There’s no denying the trend that is solar power. It seems as though it’s everywhere and the UAE wants to lead the way in the region. But the bottom line is, and will always be, money.
Many studies show consumers across the globe saying how they care about the environment. But when it comes to being greener – the price tag is what truly wins support, even with so-called eco-friendly products.
US-based Retailmenot.com conducted a survey that showed three in five people would buy green items only if the costs were the same or less than non-eco-friendly products. It also found that 81 per cent of consumers surveyed thought greener means more expensive.
The same is true for the power sector, with many believing that cleaner, greener models will drive up bills.
If electricity from solar costs more to produce than traditional sources such as natural gas, utilities and consumers alike will be less inclined to support clean energy.
So it was significant that when Dubai unveiled the winning bid for the 200-megawatt second phase of the Mohammed bin Rashid Al Maktoum solar photovoltaic (PV) park at the same rates as natural gas, the utility and country showed that solar energy was on a financial par with conventional sources.
The consortium won the contract at 5.84 US cents per kilowatt hour. It was the cheapest rate in the solar industry and has been undercut only recently in the US.
So now that the UAE has proven that PV can present a major economical solution to power generation, the country is looking to expand another type of solar technology.
Concentrated solar power (CSP) offers something that PV doesn’t: energy storage. This means that electricity generated can be fed into the grid even when the sun isn’t shining. This is leverage that PV doesn’t have because any electricity generated in a PV system must be immediately put into the grid or else the power is lost. However, this also means that CSP typically runs at twice the price of PV.
Gus Schellekens, a partner at the clean energy division of the consultancy EY, said that even when discussing which technology would be better suited, the question of cost always arises. “Even when I’ve received request for proposals, there’s always a one-line [input] and the consultants will recommend the most cost-effective technology,” he said.
And although Dewa may be studying new CSP techniques, the utility seems to agree that PV currently outranks CSP. Looking back at the solar park that garnered so much attention, it was originally planned to have a mixture of solar applications spanning from PV to CSP.
The tender was open to the best technology, and PV came out of the gates and finished the race first. So much so that Dewa doubled down and made the entire park PV. “That’s a sign of where the smart money is – they see it as economically and technically impactful on their grid,” said Matthew Merfert, a technical director at First Solar.
Mr Schellekens noted that CSP is still in its early days. “Whether it gets support from big investment will depend on the awareness and comfort investors have with the technology,” he said.
The UAE has another problem that drives up costs. CSP technology has many moving parts, unlike its competitor. With that comes the job of cleaning – a task that requires water, which isn’t readily available in desert areas.
The technology also needs direct sunlight to have maximum effect. However, the UAE has not only a significant amount of dust in the air, but also humidity that results in hazy conditions.
On top of this, building a 100-megawatt CSP plant takes about two to three years, as opposed to PV’s build time of less than a year.
Mr Schellekens, a self-proclaimed “big CSP fan”, believes the industry went wrong about seven years ago. “They didn’t do enough to reduce their costs to remain competitive and viable in the competing market,” he said. “It’s a great technology, but the costs remain stubbornly high and in a cost-conscious world you’re not going to win.”
Hadi Tahboub, a vice president of the Middle East Solar Industry Association, described how CSP is finding industrial applications in Oman, where it is used in enhanced oil recovery. “But the UAE isn’t looking into that at this stage and the economics of scale of implementing PV-based projects is going to far outweigh CSP,” he said.
But the question remains: how much are you willing to pay?
“The big break for CSP will come either when governments and utilities realise that they have a need for storage,” said Mr Schellekens. “Or costs come down substantially and it gets to grid parity.”
This continues our series of weekly analysis articles by a rotating group of The National’s beat reporters. LeAnne Graves covers renewables.
Follow The National's Business section on Twitter