Solar power company Enviromena ready for its moment in the sun

Enviromena, a new solar energy venture in Abu Dhabi, plans to take advantage of lower costs and technological refinements that have transformed the solar industry.

Sami Khoreibi, the chief executive of Enviromena, says solar energy costs are in consistent decline. Christopher Pike / The National
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Solar power has long been regarded as the “coming thing” in the global energy market, and especially in the Middle East, which has so much of the basic ingredient: sunshine.

But it never quite lived up to the promise. There were cost problems, with the expensive manufacturing processes involved in the photovoltaic cells that convert sun-power into energy; and there were perceived to be storage problems: daytime solar power could not be translated into nighttime air conditioning, for example.

Sami Khoreibi thinks those problems are being solved, and solar is on the threshold of a major breakthrough as an alternative to carbon-based fuels, especially in the Middle East. Enviromena, the company of which he is chief executive, is poised to take advantage of lower costs and technological refinements that have transformed the solar industry.

“We have reached the inflection point where solar becomes competitive against other forms. The US renewable market has seen more activity in the past 18 months than in the previous 35 years combined,” he says.

Mr Khoreibi, a Palestinian born in Saudi Arabia and educated in Canada, was working for a Canadian energy company in Toronto seven years ago when he became aware of the potential for solar, and looked to Abu Dhabi as the base for his new venture. “I saw a tremendous opportunity in the region, especially because this is where Masdar is based. Abu Dhabi is the centre for renewables in the Middle East,” he explains.

Enviromena has secured three different rounds of financing, after which Masdar, the Abu Dhabi government's alternative energy initiative, emerged as the biggest shareholder. "The smart money began to see an upside in solar energy. Masdar brings a very high standard of expertise. It also has improved governance, with a further degree of maturity within the portfolio," Mr Khoreibi says.

So what has changed to make solar suddenly more attractive? “Solar energy costs are in consistent decline. Costs now stand at 1 per cent of where they were 30 years ago. There has been a 70 per cent decline in the cost of solar panels,” he says.

Mr Khoreibi admits there were problems with the overall appeal of solar energy. “Solar was recognised as altruistic in terms of job creation, but didn’t make economic sense. There was still a whiff of subsidy about the whole sector. Now governments are beginning to see that solar is cost-effective and complementary to existing energy sources. It’s also seen as part of the job creation and diversification strategy,” he adds.

Solar is an essential part of the Masdar strategy. Abu Dhabi has committed to a target of 7 per cent of energy needs being filled by solar by 2020. No country in the world currently meets even 1 per cent of its energy needs from solar, despite years of investment by big economic powers like Germany.

Even with the scaling back of some of Masdar’s more ambitious plans after the financial crisis, Mr Khoreibi still believes Enviromena is well placed to exploit the new economics of the energy business. “It [the scale back] didn’t affect us more than any other companies in the sector, in this region or in the world. We’re a survival story, and more than that, a market leader despite the financial crisis,” he says. The forward order book in the Mena region stands at $350 million over the next 18 months.

Enviromena is No 1 in the Middle East photovoltaic business measured by market share, by the number of projects completed, and by total installed capacity.

It recently opened its second permanent office in Jordan, a country with no natural carbon energy resources, that has identified solar as its main strategy for providing the energy its fast-growing population needs. It is aiming to meet 20 per cent of its energy needs from solar in the medium to long term.

“Energy costs in Jordan were high and demand was growing, so the country needs a lot of energy on the grid quickly. And it fits in with the Jordanian government’s programme of encouraging private investors into the energy market,” Mr Khoreibi says.

Such rapid expansion requires adequate financial resources, but he is confident of his balance sheet strength. “Financially, Enviromena can operate independently, but as projects get more ambitious we’re of course looking at how we can take the next financial step. If maintaining our position at No 1in the regional market requires investment, we’ll look for it,” he says.

Some way down the line, existing investors will look for an exit, Mr Khoreibi realises. “With regard to an IPO, the shareholders understand the cycle and are patient. They continue to assess the quality of their shareholding, but haven’t chosen the exact course of their exit,” he says.

Enviromena’s rapid expansion makes it look as though solar energy is a business proposition whose time has finally come.

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