Masdar City in Abu Dhabi. Andrew Henderson / The National
Masdar City in Abu Dhabi. Andrew Henderson / The National
Masdar City in Abu Dhabi. Andrew Henderson / The National
Masdar City in Abu Dhabi. Andrew Henderson / The National

Solar power to shine through in the Middle East in 2015


  • English
  • Arabic

Last year was a breakthrough 12 months for solar power in the Middle East.

To put 2014 in perspective, in the previous 7 years only 70 megawatts (MW) of solar photovoltaic system (PV) projects were awarded across the region. In 2014 alone, that figure stood at 287MW – a fourfold increase – according to a new report published by the Middle East Solar Industry Association (Mesia).

There are two factors fuelling this sharp rise in solar projects in the region.

First, the price of solar systems has dropped dramatically since 2009 when the first large-scale solar project in the Middle East was unveiled by Masdar in Abu Dhabi. The installation cost of utility-scale solar PV power plants have fallen from about $7.00 perwatt in 2008 to less than $1.50 per watt last year. This amounts to more than a 75 per cent cost reduction. It means that for the same budget used to run a 10MW solar PV power plant in 2008, a plant five times larger can be built today without having to spend a fil more.

As a result of this cost reduction, solar energy is now competitive with the wholesale price of electricity in many jurisdictions in the Middle East. One example is the recent Dubai Electricity & Water Authority (Dewa) tender for a 100MW solar PV power plant. Dewa was able to secure a 25-year electricity tariff of approximately $0.06 per kilowatt hour (kWh). This tariff is broadly in line with the price of generating power from natural gas, the staple fuel for much of the region’s power generation infrastructure.

At the same time as solar prices are falling, the cost of generating electricity from natural gas is going up.

Here in the UAE, the government has historically been able to produce or import natural gas for less than $2.00 per million British thermal units (MMBtu) resulting in natural gas-based electricity generation at very low cost.

Today, however, much of the new domestic natural gas production could cost up to $8.00 per MMBtu to deliver to the market due to high concentrations of hydrogen sulphide (H2S) or carbon dioxide (CO2), which are toxic and corrosive. LNG imports, which were introduced in 2010 in Dubai and may begin on a larger scale in Abu Dhabi as early as 2016, cost more than $12.00 per MMBtu.

Meanwhile, in Jordan, the natural gas pipeline that provided the country with 95 per cent of the fuel needed to generate its electricity was repeatedly blown up during the Arab Spring. This pushed up the average cost of electricity to $0.24 per kWh.

When solar developers approached the government and offered solar PV energy at a price that was 30 per cent cheaper, it’s no surprise that Jordan jumped at the opportunity and awarded long-term utility-scale power projects to 12 international consortiums dotted across the countries. Together they will generate 300 GWh of clean electricity, enough to power nearly 1 million households.

Even with the recent drop in oil prices, solar power will continue to grow. For one, oil accounts for only 5 per cent of global electricity production, according to the International Energy Agency. In the Middle East, the majority of the electricity generated comes from natural gas. And as we have seen from the Dewa example, solar power is already in line with the cost of electricity from natural gas.

Moreover, solar and oil operate based on opposite drivers. With fossil fuels such as oil and natural gas, as demand goes up, so do prices. With solar, as consumption goes up, prices come down thanks to economies of scale. And so, as demand for solar continues to balloon in our region, we will see prices continue to deflate, thus creating a whirlwind cycle which will progressively expand the footprint of solar across the region regardless of the fluctuations in oil prices.

Looking ahead to 2015, we will see three trends emerging.

First, we will see projects become much bigger in size. The typical project will go from 1 to 10MW to 10 to 100MW. According to research compiled by Mesia, in 2013 there were only 4 projects awarded that were larger than 10MW. In 2015, we expect that number to reach 40, a tenfold increase.

A good example of the regional move toward solar can be found in Egypt. As its natural gas infrastructure continues to age, it is becoming more expensive for Egypt to generate power using the fuel. Egypt has therefore turned its attention to how it can take advantage of its abundant potential for solar and wind energy.

Just last month Egypt’s ministry of electricity unveiled a landmark programme which will see it introduce about 2,000MW of large-scale solar PV power plants and 300MW of rooftop solar power projects. The fact that about 176 companies responded to the ministry’s invitation to submit proposals for this Feed-in-Tariff (Fit) programme is a clear signal that solar has become a bankable source of energy in all corners of the Arab world.

At the same time, the market is becoming more broad-based. In the past, most of the solar projects were focused on the UAE. This year there will be large-scale solar tenders in at least 10 different markets in the Middle East, a new record, with Egypt leading the way followed by Jordan and then Morocco. Even small Arabian Gulf countries such as Qatar are making progress with solar.

This diversity will become more exciting once Saudi Arabia enters the market. It has so far been held back from achieving its Herculean solar potential due to the lack of political alignment. But in time they too will turn to solar in a big way, following the footsteps of Jordan and Egypt.

This will no doubt herald a new wave of dramatic growth in our region’s emerging solar market. In fact, Saudi Arabia’s most recent plans for solar PV entail building a capacity of 6GW over the next 10 years. 2015 is expected to be the year that Saudi finally starting moving ahead with its ambitious plans.

Finally, we will see niche segments within the solar industry emerging. In the past, the typical profile of the companies was small local installers. But as the market continues to grow we will see more specialised companies. Aside from the traditional installers we will see system operators such as SAT Engineering and solar-diesel hybrid system providers such as Enerwhere rise to the forefront.

Dubai’s landmark unveiling of a grid-connected solar rooftop programme will also foster the growth of specialised rooftop installers. As a result, solar companies that had to endure razor-thin margins to win projects in the past now have the luxury to pick and choose which projects they can chase.

