The rising sun: Solar’s contribution to the energy mix is set to increase sharply

Thanks to a sharp rise in investment, solar energy’s potential as the power of the future is enjoying renewed credibility in Dubai. The emirate is determined to be at the leading edge in energy innovation, but those responsible for meeting its growing power generation needs have also had to be convinced that the economics make sense as well.

Solar Park 

The Mohammed bin Rashid Al Maktoum Solar Park had 13 MW of installed capacity in early 2016 and is expanding rapidly. The second phase of its development was due to add 100 MW, but early in 2015 Dubai Electricity and Water Authority (DEWA) announced that it was doubling the size of phase two to 200 MW and that phase three would be 800 MW. DEWA’s goal is to see an installed capacity of 5000 MW at the solar park by 2030, and it believes it is on track. To put this in context, Dubai’s entire installed generation capacity in 2016 is just under 10,000 MW. The first phase of the solar park consists of 152,880 photovoltaic (PV) panels, covers 24 ha and was built by US multinational First Solar in 30 weeks. The project generates around 24 GWh per year, enough to provide electricity to 600 homes.

Phase Two

In 2015 DEWA announced that phase two of the solar park would be a 200-MW facility to be built, owned and operated as an independent power plant by a consortium led by ACWA Power of Saudi Arabia. ACWA revealed that the construction cost of the new facility, known as Shuaa Energy 1, would be around $350m under a 25-year power purchase agreement with DEWA. The deal represented the world’s biggest solar plant tendered in a single phase, and it also set a new benchmark on price. DEWA revealed that the levelised cost of energy would be $0.056 per KWh. This was 20% lower than any bid ever received for a solar project anywhere in the world. Paddy Padmanathan, president and CEO of ACWA Power, said, “We have established ACWA Power as the leading renewable energy developer in the region, and this project demonstrates that we live up to our commitment of delivering reliable and sustainable electricity at the lowest KWh tariff.” Phase two of the solar park will be built on a 450-ha site and should be operational by April 2017.

Phase Three

While construction starts on phase two, the bidding process will be getting under way for phase three, which will have a capacity of 800 MW. DEWA invited expressions of interest for the project in September 2015, with a reminder that the ultimate target was to eventually have installed capacity of 5000 MW at the solar park. “We move with technology and when we see a good opportunity, we capture it,” Ahmad Buti Al Muhairbi, secretary-general of the Dubai Supreme Council of Energy, told OBG. “The Year of Innovation meant the Year of Solar in terms of energy.” Dubai also hosts a number of researchers who are testing the functionality of PV panels in the challenging desert environment.

Global Trends

While researchers try to improve the performance of PV panels, investors are being drawn to the power of the sun. In addition to ACWA Power’s role in Dubai, in 2015 alone it won contracts, and long-term financing, for the 100-MW Redstone solar project in South Africa and two phases of the Noor solar energy project in Morocco, all making use of concentrated solar power technology.

BP’s “Statistical Review of World Energy 2016” showed use of renewable power of all types in energy generation increased by 15.2% globally in 2015, and that solar generation grew by 32.6%. Consumption of renewables, other than hydroelectric power, was highest in the US, with 65m tonnes of oil equivalent (TOE), up 10.8% on 2013, but China, which consumed 53.1m TOE, showed the greatest increase at 15.1%, while Germany used 31.7m TOE, up 8.3%. “Access to capital and investment paves the way for more efficient projects,” Ivano Iannelli, CEO of Dubai Carbon Centre of Excellence, told OBG. “What we are seeing is market maturity, because now the investors can see numbers and read track records, so the market can see that there is money to be made. Even the most conventional investor is now looking at energy with reinvigorated interest.”

DP World

The Mohammed bin Rashid Al Maktoum Solar Park is not the only place in Dubai where the possibilities of solar power are being explored. The rooftops of buildings at DP World, the global marine terminal, are set to have installed capacity of up to 42 MW after a contract was signed in October 2015. The initiative is designed to reduce the port’s carbon footprint while simultaneously exporting excess energy to the national grid. PV panels are to be installed on 19 buildings at its Jebel Ali Free Zone (JAFZA), on six light industrial units, a warehouse and two cruise terminal buildings in Port Rashid.

Additional panels will be placed on parking areas, and mounted panels will be placed on the main road through JAFZA North. Sultan Ahmed bin Sulayem, DP World’s group chairman and CEO, said, “This is a major milestone in promoting the rational use of natural resources and creating innovative solutions that replace traditional energy sources.”

Iannelli said DP World worked with a team to assess the scheme’s feasibility, its costs and also the revenues it could earn from DEWA for excess energy. “Nobody anticipated just how amazing the results of the research would be. The discount factor they got from the DEWA tariff is way beyond expectations,” he told OBG. Elsewhere in the emirate, since 2014 Al Maktoum International Airport at Dubai World Central has been generating two-thirds of the energy used in one of its staff buildings from 100 solar panels, which are connected to the DEWA grid.

Shams Dubai 

DP World was encouraged to consider a distributed rooftop solar solution when DEWA created Shams Dubai, an initiative to boost the use of PV panels by the owners of homes and buildings, allowing them to sell excess power to the grid. DEWA has an approved list of installation engineers that assess the suitability of properties for inclusion in the scheme and handle the applications. If the application is approved by DEWA the engineers can proceed, and once DEWA has completed a site inspection customers can connect to the grid. Customers have to pay approved and DEWA-trained contractors to carry out the work. A net metering scheme is used, which means customers who generate all their own power requirements no longer have to take DEWA power, effectively cancelling out their household electricity bills. If they produce a surplus, this can be injected back into the grid. DEWA is not offering incentives, such as high feed-in tariffs, to encourage people to have PV panels installed. Instead it is allowing customers to calculate the cost-benefit they might achieve in their own property. The bi-directional smart meters customers used to monitor generation – as well as purchase from and sell electricity to DEWA – are provided to consumers free of charge.

Waste Energy

Although solar appears to have a bright future, some experts in renewable energy feel that additional solutions should be considered where appropriate. For example, landfill gas power generation is an alternative source of energy that has yet to take off in Dubai. Anita Nouri, CEO and business development director at Green Energy Solutions and Sustainability has developed the first landfill gas to energy project in the region, which is providing the full electrical load to the municipality site and facility in Al Qusais Landfill. Even though the emirate’s growing population generates huge quantities of waste that is currently being landfilled, she says it is difficult to get the final approvals necessary for the grid connection. “Landfill gas to energy is the lowest hanging fruit in the renewable energy sector,” Nouri told OBG. “Landfill methane is a waste gas that is harming the environment that can create value. The dry climate in Dubai is ideal for capturing the most gas available to produce power from this waste gas.”

Solid waste energy also compares favourably in terms of capacity factor, a measure that is typically used to determine what percentage of the installed capacity of a power generation site is actually produced over time. US Energy Information Administration figures based on US installations from August 2014 to September 2015 showed average monthly capacity factors for solar PV and wind of 28.5% and 31.8%, respectively, while power stations using nuclear and solid waste demonstrated capacity factors of 93.4% and 67.5%, respectively.

Although some investors and government entities in Dubai may still remain uncertain on the overall benefits of generating power from solid waste, their adoption of solar energy solutions could have significant consequences for other GCC countries. “Dubai is a great leader in piloting innovation, because anything that proves to be commercially and economically viable in Dubai is known to be both scalable and replicable across the region,” Iannelli told OBG.