Critics of renewable energy love to point out that the “wind doesn’t always blow and the sun doesn’t always shine”.
After decades of research by scientists confirming this observation, Abu Dhabi has the solution. Its giant solar and battery combination will provide electricity day and night, summer and winter.
The project was announced at Abu Dhabi Sustainability Week last week, by Dr Sultan Al Jaber, the UAE’s Minister of Industry and Advanced Technology. Located at Al Azeezah south of Abu Dhabi city, Masdar and Emirates Water and Electricity Company will together develop the project, costing $6 billion. It combines 5.2 gigawatts of solar power with 19 gigawatt-hours of battery storage. It should be able to output a steady 1 gigawatt, which it could keep up for 19 hours in conditions of zero Sun.
Solar photovoltaic power in the Middle East has achieved startlingly low costs. Ewec’s Al Dhafra project was awarded in April 2020 at 4.97 fils (1.35 US cents) per kilowatt-hour, at the time the lowest in the world. This was the cheapest electricity generation from any source globally. In contrast, the US’s target was to reach 3 US cents per kilowatt-hour by 2030.
But even in the sunny Gulf, solar power achieves a capacity factor of only about 20-25 per cent – that is, the ratio of a plant’s average output over a year to its stated maximum. Generation is zero at night, lower in the shorter days and in winter, falls when ambient temperatures are high, and is reduced at times by clouds, haze, dust and sandstorms.
A back-of-the-envelope calculation suggests that the system at Al Azeezah could deliver reliable baseload power at about 6 US cents per kilowatt-hour over a 20-year operating life. That is already cheaper than nuclear power, another large-scale, low-carbon option for baseload. And costs will fall further as solar, and in particular batteries, enjoy further declines in purchase prices.
It is also cheaper than conventional generation with natural gas, except in areas with very low gas prices. And the long-term use of natural gas is not possible within the UAE’s net-zero carbon target, unless teamed with carbon capture and storage, which would raise its cost.
The solar-plus-storage combo compares favourably with the 7.3 cents per kilowatt-hour that the Dubai Electricity and Water Authority (Dewa) achieved for its concentrating solar plant in 2017. That plant uses molten salts to store heat so it can also provide night-time electricity, for up to 15 hours.
Solar with storage in the Gulf has the advantage of matching well to demand patterns. Air-conditioning accounts for up to 70 per cent of the UAE’s electricity use during summer. With enough storage to get through the night, solar can cover much of national demand. This is in contrast to other heavy users of solar power in northern Europe, such as the Netherlands and Germany, where peak electricity demand for heating comes during the short daylight hours of winter.
Another option for long-term energy storage is pumped hydropower, where water is sent to a higher reservoir behind a dam when electricity is in surplus, then allowed to flow to lower levels through a turbine at times of deficit.
Dewa’s pumped hydroelectric centre at Hatta, with 250 megawatts of capacity and six hours of storage, is expected to be completed by the end of the first half of this year.
At its recent energy summit, Ras Al Khaimah also revealed plans for a massive, 5 gigawatt pumped hydroelectric plant with up to 12 hours of storage in its mountains.
Finally, other renewable options such as wind, geothermal and waste combustion generate independently of solar output and complement it.
While lithium-ion batteries are the most familiar today, they may not be the main long-term option. Other chemistries, such as sodium-ion, and different concepts entirely, such as flow batteries using metal salts, may eventually have advantages of lower cost, safety, large scale or avoidance of scarce materials.
All these methods have their place. Batteries and other energy storage options do not just hold electricity for future use. They have other functions such as stabilising the grid in case of surges of demand or the sudden power cut of a generating unit and keeping the frequency of its alternating current within standard levels to avoid damaging equipment or causing blackouts. Batteries close to consumers help ease the burden on power lines at times of high demand. These different storage and grid technologies contribute in various ways to stable, reliable electricity.
Achieving reliable, low-cost and continuous electricity from solar plus battery storage has three important implications.
First, as President Sheikh Mohamed said, it is “a significant step on the UAE’s journey towards net zero”.
Second, it will help to power new businesses in the UAE. These could include large industrial users, such as aluminium smelting. Some of these already buy certified low-carbon nuclear and solar electricity from Ewec and Dewa. It can expand to cover data centres, an exploding sector for both investment and electricity use, as artificial intelligence booms.
Third, it will mean the end of oil burning in the power sector in the Middle East, and the steady reduction in gas. The UAE’s gas consumption for power has already dropped significantly, mostly because of the start-up of the Barakah nuclear plant, and improved efficiency.
Saudi Arabia plans to phase out oil in favour of a mix of renewables and gas. Oman, Jordan, Egypt and Morocco are among other regional countries forging ahead with solar and wind power. Those suffering electricity crises, such as Lebanon, Yemen, Syria, Iran, Iraq and Libya can tap into solar. The gas saved from power generation can be used in industries such as petrochemicals, or converted to clean products such as “blue” hydrogen and ammonia.
This advance is crucial for the future demand for gas, the supply and cost of low-carbon electricity, and the region’s industrial competitiveness. Other sunny regions with abundant land can benefit similarly.
In the Gulf, the sun will shine even at night.
Robin M. Mills is chief executive of Qamar Energy, and author of The Myth of the Oil Crisis
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
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What is a robo-adviser?
Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.
These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.
Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.
Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.
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By Mario Levrero
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MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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FIXTURES
West Asia Premiership
Dubai Hurricanes v Dubai Knights Eagles
Dubai Tigers v Bahrain
Jebel Ali Dragons v Abu Dhabi Harlequins
UAE Division 1
Dubai Sharks v Dubai Hurricanes II
Al Ain Amblers v Dubai Knights Eagles II
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LAST SEASON
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Winners – Bahrain
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UAE Premiership
Winners – Abu Dhabi Harlequins
Runners-up – Jebel Ali Dragons
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Winners – Dubai Hurricanes
Runners-up – Abu Dhabi Harlequins
UAE Conference
Winners – Dubai Tigers
Runners-up – Al Ain Amblers