As a specific example, Chinese solar panel manufacturer Chang Zhou Almaden is reportedly setting up a factory in Dubai to produce up to 400,000 PV panels annually.

This year will therefore be a breakthrough year for solar energy in the Middle East. The UAE will do its share leading the industry, with large-scale solar projects awarded in both Abu Dhabi and Dubai. But in 2015 we will also see such mega projects mushrooming across the entire Middle East, ushering in a new era for our region’s most abundant source of energy – solar power.

Vahid Fotuhi is the president of the Middle East Solar Industry Association and director of origination at Access Power MEA.

While you're here
COMPANY%20PROFILE%3A
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Envision%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2017%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EKarthik%20Mahadevan%20and%20Karthik%20Kannan%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20The%20Netherlands%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20Technology%2FAssistive%20Technology%3Cbr%3E%3Cstrong%3EInitial%20investment%3A%3C%2Fstrong%3E%20%241.5%20million%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%3C%2Fstrong%3E%2020%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20Seed%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%204impact%2C%20ABN%20Amro%2C%20Impact%20Ventures%20and%20group%20of%20angels%3C%2Fp%3E%0A
MOUNTAINHEAD REVIEW

Starring: Ramy Youssef, Steve Carell, Jason Schwartzman

Director: Jesse Armstrong

Rating: 3.5/5

The%20Specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E3.6-litre%20twin%20turbocharged%20V6%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E10-speed%20automatic%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20472hp%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20603Nm%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3Efrom%20Dh290%2C000%20(%2478%2C9500)%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20now%3C%2Fp%3E%0A
MATCH INFO

Day 2 at the Gabba

Australia 312-1 

Warner 151 not out, Burns 97,  Labuschagne 55 not out

Pakistan 240 

Shafiq 76, Starc 4-52

GAC GS8 Specs

Engine: 2.0-litre 4cyl turbo

Power: 248hp at 5,200rpm

Torque: 400Nm at 1,750-4,000rpm

Transmission: 8-speed auto

Fuel consumption: 9.1L/100km

On sale: Now

Price: From Dh149,900

The specs: 2018 Nissan 370Z Nismo

The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
​​​​​​​Fuel consumption, combined: 10.5L / 100km

Jetour T1 specs

Engine: 2-litre turbocharged

Power: 254hp

Torque: 390Nm

Price: From Dh126,000

Available: Now

The five pillars of Islam

1. Fasting 

2. Prayer 

3. Hajj 

4. Shahada 

5. Zakat 

Syria squad

Goalkeepers: Ibrahim Alma, Mahmoud Al Youssef, Ahmad Madania.
Defenders: Ahmad Al Salih, Moayad Ajan, Jehad Al Baour, Omar Midani, Amro Jenyat, Hussein Jwayed, Nadim Sabagh, Abdul Malek Anezan.
Midfielders: Mahmoud Al Mawas, Mohammed Osman, Osama Omari, Tamer Haj Mohamad, Ahmad Ashkar, Youssef Kalfa, Zaher Midani, Khaled Al Mobayed, Fahd Youssef.
Forwards: Omar Khribin, Omar Al Somah, Mardik Mardikian.

A new relationship with the old country

Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates

The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:

ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.

ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.

ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.

ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.

IN WITNESS WHEREOF the undersigned have signed this Treaty.

DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.

Signed

Geoffrey Arthur  Sheikh Zayed

What should do investors do now?

What does the S&P 500's new all-time high mean for the average investor? 

Should I be euphoric?

No. It's fine to be pleased about hearty returns on your investments. But it's not a good idea to tie your emotions closely to the ups and downs of the stock market. You'll get tired fast. This market moment comes on the heels of last year's nosedive. And it's not the first or last time the stock market will make a dramatic move.

So what happened?

It's more about what happened last year. Many of the concerns that triggered that plunge towards the end of last have largely been quelled. The US and China are slowly moving toward a trade agreement. The Federal Reserve has indicated it likely will not raise rates at all in 2019 after seven recent increases. And those changes, along with some strong earnings reports and broader healthy economic indicators, have fueled some optimism in stock markets.

"The panic in the fourth quarter was based mostly on fears," says Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company. "The fundamentals have mostly held up, while the fears have gone away and the fears were based mostly on emotion."

Should I buy? Should I sell?

Maybe. It depends on what your long-term investment plan is. The best advice is usually the same no matter the day — determine your financial goals, make a plan to reach them and stick to it.

"I would encourage (investors) not to overreact to highs, just as I would encourage them not to overreact to the lows of December," Mr Schutte says.

All the same, there are some situations in which you should consider taking action. If you think you can't live through another low like last year, the time to get out is now. If the balance of assets in your portfolio is out of whack thanks to the rise of the stock market, make adjustments. And if you need your money in the next five to 10 years, it shouldn't be in stocks anyhow. But for most people, it's also a good time to just leave things be.

Resist the urge to abandon the diversification of your portfolio, Mr Schutte cautions. It may be tempting to shed other investments that aren't performing as well, such as some international stocks, but diversification is designed to help steady your performance over time.

Will the rally last?

No one knows for sure. But David Bailin, chief investment officer at Citi Private Bank, expects the US market could move up 5 per cent to 7 per cent more over the next nine to 12 months, provided the Fed doesn't raise rates and earnings growth exceeds current expectations. We are in a late cycle market, a period when US equities have historically done very well, but volatility also rises, he says.

"This phase can last six months to several years, but it's important clients remain invested and not try to prematurely position for a contraction of the market," Mr Bailin says. "Doing so would risk missing out on important portfolio returns."