UAE looks to tap vast potential of wind power


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The UAE has been a driving force in funding wind power overseas, but the green energy source has found itself in the doldrums closer to home. The country’s obvious solar potential has also had the effect of putting other renewables in the shade.

That could be about to change as attention focuses on the wind potential offered by locations such as the power-hungry Northern Emirates and islands such as Sir Bani Yas, while at the same time technology to produce power from lower wind speeds improves.

Such technological developments are especially relevant for the UAE, which typically lacks the gales that drive the largest of existing wind farms in Europe and North America.

Masdar, Abu Dhabi’s eight-year-old renewable energy company, has taken a lead in investing in wind projects overseas. After wind-mapping the country, it is also scouting possible locations for turbines at home.

The Mubadala Development unit has more than US$1 billion invested in energy projects around the world. It is also a key player in the emirate’s attempt to achieve 7 per cent renewable energy capacity by 2020. Dubai’s renewable target is 5 per cent.

Masdar is one of three major investors in the Middle East’s first utility-scale wind power project in Jordan.

The 117-megawatt Tafila Wind Farm is expected to increase the country’s total power capacity by 3 per cent and is estimated to cost about $290 million.

The UAE wind-mapping project is about identifying the best locations for potential turbine sites. Among the places that look initially favourable is Sir Bani Yas Island, where Masdar has already presented plans to the Government for a 30MW project.

But finding the wind is only half of the problem. The cost of erecting the turbines and their gigantic blades can be prohibitive without the right infrastructure.

To that extent, identifying commercially viable locations for wind power in the UAE is more challenging than doing the same for solar projects, where there are fewer variables to consider.

“The commercial viability of a wind project depends on the wind project itself, the specifics of the project and where it is located,” said Ahmed Al Awadi, the head of business support at Masdar’s clean energy unit.

“The Northern Emirates are mountainous, and so in order to build your plant you may have to build additional infrastructure to accommodate the vehicles that would take the blades there.”

Modern blades made for the largest wind turbines are vast. The largest rotors made by Siemens extend more than 150 metres, competing with the wing span of an Airbus A380 superjumbo. One sweep of such a rotor covers more than 18,600 square metres, or two-and-a-half football fields.

Another factor is the relatively weak wind speeds available throughout the UAE. However, research and development into generating power at much lower velocities than was viable last decade has yielded positive results in the past five years.

“At first sight the country doesn’t look very windy, but there are locations where it makes sense to develop wind powers,” said Nicholas Fichaux, the programme officer for resource assessment at the Abu Dhabi-based International Renewable Energy Agency.

But even in the absence of formal government-supported utility-scale wind farms, small private turbines are already operating in the country where grid power is lacking.

“You see quite a lot of turbines already on the road to Liwa,” said Mr Fichaux. “You tend to see a small solar panel and a wind turbine beside it. I was surprised because you may not think there is enough wind in the desert, but there is.”

While weak wind speeds represent one of the biggest challenges for the industry locally, globally the headwinds are economic in nature.

The increasing availability of shale gas offers the potential to build cheaper gas-fired power plants – even as the cost of producing wind power continues to fall.

Siemens, one of the world’s biggest players in wind energy, says the cost of producing wind power in the United States has fallen 43 per cent since 2008, while the power generated per turbine has jumped 30 per cent. It estimates that the total cost of providing wind power has fallen by 90 per cent since 1980.

scronin@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Can NRIs vote in the election?

Indians residing overseas cannot cast their ballot abroad

Non-resident Indians or NRIs can vote only by going to a polling booth in their home constituency

There are about 3.1 million NRIs living overseas

Indians have urged political parties to extend the right to vote to citizens residing overseas

A committee of the Election Commission of India approved of proxy voting for non-resident Indians

Proxy voting means that a person can authorise someone residing in the same polling booth area to cast a vote on his behalf.

This option is currently available for the armed forces, police and government officials posted outside India

A bill was passed in the lower house of India’s parliament or the Lok Sabha to extend proxy voting to non-resident Indians

However, this did not come before the upper house or Rajya Sabha and has lapsed

The issue of NRI voting draws a huge amount of interest in India and overseas

Over the past few months, Indians have received messages on mobile phones and on social media claiming that NRIs can cast their votes online

The Election Commission of India then clarified that NRIs could not vote online

The Election Commission lodged a complaint with the Delhi Police asking it to clamp down on the people spreading misinformation