Solar power in the GCC: Untapped potential
Plenty needs to be done for the region to tap solar's huge potential.
It’s early days for solar energy in the GCC and only time tell if it can become a major part of the region’s energy mix. What is certain is that there is a high level of interest in solar and plans, still mostly tentative, to deploy many gigawatts of solar capacity across the region. “At the start of 2013, renewable energy played only a marginal role within the MENA region; however, a clear trend of activity can be seen,” says Giampietro Sanna, managing director, utilities, Middle East, Accenture.
What certainly doesn’t seem to be in doubt is the potential for solar. One study suggests that Oman could cover its entire annual electricity demand by placing concentrated solar panels on just 0.1% of its land surface area.
The Trans-Mediterranean Renewable Energy Corporation (TREC) has estimated that the equivalent of 630,000 terawatt hours of solar energy shines on the Middle East and North Africa (MENA) region every year. Europe’s annual energy consumption is less than 1% of that figure.
The potential is there, but it’s still early days for the region in terms of projects on the ground. The country currently leading the way on actual solar plant deployment is the UAE. The country’s first utility-scale plant is Masdar’s Shams 1 in Abu Dhabi, which has a reported 100MW of generation capacity.
Dubai is also making strides. Phase one of Dubai’s Mohammed bin Rashid Solar Park is under construction and due to open ‘on schedule’, according to a recent DEWA statement. With 13MW of power generation capacity, the plant will account for less than 1% of Dubai’s annual generation capacity when it opens. This, however, is only phase one of the park’s development and Dubai’s stated aim is to have 5% of its energy come from renewable sources by 2030.
According to Schneider Electric, that might not seem much, but it is when projected growth in demand is taken into account. “Although the targets of 1% solar energy contribution by 2020 and 5% by 2030 to overall energy production appear negligible, this is actually not the case as energy consumption per capita by 2030 will be two or three times what it is today; so the production capacity will actually reflect an estimated 1,000MW on completion,” says Enrique Pastor, power marketing director, Gulf countries, Schneider Electric.
Saudi Arabian officials unveiled a plan earlier this year called K A Care, under which the country will have 40GW of solar capacity by 2032. There are, as yet, no utility-scale plants under construction in the country, but Browning Rockwell, executive director of Saudi Arabia Solar Industry Association (SASIA), hopes for movement soon. He expects tenders for a first round of utility solar plants to be released in Q4, 2013 or Q1, 2014.
“Saudi Arabia is the dominant country in the region thanks to its size, population and growing energy demand, meaning that it will become the point of reference for the region’s countries,” he told Intersolar Europe. “If renewable energy proves to be a success in Saudi Arabia, this may have a positive knock-on effect throughout the region, with investors from Saudi Arabia driving forward the development of solar energy in their neighbouring countries.”
In Qatar, the country is scheduled to float tenders for an 1800MW plant, or plants, in 2014. Capacity would come online by 2018 and could provide around a fifth of the country’s electricity generation capacity.
Away from the GCC, one country setting the pace on solar is Morocco. It aims to have 2GW of capacity in place by 2020 and will be home by then to one of the world’s largest solar thermal plants, a 500MW facility in Ouarzazate.
Comparing solar technologies
Utility-scale PV plant
Takes up less space: The required area of a utility-scale PV plant of ground fixed type, based on crystalline-silicon PV modules, is about 50-55% lower than the area required by a CSP plant with the same nominal power.
Is easier to locate: PV doesn’t need flat land like CSP does; it can also be installed in sloped territory.
Is expandable: Unlike a CSP plant, a modular utility-scale PV plant, usually constituted by several power blocks of 1MW, can be easily expanded as the demand increases.
Is built faster: PV plants can be built in a shorter time than CSP plants. The time required to build a 50 MW utility-scale PV plant is about 14-16 months, while to build a 50MW CSP plant would require 24-36 months.
