Abu Dhabi to introduce subsidies for solar power projects

21 January 2010

Shams 1 funding plan will increase feasibility of sustainable energy schemes

Abu Dhabi plans to introduce a programme of subsidies for solar power projects, according to industry sources involved in talks over the issue with the emirate’s government.

The Department of Economic Development has been working on a framework for a subsidy system since at least 2008, according to a senior executive at one engineering, procurement and construction (EPC) firm working in the emirate.

Industry executives had expected the government to announce the programme at the World Future Energy Summit, held in Abu Dhabi on 18-21 January. However, the details of the plans were not finalised in time because the process has been “bogged down by bureaucracy”, according to one senior industry figure.

A source close to state-owned Abu Dhabi Future Energy Company (Masdar) says it has held intense negotiations with the government over the programme of subsidies. Such subsidies would “fundamentally change” the prospects for the alternative energy industry in the emirate, he adds.

“This would completely change the solar industry in Abu Dhabi and the region,” says the business development manager of one solar power company. “It would be the first step in making it feasible in the Gulf to build solar plants.”

Masdar is understood to be ready to award the EPC contract to build the 100MW Shams 1 solar power plant at Madinat Zayed in the west of the emirate, but wants to get a commitment on subsidies for the plant before it completes the deal.

“What we face with Shams is a lack of regulatory framework,” said Frank Wouters, head of power at Masdar, on 18 January (MEED 18:01:10).

“In Spain, for example, you know what the rules are for plants, but in this case part of what we are doing at Masdar is creating the regulations from scratch,” he added.

A team of Spain’s Abengoa and France’s Total were selected to build the solar plant in March 2009, although negotiations are still under way on the final terms of the EPC deal.

In September, MEED reported that five sites in the west of Abu Dhabi had been selected for the Shams 1 plant as part of plans to relocate it. However, a spokesman for the company now says the plant will be built at Madinat Zayed as was originally planned.

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