Investments worth $163bn are planned over the next three decades to reorganise Dubai’s energy sources for its water and power needs. The aim is that by 2050 renewable energy will have replaced carbon fuel as the primary component in the emirate’s energy mix. In order to accomplish this, intermediate targets have been set for 2020 and 2030.
Dubai’s renewable energy ambitions have grown considerably in recent years. In 2008 the emirate was aiming for a 1% contribution by 2020 and 5% by 2030. The Dubai Supreme Council of Energy has now set a goal of 7% renewable or clean energy by 2020 and much higher targets for 2030 and 2050. In January 2017 the 2030 target of 25% renewable energy joined expectations of 7% of energy coming from nuclear sources, 7% from clean coal and 61% from gas. For its target of 75% clean energy by 2050, Dubai expects a total energy mix of 44% renewables, 38% gas, 12% clean fuels and 6% nuclear energy. In addition to this radical reform of supply, the emirate also aims to increase energy efficiency by 40%.
An integral part of the Dubai Clean Energy Strategy 2050 is the Dubai Green Fund, which was launched by Sheikh Mohammed bin Rashid Al Maktoum, vice-president and prime minister of the UAE, and ruler of Dubai. The fund is to provide short- and long-term financing for projects that will enable Dubai to become a global standard of excellence for sustainable energy, focusing on demand-side management, such as the installation of rooftop solar panels under the Shams Dubai scheme. The fund has allocated Dh100bn ($27bn) to support green energy. “The capital of the fund is being provided by founding investors from Dubai, with additional investment from the private sector, international banks and large investment companies,” Saeed Mohammed Al Tayer, vice-chairman of the Dubai Supreme Council of Energy, told OBG.
The rapid acceleration of renewable and clean energy targets partially stem from Dubai’s desire to be a smart city, keen to embrace the latest breakthroughs in green technology. The pace of planned implementation also reflects the increasingly strong business case for solar energy in a region with eight to 11.5 hours of average sunshine per day throughout the year. “The economics of solar power are changing, and every year we are on a logarithmic scale in terms of cost savings and advances in solar panels. We are just breaking through now,” Hootan Yazhari, managing director of equity research at the Bank of America Merrill Lynch, told OBG.
Dubai has established a strong reputation in the region as a pioneer, developing mega-projects such as the Dubai metro, an underwater hotel and the world’s tallest building. Experts in the emirate believe that role could be expanded with renewable energy. “Technologically, we are already there with solar power, but it was access to capital that had to be overcome to make the solar revolution a success story,” Ivano Iannelli, CEO of Dubai Carbon, told OBG. “The major difference for utility-scale solar has come with the alignment of financial institutions because Dubai has worked extremely closely with the financial markets.”
In December 2016 the Dubai Energy and Water Authority, ACWA Power of Saudi Arabia and Harbin Holding Company announced they had reached financial close on the first phase of its 2.4-GW Hassyan clean coal-fired power station after securing $2.47bn from regional and international banks. The second 200-MW phase of the Mohammed Bin Rashid Al Maktoum Solar Park became operational in March 2017, with announcements that installed capacity should reach 1000 MW by 2020 and 5000 MW by 2030. Total investment for the project is forecast to garner Dh50bn ($13.6bn). A 250-MW hydroelectric power station – the first in the GCC – also got under way in 2017, with a Dh58m ($15.8m) consultancy contract awarded to EDF of France in June. All these projects go towards securing Dubai’s future energy framework.
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