills every year.
Given those investments, the nation looks likely to meet its clean energy targets — however, some challenges remain. “IHS Markit believes current momentum will ensure significant progress towards the 2030 renewables targets, but going beyond 25-35 per cent renewables penetration would require major storage solutions and/or significant solar curtailment,” says Barrett.
“Beyond 2030 the low demand growth expectations can be met with existing and committed thermal and nuclear capacity without significant additional renewables.”
The year 2050 is a long way away and some hurdles are inevitable. Nevertheless, executive action has ensured a robust outlook for the UAE’s power sector.