Dubai's Solar Plant To Set A Precedent
BMI View: Following the successful commissioning of the 100MW Shams 1 concentrated solar plant (CSP) in March 2013, we were expecting to see a number of other solar power projects come online in the UAE. This view is playing out, as the 13MW photovoltaic (PV) power plant in Seih Al Dahal, Dubai, has officially been launched, with the generation output incorporated into the national grid. Our constructive outlook for the country's solar sector remains in play - as strong fundamentals, such as high projected power demand, the government's desire to diversify its domestic power mix and beneficial climatic conditions, continue to underpin the solar expansion.
It was announced in mid-October that a US$32.7mn solar PV plant at Seih Al Dahal in Dubai has been brought online. The plant is 13MW in capacity and is the first stage of the 'Rashid Al Maktoum Solar Park' complex, which it is hoped will have a total capacity of 1,000MW by 2030. US solar manufacturer First Solar signed an agreement to develop the plant with state-owned Dubai Electricity and Water Authority (DEWA), and the output from the plant is reportedly already feeding into the national grid. This is the first solar power facility of its kind in Dubai, but comes as no surprise given the UAE's strong desire to adopt solar power into its domestic electricity mix.
We were expecting to see a number of project announcements and developments within the country's solar sector following the successful commissioning of the 100MW Shams 1 CSP plant in Abu Dhabi in March 2013, and this has been the case so far (see 'Solar Set To Surge', March 18). In fact, it has been announced that a 100MW PV project is in the pipeline for the same site in Dubai, expected to go online in the next three years. Dewa is seeking a private partner who will own just under half of the project, with tendering expected over the next six months.
|Solar On The Rise|
|UAE Solar Capacity (MW) and Solar Generation (TWh), 2012-2022|
We have been following the UAE's, and wider Gulf Cooperation Council (GCC) region's, strives towards solar power over the last couple of years; commenting previously that both the UAE and Saudi Arabia are particularly well-placed to undertake renewables expansion (see 'GCC Renewables: Saudi Arabia Leading The Pack', September 20). Our constructive outlook for the industry is underpinned by a number of key fundamentals.
A greater utilisation of renewable energy would allow the UAE to utilise its natural gas reserves for more attractive economic purposes, for example, the domestic petrochemicals industry and the export market.
Power demand in the UAE is expected to rise significantly over the coming decade, in line with positive macroeconomic trajectories, particularly for Dubai. We anticipate an annual average growth rate in electricity consumption of 5.1% between 2013 and 2022. Exploiting its domestic natural potential for solar power would help to meet this demand, whilst ensuring long-term energy security.
|Power Demand Surging|
|UAE Electricity Generation Growth, Dubai Real GDP Growth and Abu Dhabi Real GDP Growth, 2012-2017|
The government's commitment to its renewables expansion is seemingly strong. With the individual emirates implementing targets for renewable energy and carbon emissions reduction. For example, Abu Dhabi aims to source 7% of its electricity from renewable sources by 2020, and Dubai aims to generate at least 5% of its energy from renewables by 2030.
Climatic conditions within the country and supply/demand patterns mean that solar power provides a feasible and mostly reliable form of energy, with fewer problems of intermittency, as seen in European or North American markets.