Mohammed Abunayyan, Chairman, ACWA Power: Interview

Interview: Mohammed Abunayyan

How can energy storage for solar generation, particularly in emerging markets, be improved?

MOHAMMED ABUNAYYAN: Energy storage can be improved through innovation and development of technology. We have already seen in the hotel industry how electrical power has been advanced through developments in storage, and I am optimistic that we will see similar improvements in photovoltaics that will make solar energy more effective in the Kingdom’s energy mix. In the case of concentrated solar power (CSP), molten salts are now being used, which allows for efficient energy storage and conversion to electricity without reliance on fossil fuels.

Another incredibly promising development in the works for CSP is tower technology, which uses a tower to receive mirror-focused sunlight. This technology can also be combined with molten salt energy storage, thereby driving efficiency and bringing a lot of optimisation when it comes to the cost of capital expenditure and operational expenditure. The development of energy storage is challenging but it brings huge opportunities, and it will give a great advantage to solar energy over other conventional energy generation. The changes we have seen in just the past five years makes me very optimistic about future technological developments in this area.

On the side of battery storage, the driving force in innovation is coming from the auto industry, which has made a huge investment in research and development in that particular area.

Given that oil prices have been low since mid-2014, how can solar energy remain competitive?

ABUNAYYAN: I see the fall in oil prices as positive in a certain way because it encourages innovation in energy alternatives. If development of solar and wind technologies when the oil prices were around $100 is compared to the progress made since the prices fell, this perspective is borne out. However, the truth is that oil should not be seen as a competitor to alternative energies because it is not sustainable to use oil for all of the Kingdom’s energy and desalination needs. A mix of oil, solar and wind power generation is the most effective way to create a sustainable and efficient energy mix. This mix is necessary from an economic perspective, but it is also a social decision because of the beneficial environmental impact a sustainable energy mix will have on society over the long term. In Saudi Arabia, the highest energy cost is incurred at the peak in usage. Solar excels in this situation because it produces the most during the peak.

The direct heat from solar can also be used in desalination very efficiently. Although this process conventionally uses oil energy, creating a value chain and localisation is extremely difficult to achieve with conventional power. Alternative energies are better positioned in terms of the ease of technology and knowledge transfer, and more easily fit into a decentralised and diversified economy. Changing our energy generation solutions will contribute to changing the country in a way conventional power cannot.

Have the reductions in subsidies for electricity been effective in curbing excessive consumption levels, or will further reductions be needed?

ABUNAYYAN: I am 100% behind the restructuring of subsidies, because the biggest users of subsidies are the biggest consumers rather than those who need the subsidies most. This has been talked about for a long time, so it is good that the government is aiming for a more targeted approach. There must be a value-based rationalisation, because pricing based on value will drive efficiency by making it a key concern for consumers. Also, the industrial sector uses only 18% of the power. This imbalance is due to the consumption in government buildings, in the private sector and in households. However, the changes to subsidies will prompt a shift in the right direction.

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The Report: Saudi Arabia 2016

Utilities chapter from The Report: Saudi Arabia 2016

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