Heating up: Major solar power projects are under way across the globe

the need to cross the Mediterranean, and official policy is being written to support international trading.

The EU’s Renewable Energy Directive calls for 20% renewable energy within the union by 2020 and permits member states to import energy from non-EU countries to help meet their respective quotas.

Fukushima is also helping to drive Europe toward a desert solution. After the nuclear accident in Japan, Germany decided to phase out nuclear power altogether by 2022. This policy has made finding renewable energy sources a priority, as Germany gets 23% of its electricity from nuclear plants. As a result, the country has been a leader in the development of North African desert-based solar installations.

Conditions in the MENA region are conducive to building solar capacity in the desert. In the 20th century, it was the fastest-growing part of the world: the population of MENA in 2000 was 3.7 times what it was 50 years earlier, World Bank data shows. While the fertility rate has fallen (from 6.9 births per woman in 1960 to 2.7 in 2010), it has been more than balanced by an increase in longevity (with average life expectancy at birth rising from 46.4 years in 1960 to 72.4 in 2010). This has left countries such as Egypt with serious challenges, including overcrowding, a high rate of youth unemployment and a lack of resources (only 2.9% of Egypt’s land is arable).

At the same time, the oil riches that once supported a number of regional economies are starting to run out. In Egypt, for example, domestic consumption of oil surpassed production in 2010. According to the World Bank, MENA as a whole became a net importer of energy in 2011. In 2010 net exports of energy were equal to 148% of use. The following year, the region’s net imports of energy were equal to 87% of use. Inflation, which has been a problem for years in a number of countries in the region, will now feed through more directly to the more vulnerable economies and could stir discontent. A priority is to ensure future energy supplies. Oil-rich nations The global insolation map has three notable patches of dark red: one in western Australia; another in south-west US; and perhaps the largest stretching from Algeria across North Africa to Saudi Arabia. It is in these regions where the most sun hits the ground, creating great potential for solar energy.

SOLAR DRIVE: While South-east Asia has great potential too, current interest first falls on the large swathe in the Middle East and North Africa (MENA) region. It runs through countries that are fast-growing and in need of additional sources of energy and exports. The virtually untapped solar energy is not far from Europe, a continent that has huge demand for alternative energy and a relative lack of sunshine. Governments and industry have recognised the opportunity and are pushing to turn the unexploited solar resources in the MENA deserts into real energy that can be transported regionally and northward. The story being pitched is sensible, believable and quite compelling. The Sahara Desert gets about 3500 hours of sunshine a year, as much as or more than the best areas for solar energy in the US. In theory, just 0.3% of North Africa’s desert could supply all the electricity needs of both MENA and the EU – six hours of sun hitting the world’s deserts could power the entire world for an entire year. Importantly, the land in question is for the most part uninhabited. The clean energy could be created without disrupting lives or crowding out crop production. 100% RENEWABLE: The EU has set an ambitious goal of supplying all its energy from renewable sources by 2050, by which time it is also hoping to reduce its carbon emissions by at least 80%. To help it achieve those targets, connections to the desert assets of North Africa are being considered and actively pursued. The Desertec Foundation, an organisation working to develop solar power in North Africa that can be transmitted to the EU grid, believes that 15% of Europe’s energy needs can be supplied by desertbased installations by 2050. The governments accept know there will be a time when the oil will run out, and alternative energy is one way to guarantee access to power when that day comes; it could even become a source of export revenues.

Since the onset of the Arab Spring, the trend toward renewables has only strengthened. Before the uprisings, about 10 separate nuclear programmes were in the works in Arab states. They were being pursued in part to address demographic pressures, in particular to power large-scale desalination plants to ensure access to safe and clean water. After the uprisings, most new nuclear projects in the region came to a halt. The lack of strong governments and in some cases the rise of representative government made it difficult to pursue potentially controversial programmes. Investors also backed off, seeing the new governments as untested. Importantly, priorities have changed. There is a growing sense in the region that countries need to develop in a more balanced manner and in a way that brings prosperity to the greatest numbers. Support for alternative energy development, regional cooperation and the export of electricity have increased as a result of this.

GRIDS & LINES: The biggest challenge for the MENAEU solar vision is transmission. While a grid does exist in North Africa, it is rudimentary and not appropriate for the task. Morocco-Algeria-Tunisia connections are good, and that grid has a solid connection with Spain and the EU. But the Tunisia-Libya section of the grid was not operational as of June 2012. And while Libya and Egypt are technically connected, the link is highly limited. A 2005 attempt to synchronise the grids failed and currently the transmission capacity is about a third of what it should be. Going in the other direction towards Europe, there is no interconnection between Syria and Turkey and limited transmission options between Syria and Egypt via Jordan.

