Oil producing and exporting countries are by instinct watchful, and rightly so, of increasing capacities. For obvious reasons too. Such increases will cut in on potential exports and cause a drop in prices and, therefore, of revenues accruing to these countries.
For instance, Opec’s production in 2000 was 31.1 million barrels a day (mbd) and which increased to 35.8 mbd in 2011. But the bulk of this has come from natural gas liquids and not crude oil. In fact in the last few years Opec’s crude oil production has been stagnant or even falling due to increased production in other regions of the world. The buoyancy of prices, however, helped to stabilise revenues.
But countries have to be watchful of developments in renewable energy. It is true that the contribution of renewables in the total primary energy mix of the world is still modest, but it is growing. As Arabs would say: “The beginning of a torrent is a few drops.”
In 2011, total primary energy consumption was 12,275 million tonnes of oil equivalent (mtoe) whereas growth over 2010 was 2.4 per cent. At the same time, contribution of renewables, excluding hydroelectricity, was about 195 mtoe whereas growth over 2010 was 18 per cent. A reminder that the size of the renewables was only 28 mtoe in 1990 is in order.
Major growth is noticeable in wind and solar energy among others. The installed electricity generation capacity of wind energy was 6,070 MW in 1996 and growing to a staggering 239,485 MW in 2011. At the same time, the installed solar generating capacity was 453 MW in 1996 but 69,371 MW in 2011.
The increase has come from government policies of setting targets for the growth of renewables but more so by the development of technology to increase efficiency and reduce cost to make solar and wind energies competitive in comparison with traditional power generation methods of using coal, oil or gas as fuel.
An article in the Power Engineering magazine cites a report by Ernest & Young, which says: “Renewable energy projects accounted for nearly 50 per cent of new capacity in the US in 2012. That includes a record 13,124 MW of wind power capacity and 3,313 MW of solar power capacity.” In fact, growth rates in Europe and China are even higher.
In the US, many coal-fired generating stations are closing and are replaced by either gas-fired units or wind and solar units for environmental reasons, a process encouraged by the competitiveness of the gas and renewable sources.
Many solar projects are of capacities of as little as 2 MW to supply the needs of small businesses or communities here and there, an example that can be adopted in our region.
Renewable energy has been helped by the increasing number of firms specialized in engineering, construction and operation of the systems. Wind turbines, for instance, are no longer the domain of one or two companies. Therefore, costs have been falling and expected to fall further.
The National Renewable Energy Association (NREL) of the US expects wind power costs will drop by 19 per cent in real terms and increase only by 9 per cent in nominal terms up to the year 2025. Solar power costs will decrease by 35 per cent in real terms and even by 5 per cent in nominal terms. All this while costs of combined cycle gas turbine power may remain the same in real terms but increase 29 per cent in nominal terms.
Oil producing and exporting countries are advised to use renewable energy, especially wind and solar not only to their environmental and economic advantages but to limit the internal consumption of oil and gas and preserve its export potential.
Congratulations then to the UAE for commissioning of its first 100 MW Shams 1 solar power station in Madinat Zayed in March with other stages to follow soon. The station uses concentrating solar power technology.
The stations output at this stage is enough to power 20,000 homes. The experience will be gained from this stage is important in improving future stages, especially in regard to solving the impact of atmospheric dust on the efficiency of the plant.
Other countries in the region will surely follow suit to the benefit of current and future generations.
— The writer is former head of the Energy Studies Department at the Opec Secretariat in Vienna.