Abu Dhabi’s main utility group is seeking bids for the company’s first major solar project.
The Abu Dhabi Water and Electricity Authority (Adwea) has announced a tender for a 350-megawatt solar photovoltaic (PV) project to be built in Sweihan, about 120 kilometres east of the capital.
Although the emirate has 110MW of solar power, thanks to Masdar, this would be the first such project carried out by Adwea.
The selected developer would own up to 40 per cent of a special-purpose vehicle, with Adwea taking the remaining equity, according to the tender announcement.
“Adwea did dip a toe in the solar market by co-investing with Masdar in a 2.3MW PV portfolio in Abu Dhabi in 2011,” said Jenny Chase, manager of Solar Insight at Bloomberg New Energy Finance “However, the scale-up to 350MW is probably due to low prices being bid in solar tenders around the region.
“At these prices, building solar seems like a sensible energy diversification strategy and not a painful financial sacrifice.”
The facility, which would produce enough electricity to power more than 50,000 homes, would be structured as an independent power project with a power purchase agreement. Adwea will “pay only for the net electrical energy supplied by the plant”, the tender announcement said.
Adwea was not available for comment.
The expansion into solar could point to the fact that gas is in short supply while the tumbling price of oil squeezes regional budgets, according to Gus Schellekens, a partner at the clean energy division of the consultancy EY.
“The number of countries in the region using gas to support enhanced oil recovery makes less economic sense,” he said.
And economics plays a major role as the oil glut has pushed the price of Brent crude down below US$40 a barrel, forcing many companies – including the national oil firms – to cut costs.
The UAE currently imports and exports liquefied natural gas and shares international gas pipelines with Qatar and Oman.
Abu Dhabi is committed to producing 7 per cent of its total power from renewable energy sources by 2020, and the Sweihan project will be the first under the initiative.
lgraves@thenational.ae
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