Crossing the Mediterranean is also proving a challenge. While high voltage direct current is a relatively straightforward, robust and mature technology, the distances and depths involved are such that most routes across are either too expensive or beyond current cable technology. The Mediterranean has a complex morphology and is a bit of bottleneck in the plan. One EU report suggests simply focusing on the classic Strait of Gibraltar crossing, which is shorter and not very deep. That would mean upgrading most of the power grids and interconnections in North Africa, a technological and political feat.

For alternative energy to work in the region, conservation and planning will have to begin. As it stands, buildings are constructed and infrastructure developed without much concern for efficiency. The truth about renewables is that they cannot entirely replace conventional energy sources unless societies adjust consumption. That requires greater use of efficient lighting technologies, the construction of more green and intelligent buildings, greater investment in efficient cooling systems and the regulation of IT so low-power equipment is utilised.

FALLING SUBSIDIES: The challenges in the West are somewhat different, with economic difficulties leading to a significant drop in subsidies, tax credits and preferential tariff rates for solar. In crisis, the developed world simply cannot afford to support the industry like it once did. This raises a lot of questions about the future of the technology. Incentives are needed, it is often said, so the industry can achieve the critical mass to make it competitive with conventional power generation. The decline in official support also further clouds the future of MENA solar farms. While there is a lot of policy inertia, the project is going to require significant state funding, and that money may simply not be there.

In autumn 2012 it seemed these challenges were beginning to threaten the vision of a desert solar solution for Europe. Siemens and Bosch both pulled out of the Desertec Initiative, while Spain was reconsidering its support for three Moroccan solar plants.

Plenty of stakeholders are still in the game, and Desertec and many of its related projects are still in the works, but second thoughts by corporations and governments might slow implementation of the plan.

Other parts of the developing world may experience surprising growth in solar generation capacity regardless of what happens in the West. While no region can match the solar resources of North Africa in terms of the size of the productive area, a number of countries outside the EU, the US and MENA are well-placed for the utilisation of solar technologies. They are sunny, and they face a set of problems, challenges, opportunities and circumstances that argue in favour of alternative energy. These include cheap and productive labour, unstable power grids, the need to balance the carbon output of polluting industries, abundant capital, high-cost electricity, challenging geography and rapid economic growth. It is a different story from that in MENA; it is not one of massive solar farms feeding wealthy countries, more one of smaller projects being developed for local demand, which is why it may in the end be the story. Projects in South-east and South Asia are not dependent on international coordination and politics, the economies of the West and the transmission of power over vast distances. Demand is at home, and in some cases manufacturing will be too.

THAILAND: Thailand has been particularly active in the development of solar resources. The country has two prime areas of exceptional sun, the northeast Isaan region and a patch just north of Bangkok near the ancient capital of Ayutthaya. Both get about 5 KWh per sq metre per day of irradiance throughout the year – lower than the best areas of North Africa, but still respectable and worth exploiting.

Thailand’s promotion of the alternative energy sector began a number of years ago. It was one of the first Asian countries to institute an adder, a special tariff over and above the market rate for solar power purchased by a utility. The country has also set ambitious targets. Its Renewable Energy Development Plan (REDP) 2008-22 called for about 20% of Thailand’s electricity to be generated from alternative sources by 2022 and set a target of 500 MW of solar energy capacity. The Alternative Energy Development Plan (AEDP) 2011-21 superseded the REDP and set targets of 25% renewable energy and 2 GW of solar power capacity.

SOLAR RUSH: The campaigns have in fact been a bit too successful. By 2009, more than 1000 applications for over 5 GW of solar power production had been filed, and the government became concerned that the rush would leave the country with too much expensive solar power, as it was offering a tariff more than three times the going rate and would be responsible for the difference. There was also a concern that most of the applicants were merely solar speculators, seeking to buy rights that could be sold later. The government has amended the programme. The adder was reduced to BT6.5 ($0.21) per KWh from the original BT8 ($0.26) per KWh for all applications submitted but not yet approved as of June 28, 2010. The government stopped taking new applications as of that date and is now considering a fixed rate for solar power, not an adder rate.

At first, very little was built, confirming worries about speculation. But in 2011 and 2012, a number of major projects commenced and quite a bit of capacity has come on-line. Solar Power Company, a local firm, had completed nine of its 34 planned projects by August 2012, for a total of 55 MW of capacity, and it hopes to have all its projects finished by the third quarter of 2013, bringing the group’s total to 242 MW. Thailand-based Natural Energy Development built a 73-MW solar farm in Lopburi. Bangchak Petroleum and DuPont Apollo have completed plants in the country as well.

PIONEERS: Brunei Darussalam is also pioneering a number of new initiatives to promote solar on a local level. Under one proposal, discussed by the Energy Department at the Prime Minister’s Office in early January 2013, consumers who choose to invest in rooftop solar panels for their homes would be able to channel any surplus power to the national grid, and would receive compensation by the government in return. “It is a wise investment that will provide returns,” the minister of energy, Pehin Dato Yasmin Umar, told local press in January 2013. “Although this will take time to make a profit, it will provide reasonable returns in the end.”

