Sunday, August 10, 2008

New dawn for energy market

Original Article
From the air, it resembles a contact lens discarded in the red dust of the Ras al Khaimah desert. At ground level, however, the true scale of the giant disc, shimmering in the intensity of the Sun’s heat, is apparent.

The 85-metre circular solar panel is an incongruous feature on the otherwise empty salt plains and desert near Ras al Khaimah city but, as a potential part of the answer to the UAE’s growing energy crisis, installations like it could soon become a common sight.

This futuristic structure is the land-bound prototype of an even larger man-made “solar island” that may float several hundred metres off the coast of the Emirate, supplying the energy needs of up to 200,000 homes.

Eventually, says the Swiss research and development company behind the scheme, a single gigantic island up to five kilometres across – or even an archipelago of floating solar generators – could be stationed off the shore, cooled by the waters of the Gulf and rotating to track the power-giving passage of the Sun.

The island is just one of many solar projects that Emirati leaders and international proponents of alternative power hope will provide an answer to growing energy shortages in the country. Despite the enthusiasm, however, none is yet contributing power to the grid.



Japanese researchers say within
36 years most Gulf nations will be
able to meet 80 per cent of their
energy needs with solar power.

In any other region blessed with an average of 10 hours of sunshine every day in the summer, and seven in the winter, the widespread absence of solar panels would be conspicuous and curious – but few other such regions are blessed with the UAE’s other natural asset: oil.

With massive resources – in 2007 the UAE was the third-largest Opec oil producer, with about eight per cent of the world’s proved reserves – the country has lacked the incentive to embrace renewable energy and has been left behind by nations less endowed with a ready source of fossil fuels. In Germany, for example, which enjoys far fewer sunlight hours than the Emirates, there are dozens of medium-size solar power plants and countless smaller schemes, part of a solar-energy industry that employs an estimated 45,000 people.

High prices, however, mean that oil is now more valuable to the UAE as an export commodity than as a source of domestic power and, with the exception of Qatar, every GCC country is now also facing a shortage of natural gas, the alternative fuel used for electricity generation, necessitating expensive imports to feed the nation’s continuing expansion.

Gas from domestic reserves and Qatar currently provides most of the country’s power. But with consumption growing at about 15 per cent annually, official forecasts say 2011 will be the last year the UAE’s current electricity-generating capacity will meet demand.

Two weeks ago, the metals company Rio Tinto confirmed that, because of uncertainty over gas supplies, it would not be going ahead with a planned aluminium smelter in Al Ruwais in Abu Dhabi.

In the northern emirates, the situation is even more acute, with power supplies already failing to keep pace with the rapid growth. New housing and business developments, including a major shopping mall in Ras al Khaimah, are standing empty – unable to open without sufficient power.

The UAE, where air-conditioning has evolved from a luxury to an omnipresent necessity, has the tenth highest per-capita consumption of electricity in the world, with each citizen using twice as much as their counterparts in countries as climatically diverse as the UK and Bahrain.

The clock, therefore, is ticking and the Sun’s time, say experts, may finally have come.

“If you consider the rapid rate of development in the UAE and the entire region, power supply is already a serious problem – the infrastructure just cannot keep up,” says Andrew Machirant, the co-founder of a Swedish renewable-energy development company, Switchpower. “Solar power has a big potential to contribute to this need.”

Thomas Hinderling, the chief executive of Centre Suisse d’Electronique et de Microtechnique, the company behind RAK’s solar islands, agrees. It is, he says, quite simple: “The problem is there – and there’s the Sun.”

He and other advocates of renewable energy believe Gulf nations can lead the way in the development of large-scale solar projects – schemes impossible in northern Europe or much of North America, where alternative energy has been embraced but is possible only on a small scale.

“Large-scale has to be done somewhere near the tropics,” says Mr Hinderling, “somewhere where there is lots of sun because otherwise you cannot have enough power. It is somewhere like the UAE that this is going to happen.”

Energy from the Desert, a 2006 study by Japanese researchers, calculated that within 36 years most Gulf nations would have the ability to meet 80 per cent of their energy needs with solar power.

In a report released last Sunday, Alternative Energy Trends and Implications for GCC Countries, Eckart Woertz, economic programme manager with the Gulf Research Centre (GRC), concluded that “Rising domestic energy needs for power generation and desalination, favourable conditions for solar energy production and interest in acquiring technological know-how, make a perfect argument for renewable energy in the Gulf”.

What’s more, he said, energy created from renewables could not only supply the nation’s own needs, but “could gradually substitute oil as the GCC’s major export item”.

However, the ghosts of many bright ideas linger.

Enthusiasm for previous solar schemes elsewhere in the Gulf has tended to wax and wane in pace with fluctuating energy prices and wavering policy agendas.

