Renewable energy has quite literally taken off in Abu Dhabi, with the emirate taking centre stage in the first solar-powered flight around the planet, while Abu Dhabi Water and Electricity Authority (ADWEA) received a new world record lowest bid for a solar power generation project. With a new 2050 energy strategy in place at the federal level, coupled with rapidly diminishing costs, new projects are expected to join a burgeoning renewable energy industry in the emirate.
ADWEA Bid
In September 2016 the state-owned Emirates News Agency reported that ADWEA and Abu Dhabi Water and Electricity Company (ADWEC) had received the lowest-ever weighted levelised cost of electricity offer at 2.42 cents per KWh for its proposed 350-MW solar photovoltaic (PV) independent power plant at Sweihan. This came around two years after Saudi Arabia’s ACWA Power bid a record low 5.98 cents per KWh for the 100-MW second phase of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai.
The bids submitted to ADWEA in 2016 were from six pre-qualified bidders, who had been asked to create a power plant design maximising energy production during the summer months, when air conditioning use creates peak electricity demand in Abu Dhabi. When the bids were opened Abdulla Al Ahbabi, chairman of ADWEA, said: “Today’s opening of proposals from the pre-qualified consortia for the Sweihan project has been eagerly awaited, not only by ADWEA, ADWEC and other interested stakeholders in Abu Dhabi and the UAE, but also by the global solar PV community, and we are delighted that extremely competitive bids have been received to support Abu Dhabi’s achievements in sustainability and energy diversification.” Detailed evaluation of the bids took place in the final quarter of 2016, and in March 2017 the companies behind the lowest bid – Jinko Solar Holding Company of China and the Japanese firm Marubeni Corporation – announced that they had signed a power purchase agreement (PPA) with ADWEC to build, own, operate and maintain the development. ADWEA will hold a 60% stake in the project, and the international firms will each own 20%. The new power station is due to start operations in 2019.
In the five years leading up to 2016 solar technology prices fell by almost 70%, with competition among solar PV panel manufacturers helping to bring down costs, according to Bloomberg New Energy Finance. However, the favourable climate, the price of land in Abu Dhabi, and longer-term power purchase agreements backed by a high credit rating, are also factors that may have enabled companies to bid so low, and those same factors may help the UAE to lead the way in the adoption of renewable energy solutions. “The cost of PV has dropped, but also offshore and onshore wind,” Mohamed Jameel Al Ramahi, CEO of Masdar, Abu Dhabi’s renewable energy and clean technology firm, told OBG. “Each is different in terms of levelised cost of electricity, but the last few years have seen dramatic drops across the board, making these solutions competitive with traditional forms of energy. This attracts the attention of regulators and changes how they prioritise it.”
Solar Park
In November 2016 Masdar signed a PPA with Dubai Electricity and Water Authority (DEWA) to build the 800-MW third phase of the Mohammed bin Rashid Al Maktoum Solar Park, which should be completed in time for the World Expo 2020. The consortium won the project in June 2016, after submitting a bid with the lowest cost of electricity at that time, at 2.99 cents per KWh. “We saw record low solar bids coming out of the UAE in 2016, of which Masdar was a part,” Al Ramahi told OBG. “However, the important thing for us is not setting records; it is playing an ever more important role in the field of renewable energy globally.”
By the end of 2016, Masdar had almost 2.7 GW of clean energy either installed or under development, including the region’s first utility-scale wind project, the 117-MW Tafila Wind Farm in Jordan, and the largest concentrated solar power project in the region, the 100-MW Shams 1 project, which is located in Abu Dhabi and was built by a consortium of Masdar, Total and Spanish multinational Abengoa, with equity divided on a 60%, 20%, 20% basis. In January 2016, Masdar purchased Abengoa’s stake in the project. It is estimated that the Shams 1 plant will displace 175,000 tonnes of CO every year, equivalent to planting 1.5m trees.