Elsewhere in the region, progress has been slower. Construction of Malaysia’s first solar plant did not start until 2011. The project, undertaken by Tenaga Nasional, the country’s largest utility, is in the buffer zone of a conventional power plant and is designed to help the firm gain experience and test different technologies and configurations. It is a showcase project in support of the government renewable energy initiatives, with the country aiming to build 1.25 GW of renewable power capacity by 2020. However, political bottlenecks could slow the process and make it vulnerable to challenges from a vocal opposition. Another problem in Malaysia is the fact that most of the land suitable for solar farms is arable, and there is a trade-off between agriculture and power to be considered.

Other countries have also been slow to move into the solar arena. The Philippines has put a 50-MW cap on the amount of solar capacity that can be connected to the main power grid each year. It sees the technology as expensive, difficult to integrate efficiently with the grid and even leading in some cases to corporate failures. In early 2012 Indonesia had a total of just 13.5 MW of installed solar capacity.

OPPORTUNITY: Indonesia is an ideal place for solar, however. An archipelago of 17,500 islands, one-third of its 245m people have no access to the electricity grid. The economy is growing fast, the country is now a net importer of oil, and its infrastructure is inefficient and poorly maintained, making fuel transportation for conventional plants expensive. Solar makes a lot of sense, especially because the average insolation rate is 4.8 KWh per sq metre per day. The government recognises the need and the potential and is now formulating a tariff as an incentive for development. A few large projects are being developed: in 2012 Japanese electronics manufacturer Sharp said it was considering a 100-MW plant in Bali, and a 200-MW plant on Java is being planned.

India is in a similar situation. Necessity is driving solar development. The country has an unstable power grid and has suffered major failures, with hundreds of millions losing electricity in July 2012. Solar might be the answer. It would allow India to establish micro-grids that can function independently of each other. Failures will not cascade so easily throughout the country. Solar plants can also be built relatively quickly and do not need to source fuel. India has good insolation as well, with parts of Gujarat and Rajasthan receiving over 6 KWh of solar power per sq metre per day. India has taken on solar with great enthusiasm. In mid-2011, virtually no solar power capacity was on the grid. Less than a year later, the country had 1000 MW on-line. India wants a full 20 GW of solar power by 2022, and by some estimates it could beat this goal, although there are concerns about the quality of the projects being built, grid connectivity, tariff rates and subsidies.

DECLINING COSTS: The growth of solar started relatively late in much of the developing world and has come in fits and starts, but it is very possible that activity will pick up and that the ambitious targets will be met. Just as countries are beginning to focus more on promoting renewables, the photovoltaic market has crashed as a result of manufacturing overcapacity in China. The price per watt for photovoltaic modules fell from about $2.75 in 2009 to about $1.00 at the beginning of 2012, and recent spot price reports put average module prices at about $0.62 per watt. Prices are so cheap now that people are starting to talk about grid parity – the point at which a given alternative energy is as cheap as energy from conventional sources – especially in places where electricity costs are high.

There are uncertainties, however. The overcapacity may be temporary; the world’s largest solar panel maker, China-based Suntech, has been pushed to the brink of bankruptcy, while more than 20 solar panel manufacturers in the US and EU and 50 small Chinese manufacturers have folded. The glut may pass with time, and a cost-reflective price for solar cells may again assert itself. Local factors may also stand in the way of rapid growth in the industry. Integrating solar into the grid is a complex matter that may not be fully appreciated by all the countries involved. It requires more than just buying panels and plugging them in. Even in places where solar is ideal, technical issues can still hinder development. Complications regarding power purchase agreements in Chile, for example, are limiting progress there. Solar companies fear being stuck with an obligation they cannot meet with solar and having to make up the difference by running expensive generators.

A BRIGHT FUTURE: While the development of solar power faces many challenges, one fact remains: the sun is and will be for the foreseeable future the best source of safe and sustainable energy. However, politics, corruption, technology, costs and perceptions may certainly slow the expansion of the solar power industry, and not all the vast fields of panels and mirrors planned and envisioned between now and 2020 will become a reality. Nevertheless, progress will occur and capacity will be built, especially as fossil fuels begin to dwindle and as more of the world becomes richer. Demand for electricity will rise, the price of conventional fuels will increase, the cost of panels will drop and in the future the whole question of whether solar is worth it will fade into the background. Arguments and doubts will appear less important once the numbers work.

Meanwhile, development will be patchy but overall positive. Some areas will pursue the technology because they have enough sunshine already to make it worthwhile. Others will spend money on solar power as an extension of industrial policy, developing the sector as much for the exports it creates as the power it generates. Still others will make the commitment for environmental or geopolitical reasons, not least the desire for energy independence. Together, all these efforts will contribute to something significant, investable and material. Solar may not happen exactly as the dreamers, politicians and consultants say or hope, but it will happen and it will be meaningful in terms of dollars spent, fuel saved, technologies created, and houses and industry powered.


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The Report: Brunei Darussalam 2013

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