UAE edges closer to clean energy goals

Mohamed Salama charts the evolution of the country’s clean energy ambitions



In May, Dubai took another big step toward its goal of becoming the world’s greenest city when the inauguration of the 200MW first project of the 800MW third phase of the Mohammed bin Rashid Al Maktoum Solar Park brought the emirate’s clean energy share of its total installed capacity to 4 per cent.

This followed Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, in March breaking ground on the solar park’s 700MW fourth phase.

Dubai plans to have the world’s lowest carbon footprint by 2050, when it targets clean energy sources such as solar power to account for 75 per cent of the city’s power output, up from a targeted 7 per cent by 2020 and 25 per cent by 2030.

Further capacity to be added over next two years

It will add further clean energy capacity when the second and third stages of the third phase – each supplying 300MW – are completed in 2019 and 2020 respectively.

The solar park’s third phase achieved a world record in June 2016 when a bid of just 2.99 US cents per kilowatt-hour was accepted from a consortium led by Abu Dhabi clean energy company Masdar and Électricité de France (EDF) Group. This was nearly half the winning bid for the plant’s 200MW second phase, which at 5.84 cents was itself at the time a world record low.

The Mohammed bin Rashid Al Maktoum Solar Park was launched in 2012 as part of the Dubai Clean Energy Strategy 2050 and has already claimed a number of world records. The sprawling solar park is the largest single-site generator of solar energy in the world, with a capacity to produce 5,000MW by 2030. It is also the largest renewable energy plant in the Middle East. Once complete in 2030, it will cover 214 square kilometres.

Fourth phase also breaking records

The fourth phase is also breaking world records. It will have the world’s tallest solar tower, at a height of 260m, and the world’s largest thermal storage capacity. The first stage of the concentrated solar power (CSP) fourth phase will be commissioned towards the end of 2020.

Concentrated solar power stores power that can be released when the sun is not shining, such as at night. Although more expensive than solar PV, Dubai’s solar thermal technology will allow up to 15 hours of storage, meaning it can release electricity into the national grid 24 hours a day.

Demand for power is rising in the Middle East, but the precariousness of fossil fuel dependency, as shown by the crash in oil prices in 2014 and the political fallout of climate change, is making renewable energies such as solar power more attractive propositions, particularly as prices fall, and none is falling faster than solar. In April 2016, the Gulf Cooperation Council states pledged to pump $100bn into renewable energy projects over the following 20 years.

The $3.8bn fourth phase has achieved the world’s lowest levelised cost of electricity, at 7.3 cents per kilowatt-hour.

Solar power costs tumbling

In many parts of the world, the cost of solar power is plummeting to a point where it will soon be met by rising costs for electricity generated by coal or gas. Part of the reason for this is that once a solar plant is built, the marginal cost of the power it produces is next to nothing, whereas for fossil fuels, these resources need to be constantly supplied.

In 2016, the amount of solar photovoltaic capacity added around the world rose around 50 per cent, continuing a stellar growth from little more than zero at the turn of the millennium.

One concern about solar power has been that it is only available when the sun shines, and that because of this it will still be necessary to maintain base load generation from fossil fuels. But this objection collapses in the face of CSP.

Indeed, CSP holds so much promise that the International Energy Agency predicts up to 11 per cent of global electricity generation could come via CSP by 2050.

Spain and the United States account for nearly 90 per cent of installed CSP capacity, but by 2016 there were facilities being built in Saudi Arabia, Australia, Chile, China, India, Mexico and South Africa among others, while Morocco brought online the 160MW first phase of its Noor-Ouarzazate solar power station, to be built by a consortium led by Saudi private electricity company ACWA Power. This plant will grow to 580MW when fully operational by the end of 2018, making it the world’s largest CSP plant.

Abu Dhabi is similarly committed to increasing its share of renewables in its energy mix, and is home to Masdar City, which it plans to be the world’s most sustainable eco-city. The Masdar City Solar Photovoltaic Plant is the largest of its kind in the Middle East, producing about 17,500MW-hours of clean electricity a year.

Masdar has also contributed a number of renewable energy world firsts over the past decade including Shams 1, which at the time of its inauguration in 2013 was the world’s largest CSP plant. An even larger CSP plant will be built in Abu Dhabi for a total cost of Dhs3.2bn ($870m). The Noor Abu Dhabi is planned to generate 1,177MW from the second quarter of 2019. Masdar is also developing a waste-to-energy plant in Sharjah to assist in that emirate’s effort to reach its zero waste-to-landfill target by 2020 and help the UAE to achieve its 2021 goal of diverting 75 per cent of solid waste from landfills.

Greater involvement of private companies

Several countries in the GCC have recently moved towards allowing greater participation by the private sector in renewable energy schemes, mainly involved in building and running power plants, and the Mohammed bin Rashid Al Maktoum Solar Park is one of the first projects contracted under an independent power producer environment by the Dubai Electricity and Water Authority. Its fourth phase will be co-developed by ACWA Power, while Shanghai Electric will serve as contractor for the engineering, procurement and construction elements.

As the UAE has somewhat higher electricity prices than others in the GCC such as Saudi Arabia and Bahrain, which have some of the lowest utility prices in the world, there is greater incentive there to push renewables – particularly solar power. But even in Saudi Arabia, then oil minister Ali Al-Naimi told reporters in 2015: “I believe solar will be even more economic than fossil fuels”.

Dubai has established a ‘Dubai Green Fund’ worth Dhs100bn ($27.2bn) to provide easy loans for investors in the clean energy sector at low interest rates, and through tax-free business zones it is seeking to attract clean energy companies from around the world. Every rooftop in the city is also planned to have a solar panel installed by 2030.

Key areas of improvement to grow the CSP industry at a faster rate will be cost reduction and thermal efficiency.

Investments in the Mohammed bin Rashid Al Maktoum Solar Park’s research and development centre will reach Dhs500m ($136m) by 2020, the Dubai Electricity and Water Authority said early this year. The centre will focus on the performance of photovoltaic panels in severe conditions and their long-term capability, as well as smart grid technologies, renewable energy and storage and other cutting-edge research.

Mohamed Salama is head of global banking – UAE at Standard Chartered Bank