To date, Masdar has invested in renewables projects with a combined value of $8.5bn, with its own share totalling $2.7bn. The core focus for the company’s clean energy division is the specific demands of economies in the MENA region. “The region requires a lot of energy, for many reasons, but perhaps the most important is the energy requirement in desalinating water,” Al Ramahi told OBG. “Power generation goes hand in hand with water and sustainable ecosystems. For this reason, Masdar launched a renewable energy desalination pilot programme to research and develop energy-efficient, cost-competitive desalination technologies. At present we are piloting five different reverse and forward osmosis technologies and seeing how they function.”
Masdar City
Masdar’s work also includes the creation of a “greenprint” for sustainable urban development. This is being delivered through Masdar City in Abu Dhabi, which is designed to reduce energy and water consumption and features an integrated, smart transport network. Masdar City’s anchor tenant is the Masdar Institute of Science and Technology (now part of Khalifa University of Science and Technology), a research-oriented university focused on alternative energy and sustainability. It is also home to corporate offices of Siemens, Etihad Airways, General Electric, Schneider Electric and Lockheed Martin. The city is a free zone, with some 450 companies operating there, and its first community of villas and townhouses is expected to accommodate 5000 residents by 2022.
Irena Hq
Since 2009 Masdar City has also been the global headquarters of the International Renewable Energy Agency (IRENA). In November 2016 IRENA launched the fifth round of funding for renewable energy, making available $50m for renewable energy projects in developing countries, as part of a commitment by Abu Dhabi Fund for Development (ADFD) to offer concessional loans to projects selected by the agency. Since 2012, $333m in loans has been distributed to 15 renewable projects in 14 developing countries. Over a 20-year period, including a five-year grace period, the loans are offered at an interest rate of 1-2%.
In the first three cycles of funding, 68 MW of renewable energy capacity will be installed, serving 760,000 people through projects using wind, solar, hydro, geothermal and biomass sources. “Many developing countries are blessed with abundant renewable energy resources, yet access to financing can still hinder development,” Adnan Z Amin, director-general of IRENA, told local media. “IRENA’s partnership with ADFD helps overcome this challenge by offering concessional loans to quality renewable energy projects in developing countries, which then leverage additional investment. Funding from the facility helps boost renewable energy deployment and trigger economic growth, offering sustainable and affordable energy to people with limited or no access to electricity.”
In 2008 the government of Abu Dhabi set a target of getting 7% of its power generation capacity from renewables by 2020. The Emirates Nuclear Energy Corporation is hoping to start delivering electricity to the grid in 2018, when the first of four 1400-MW reactors being built in the UAE by a consortium led by Korea Electric Power Corporation becomes operational. Once all four are on-line, they will provide almost a quarter of the nation’s electricity needs. Energy demand in the UAE is projected to be growing at an annual rate of 9%.
IRENA’s own report on the UAE, produced with Masdar Institute and the UAE Ministry of Foreign Affairs’ Directorate of Energy and Climate Change, suggests it would be both feasible and cost-effective for the UAE to generate 10% of its energy mix and 25% of its power generation from renewables by 2030. It believes that this level of investment in renewable energy could generate annual savings of $1.6bn by 2030 through reduced fossil fuel consumption and lower energy costs.
Solar Impulse
July 26, 2016 saw the completion of a 43,000-km aerial journey and a 12-year project, when Solar Impulse 2 touched down at Al Bateen Executive Airport in Abu Dhabi. The voyage which began on March 9, 2015, was completed in 17 stages, crossing two oceans, three seas and four continents. Power for the aircraft was generated by 17,000 solar panels installed across wings as wide as a jumbo jet’s and fed to four electric engines driving its propellers. Its two Swiss pilots broke 19 official aviation records. Abu Dhabi was the host for both the take-off and landing, and Masdar was a global partner for the expedition.
While the emirate’s wealth has been built on selling oil and gas, its continued prosperity may be contingent upon consuming significantly less of its own fossil fuels. Thus Abu Dhabi’s energy policies, which aim to increase fossil fuel production while also investing in renewable energy capacity, are built with a view to securing the long-term future of the emirate’s energy supply.
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