It was a point starkly made in the energy analysis by the Dubai-based GRC: despite the “favourable conditions to produce solar energy, the prevailing attitude has been that the Gulf countries are sitting atop a sea of oil and gas that will last forever and, therefore, alternatives need not be contemplated”.

Saudi Arabia ran some pilot solar projects in the 1970s and early 1980s but they were not developed further and, in the late 1980s, interest in renewable technologies fell along with oil prices.

Until now, development of a solar industry in the UAE has been even slower.

“The policies are not in place,” says Mr Machirant. “You can’t expect anyone to put money into technology that you can’t get anything out of. If you can’t connect to the grid you can’t get anything back.”

Late last year, his company installed a solar device at Knowledge Village in Dubai as a symbol of the potential of solar power. The device, fitted with photovoltaic panels, is designed to track the Sun throughout the day, maximising its ability to generate electricity.

Equally symbolically, however, any electricity it might generate goes nowhere.

Mr Machirant says legislation that gave access to the grid and established financial incentives would jump-start the solar industry here and “lead to an explosion of the market in the UAE”.

For Mr Hinderling, the key lies in “the cost factor. We now have the technology to convert heat energy into electricity. We know we can do it, but it’s just too expensive. It provides electricity at five or 10 times the cost of what is being paid today. If there are no subsidies from the state, you don’t want to do a large-scale solar plan because nobody will be able to make a profit.”

In the northern countries, particularly Germany, he says, “there are many people who just believe in it. They want to participate. They are ready to invest even if they don’t make a profit.”

Such goodwill, says Mr Hinderling, is less evident in the UAE: “On the part of the Government, yes. But on the level of the individual, I don’t think people in the UAE have yet become energy-conscious.”

All that, however, could be about to change.

In December, the Government announced plans to build a US$350 million (Dh1.29billion) solar power plant in the Emirate that would feed into the grid and, by 2010, could be powering up to 10,000 homes.

This followed the announcement in May last year by Masdar, the “future energy” subsidiary of the Abu Dhabi Government’s investment entity Mubadala, of ambitious plans for the world’s first zero-carbon, zero-waste city. Due to start welcoming its first residents late next year, Masdar City will be powered largely by solar energy and eventually will be home to 50,000 people and up to 1,500 energy-efficient businesses.

Masdar, said Dr Sultan al Jaber, the chief executive, at the launch, was “demonstrating its commitment to change the way the world understands energy and sustainable resource utilisation”.

One day, he predicted, “all cities will be built like this”.

In June this year in Washington, Dr Jaber told the US congressional select committee on energy independence and global warming that Abu Dhabi recognised that a “range of solutions” was required to meet future energy needs. Masdar, he said, “reflects our leadership’s strategic vision to continue its role as a global energy leader”. Among those solutions, Abu Dhabi is investigating the potential of nuclear power. In April, the Government unveiled a policy aimed at securing global backing for the development of nuclear energy.

Dr Jaber’s comments to the US select committee, meanwhile, followed the news that Masdar was carrying out large-scale field studies on solar panel technology and the feasibility of supplying clean, renewable energy to the grid.

The company invited 22 international solar developers to test their products in the humidity and dust of Abu Dhabi. It has also contracted the United Nations Environmental Programme to evaluate the potential of large-scale concentrated solar power (CSP) projects in the emirate.

Since these watershed announcements, Masdar has also taken the first steps towards developing a local solar industry. In May this year, it signed up to invest US$2 billion (Dh7.3bn) in two production plants to manufacture photovoltaic cells – one in Abu Dhabi and the other in Germany – while the newly founded Masdar Institute of Science and Technology, a partnership with the Massachusetts Institute of Technology, exists to drive innovation in the field of renewable energy.

In June, the Dubai Energy and Water Agency announced a competitive tender for “engineering consultancy services for a feasibility study for a solar power project in Dubai”. No further details of the project have yet been released. The agency has also developed specifications for green buildings, which allow the use of solar energy for water heating and irrigation pumps, although not for household generation.

It would be wrong, however, to imagine that the future is entirely sunny. Although RAK’s solar islands will be floating at the cutting edge of green technology, neighbouring Ajman – like the rest of the region, hungry for power – last month announced plans to build the region’s first coal-fired plant, due to open in 2012.

There is no shortage of companies waiting in the wings for an opportunity to play a pioneering role in the developing solar market in the UAE.

“It’s heading in the right direction, but of course we would like to see more rapid development,” says Switchpower’s Mr Machirant. “There are a number of companies that are getting into the starting blocks and waiting.”

It remained to be seen, he said, which of them would “take the first leap of faith and go ahead”.

All the experts agree, however, that this is a leap that will also have to be taken by the Gulf nations.

“They should regard renewables not as unwanted competition to their oil and gas production, but rather as a welcome addition to tight global energy markets,” says Mr Woertz.

“Regarding renewable energies as the uneconomical hobby of esoteric tree-huggers in Europe and the US would be a mistake; that point was passed a long time ago.”

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