The Abu Dhabi Government's efforts to transform the emirate's electricity industry will create a multibillion-dollar market for goods such as solar panels and new computer software, power companies said yesterday. The Abu Dhabi Distribution Company (ADDC), the emirate's main electricity retailer, will by the end of the year install advanced electricity meters in every home in the capital and surrounding areas, said Abdulrahman al Dhaheri, the deputy managing director. At the same time, he said, the company had proposed a subsidy system for rooftop solar panels that was now under consideration by the Executive Council.
The two changes will have far-reaching effects for a power sector that has traditionally focused on producing ever-larger quantities of electricity from fossil fuels to meet surging consumption. The emirate will generate a significant proportion of power from clean energy while reducing the need for more supplies, executives said. The solar scheme alone would create a US$2 billion (Dh7.34bn) market over 10 years for solar panels at current prices, said Sander Trestain, a vice president at Enviromena, a solar project developer based in Abu Dhabi.
The scheme targets total output of 500 megawatts from solar panels, enough to cover the roofs of 100,000 villas or 2,000 warehouses, he said. Until now, the company's largest project was a 10mw panel array at Masdar City, the carbon-neutral development at the edge of the capital. "Even a small portion of a 500mw solar programme would be very positive for Enviromena's business model," Mr Trestain said.
"Attracting entrepreneurs and international companies to the local industry will increase competition, driving down the cost of solar energy and promising innovation such that eventually solar incentives are no longer necessary." Power prices in Abu Dhabi are subsidised and not high enough to cover the cost of producing electricity from solar panels. The solar scheme would create a fixed premium for each kilowatt-hour (kwh) of electricity generated from solar panels - paid for by the Government - under a scheme known as a feed-in tariff.
Zhengrong Shi, the chief executive of Suntech, the world's third-largest solar panel producer, said earlier this year a feed-in tariff would rapidly make Abu Dhabi a major world market. "We're very confident about the prospect of the market opportunity in Abu Dhabi," he said. ADDC officials yesterday did not disclose the level of the feed-in tariff being considered, but a source close to the company said in March it could range from Dh1.80 to Dh2.20 per kwh when all the proposed incentives were added up. That is significantly higher than the current price of Dh0.15 per kwh for expatriates (Emiratis pay Dh0.05), and higher than the rates supported by many governments in Europe and other established markets.
The growth of renewable energy in Abu Dhabi would be closely tied to ADDC's efforts to install digital electricity meters and other infrastructure to foster the development of a "smart grid" that accepts power produced by individual households, said Reinier Grobbelaar, a UAE business manager at ABB, a major Swiss company that supplies electricity equipment. "The smart grid being proposed by Abu Dhabi will not only help improve energy efficiency by a double-digit percentage, but it will also empower consumers and businesses in Abu Dhabi with information about their electricity usage," he said.
"To integrate the growing amount of renewable energy generation and, at the same time, significantly improve efficiency ? requires massive changes in the electrical system and the way it should be structured and operated." The company would offer Abu Dhabi a number of services, including sensors to monitor electricity usage by the second, technology to smooth out sudden electricity disruptions, and big systems to convert the electricity to a high-voltage direct current to reduce losses, he said.