Five reasons Dubai is so interested in solar power

Despite the lack of solar footprint in this country, there are five trends that are quietly shaking things up and setting the stage for an explosion in solar power in the UAE and across the region.

Thousands of the world’s experts on solar power will arrive in Dubai next week for the Global Solar Leaders’ Summit, and that might seem strange.

Dubai would not even rank in the top 100 global cities in terms of solar power. So why choose a city in an oil-rich country such as the UAE? Are these delegates using solar as an excuse to come here and visit the indoor ski-slope at the Mall of the Emirates?

Not quite. Despite the lack of solar footprint in this country, there are five trends that are setting the stage for an explosion in solar power in the region.

Fewer economic barriers

Throughout much of the GCC, electricity and water prices are subsidised by governments. Abu Dhabi alone spent Dh17.5 billion last year on subsidising electricity and water. In Saudi Arabia, the government is burning 900,000 barrels of oil per month to produce electricity, which is then sold at a fraction of the cost.

Now that oil revenue has dropped with the fall in oil prices, these subsidies are making a dent in government budgets. Dubai was the first to adopt cost-reflective pricing policies, and others will follow. This will push up the rice of electricity and make solar, which is not subsidised, more attractive.

Favourable policies

Slowly but surely, governments are starting to adopt solar-friendly policies. This year a string of countries and cities have introduced regulations allowing home owners and businesses to install rooftop solar systems. These include Egypt, Jordan and Dubai. In Dubai’s case, there will be more than 10 megawatts of solar power covering 12,000 square metres of rooftop space launched by the end of this year. Those jumping on to the solar bandwagon include ABB, Emirates, Dewa and Aramex.

Lower prices

Solar energy’s penetration in this region is set to grow because the cost of solar equipment keeps dropping. Five years ago I installed a 2-kilowatt system on my roof, enough to offset roughly 15 per cent of my home’s electricity consumption. The cost of this system was roughly Dh20,000. Today, that same system would cost half as much. More contractors will enter the market as solar regulations start to take root, which means more competitive prices and more variety. For example, Ergosun is a new entrant in Dubai offering roof tiles with integrated solar cells – a new technology that eliminates the extra costs for support fixings through the roof.

Payment plan

The Achilles heel of residential solar systems has always been lack of financing. It is like trying to buy a new car without having access to car loans. And since these systems are typically bolted into place for up to 25 years, buying a second-hand one on Dubizzle is not an option. As a result, a lot of potential solar customers have been kept out of the market. But not for much longer. The Middle East Solar Industry Association is working with regional developers on financing plans similar to car loans. The emergence of solar financing will revolutionise the market, much like it did in North America.

Solar in other sectors

As solar becomes more competitive, this technology will branch out to other sectors beyond power generation. One logical area is oil and gas. Petroleum Development Oman, Oman's largest oil producer, is partnering with GlassPoint Solar to build one of the world's largest solar plants. Miraah will be a 1,000MW solar facility in Oman, harnessing the sun's rays to produce steam. The steam will be used in thermal oil recovery at the Amal oilfield. This project underscores the massive market for deploying solar power in the oil and gas industry today.

As these trends take shape, the next time the solar gurus come for a visit, they might find that Ski Dubai is powered by the sun.

Vahid Fotuhi is the head of origination at Access Power and the founder of the Middle East Solar Industry Association.

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