Abu Dhabi will set the pace over the next two years in the race to become the region’s renewables powerhouse as a reduction in electricity subsidies makes solar rooftop applications more viable in the emirate, say industry insiders.
Companies that provide finance and install solar photovoltaic (PV) panels on building rooftops will increasingly focus efforts in Abu Dhabi in the next two years.
“We expect a continued reduction of subsidies as part of the standard economic reform and reallocation for budgets that are required,” said Sami Khoreibi, the chief executive of Abu Dhabi-based Enviromena Power Systems.
“We’re hoping to see [a decrease in electricity subsidies] next year, but if not, we’re sure that it will happen in the next 24 months.”
Abu Dhabi already reduced its subsidies at the start of the year after it raised electricity prices.
Mr Khoreibi said that for the upcoming year, “either subsidies will be further lifted or lifted altogether”.
As consumers begin to feel the financial tug of higher electricity bills, solar will be better positioned to help cut costs.
“We think that there are certain segments of Abu Dhabi real estate owners that could really see a benefit,” he said, adding that the cost of solar rooftop power production compared to the current cost of power generated by natural gas would likely have a six- to 10-year payback.
And with that is likely to come a plan similar to the net metring system being deployed in Dubai.
Mr Khoreibi said that it would not be a surprise if net metring came into play in the emirate over the next year.
“The infrastructure is there, and the drive to see rooftop solar is really there.”
Dubai this year issued new regulations aimed at promoting the use of commercial solar PV applications in the emirates.
Under Dubai’s net metering scheme for solar rooftops, the amount of electricity generated from solar power is capped at the amount consumed on average by the individual or company. Should there be an excess of power generated from the allotted amount, the electricity is fed back into the grid, with consumers receiving a credit on their next power bill.
Dubai’s recent announcement that solar panels would cover the tops of all of its buildings, totalling more than 114,000 rooftops, by 2030 has a market potential of 1,500 megawatts. And the total value of these rooftop solar systems is estimated to be around US$2 billion, according to the Middle East Solar Industry Association.
This has encouraged companies to offer a full suite of options, including solar financing packages.
France’s Akuo Energy Solutions and Dubai-based Corys Environment recently partnered to create a joint venture offering a full house of solutions ranging from financing, installation and operation and maintenance.
So far the company has secured 1.3MW, which will begin construction next month. “We are trying to achieve 50MW a year over the course of the next five years,” said David Auriau, the chief executive of Corys, adding that the investment would total about $40 million to $50m.
For Akuo, investing more in the UAE is a change from the company’s earlier strategy, in which it kept more funding outside the country. “But in a few years, this will rebalance and we’ll see the UAE portfolio increasing in size and being more important in the overall portfolio of the firm,” said Laurent Longuet, the Middle East regional managing director of Akuo.
But they do not expect to stop there.
“Up until now, Dubai is the emirate that has put in place the framework, but we’re very interested to work in Abu Dhabi,” Mr Longuet said. “The Abu Dhabi market is huge and the potential for solar is massive.”
lgraves@thenational.ae
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