The launch of the 800MW third phase of the Mohammed bin Rashid al-Maktoum (MBR) solar park has cemented Dubai’s position as the Middle East’s most promising renewable energy market.

Following a disappointing 2014 for the region’s renewable energy sector, Dubai’s recent progress in awarding the contract for the 200MW second phase of its MBR scheme and the initiation of proceedings for the third phase, which would be the largest single-phase solar project in the world, has resulted in the emirate emerging as the region’s most attractive solar proposition.

“The big disappointment has been Saudi Arabia. It looks like the ambitious plans, if they happen at all, will not happen in the timeline planned. But the positive news is Dubai,” says Steve Griffiths, executive director of institute initiatives and professor of practice at Abu Dhabi Future Energy Company (Masdar). “Dewa [Dubai Electricity & Water Authority] has come out with 800MW for phase three, and Dubai has become the Gulf’s leader in the solar race.”

Rapid progress

Dubai’s rise to its position at the vanguard of renewables has been rapid. In early 2013, it was Abu Dhabi that was the Gulf’s champion for solar power, having commissioned the 100MW Shams 1 project, by some distance the largest concentrated solar power (CSP) scheme in the region at the time. The UAE capital also had another 100MW solar project, Noor 1, in the tendering stage.

As Abu Dhabi completed the largest project, Saudi Arabia was announcing the largest plans. At the same time as Shams 1 was being commissioned, Saudi Arabia’s King Abdullah Centre for Atomic & Renewable Energy (KA-Care) released a white paper detailing the initial procurement rounds for its programme to deliver 41GW of solar energy by 2032.

However, three years later it is Dubai that is leading the region’s solar efforts. Abu Dhabi’s Noor 1 has suffered from numerous delays in the procurement stage, and KA-Care’s renewable energy programme appears to have been shelved indefinitely. While the drop in oil prices and lack of progress with Saudi Arabia’s programme led to questions over the future of the GCC’s solar ambitions, Dubai has come to the fore with major projects.

“Dubai has moved faster than other [states]. It is able to put projects out to the market and get them done,” says Roberto de Diego Arozamena, CEO of Saudi/UAE firm Abdul Latif Jameel Energy & Environmental Services, which was involved in the bidding process for the second phase of Dubai’s solar project and is closely watching the upcoming scheme.

Low tariff

At the official commissioning of the 13MW first phase of the MBR park in October 2013, Dewa, in partnership with the Dubai Supreme Council of Energy, announced it was going to develop the second PV solar phase of the park as a 100MW independent power project (IPP).

The first phase had been procured as an engineering, procurement and construction (EPC) project to get the ball rolling, and the commissioning of the facility a year after the contract was awarded showed Dubai was serious about delivering on its renewables plans. While the decision to proceed with the second phase as an IPP was made with the aim of encouraging the most efficient technology and reducing costs, the results of the public tender surprised even the most ardent proponents of solar energy.

“We expected the tender to be competitive, but the winning tariff price was much lower than we had foreseen,” says a source at a major international power company that participated in the bidding process.

Key fact

The third phase of Dubai’s solar park will be the largest single-phase solar project in the world

Source: MEED

 

Due to the extremely competitive bid submitted by Saudi Arabia’s Acwa Power in November 2014 for the originally planned 100MW second phase, in January, Dewa selected the firm to develop a 200MW facility, double the initially proposed capacity, for a levelised cost of energy bid of 5.85 cents a kilowatt hour (kWh). This is by far the lowest tariff for any utility-scale project anywhere in the world.

The low tariff price is set to have an impact not only on future Dubai solar projects, but also on solar schemes throughout the GCC.

“The Acwa tariff will reset the way tenders will be done,” says Griffiths. “I don’t think that is a price point that everyone will meet, but it has set a new benchmark for utility-scale projects.”

The selection of Acwa Power to develop the 200MW project was swiftly followed by the announcement that Dewa was increasing the emirate’s renewable energy targets, with the percentage of renewable energy by 2030 tripled to 15 per cent. The vast majority of the additional capacity will come from the MBR park, which has been expanded to 2,600MW in 2030, up from the previously planned 1,000MW. Dewa has invited consultants to submit bids in early May for the advisory services contract on the 800MW third phase.

While much of the discussion about Dubai’s solar market has centred around the tenders for 1GW of utility-scale solar plants, the emirate is also swiftly pushing ahead with plans to introduce a grid-connected rooftop solar market.

Rooftop plans

In December, the Dubai government issued Resolution No. 46 to prepare the framework for linking private solar rooftop projects to the electricity grid.

Under the Shams Dubai net metering scheme, private solar electricity producers will receive reductions on their electricity bill depending on the value of electricity supplied. In early March, a 30kW PV solar project at Dubai World Central at Al-Maktoum International airport was the first scheme to be connected to the grid. Dewa has since invited consumers to apply for approval to connect PV panels to its network.

According to sources involved with the programme, the current pilot-stage projects are being approved on an ad hoc basis, but as processes are normalised they will speed up. Gaining approval for small-to-medium-sized projects should take four months from applying for a certificate of no objection, through design approvals and inspection, to connection to the grid. While Dewa is not providing any subsidies for the scheme, it is thought the drop in the price of PV technology and the emirate’s tariff structure should make it attractive to larger consumers.

“I think [rooftop solar] is viable in Dubai,” says Griffiths. “With the way tariffs are, it can work on a commercial and industrial scale because [larger users] will consume enough electricity in those tiers of pricing to make it a payback for self-consumption.”

However, Griffiths is sceptical of the potential benefits for private residential consumers.

“For residential [grid-connected rooftop solar], it will be challenging at the moment: costs are too high relative to what the tariffs are,” he says. “Maybe some people will do it, but I think on an economic case basis. This is probably the same for most GCC countries. In Jordan, residential rooftop schemes will work as prices of electricity are high and the price point works, but in the GCC it will likely need to be larger-scale at the moment.”

Oil prices

Of primary concern to proponents and suppliers of renewable energy in recent months has been the drop in oil prices.

However, those involved in the region’s renewables sector still see an important role for alternative energy in meeting the growing power demand, in both Dubai and the wider region.

“I don’t think the price of oil in general will negatively impact renewables, even though LNG [liquefied natural gas] is indexed with oil,” says Griffiths.

“We found, in gas-importing countries, you are still in the $6-plus or $7-plus range per million BTUs for a new gas power plant. Solar is now very competitive on a utility scale, and is an important part of diversifying energy resources and risk.”

In response to neighbouring Dubai’s impressive progress with its solar programme, the Northern Emirates’ utility Fewa (Federal Electricity & Water Authority) has announced it is planning to procure 100MW of solar energy, and Abu Dhabi appears to have revived the much delayed Noor 1 100MW solar scheme.

Wider region

With Saudi Arabia’s renewable energy programme having stalled, the rest of the GCC is not set to offer significant opportunities for the solar energy sector in the near future, bar some pilot projects in Kuwait and Oman. Further afield, Jordan and the North African states of Morocco and Egypt will offer fertile grounds for the technology.

“The other exciting market is Egypt,” says Griffiths. “It looks great so far; it has received all the prequalification entries [for its 2,300MW solar feed-in tariff programme], has a feed-in tariff policy and a clear understanding of how it wants to get things accomplished. But, of course, whether it happens as planned is still to be determined.”

Developers and proponents will hope the rest of the region will follow Dubai’s lead and reinstall belief in the region’s undoubted solar potential.