Utility-scale CSP plant
Grid impact: Utility-scale PV plants are not naturally suitable to the supply of predictable energy and to provide network ancillary services, unless special control features or additional equipment are designed and installed, with consequent increase in capital cost. On the contrary, CSP generation is highly predictable and since any CSP plant is intrinsically coupled with thermal storage, this enables the CSP plant to easily meet the load demand curve at any time. Furthermore, CSP plants can easily participate in primary and secondary grid frequency control, so that they are able to support grid exploitation both during steady state and transient conditions.
Source: Innovations Unlimited ME
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Despite an overall lack of projects on the ground so far, companies with an interest in the field are optimistic about solar’s projects in the GCC. “As a self-renewable, abundant resource there is simply no limit to solar power generation,” says Amr Belal, managing partner at Innovations Unlimited ME. “Hence, the proportion of power supply from solar resources depends first and foremost on the investment governments are willing to make in solar projects. With the GCC’s expansive desert and the highest solar radiation in the world, the potential is very high for solar plant implementation.”
Giampietro Sanna looks to Europe when making predictions for solar’s regional potential. “The European Photovoltaic Industry Association estimates that solar generation could fulfill between 15% and 25% of the overall European demand by 2030,” he says. “Gulf countries, which feature lower industrial electricity demand and higher irradiation, clearly have the potential to exceed these targets.”
Proponents of solar believe that two factors will drive regional governments and their utility companies to deploy plants. One is the projected growth in demand for power in the GCC. Innovations Unlimited ME cites figures from the World Energy Council that project regional demand growing at 2.5% per capita between now and 2035. That translates into the need for 100GW of additional power.
Coupled with that is what many commentators call the ‘opportunity cost’ of sticking oil into turbines, instead of exporting it at $100 a barrel or using it as a raw material for manufacturing. “To achieve genuine development in the adoption of solar power, it is fundamental that GCC countries evaluate generation technologies on the basis of the overall opportunity cost and the actual cost of conventional sources,” says Sanna.
“The real cost of conventional power generation in the region, which is distorted by heavily subsidised oil and gas feedstock, is finally being acknowledged; this, in turn, is providing a better understanding of the economics of renewables.”
Ahmed S. Nada, VP of business development, Middle East, First Solar, adds: “When you burn oil, the direct cost is not very much, but you could be gaining so much more by selling that on the open market.”
Solar does, of course, have its naysayers and there are concerns that it simply costs too much to generate solar power. “Only a couple of years ago, the cost of solar was almost twice what it is today,” responds Amr Belal. “As deployment has increased rapidly and the lessons learned have helped R&D to improve the technologies, the cost of production has fallen at unexpected rates, making these technologies increasingly economical.”
Belal points to Germany where, he claims, the cost of solar generated power is now almost comparable to that from conventional power sources. It also appears that solar benefits from economies of scale, so the larger a plant becomes, the cheaper the cost of generating each megawatt hour becomes. In the GCC countries, finding the space to build large plants and increase their economies of scale will not be a problem.
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Accenture also points to the tumbling costs of power generation. “Installation costs have decreased sharply in recent years and expectations foresee a further 50% reduction in capital costs by 2020,” says Giampietro Sanna. He suggests that solar power generation could match gas-fired generation on cost in less than a decade.
Recent US Department of Energy estimates put the average cost of each solar megawatt hour at US $144.3 for plants entering service in 2018. This compares with $100-$135 for different types of coal and $67- $130 for various forms of gas.
A look at the two utility solar projects underway in the UAE raises the question of which technological approach is best. When it comes to deployment, there are two choices available: photovoltaic (PV) and Concentrated Solar Power (CSP). Shams 1 uses CSP and DEWA has opted for PV technology in phase one of Mohammed bin Rashid Solar Park. With CSP, the heat collected from the panels is used to power steam turbines, which generate electricity. With PV, sunlight is converted directly into electricity.
PV plants are reportedly easier to deploy than CSP plants and require less space. PV plants, however, provide a less reliable stream of power than CSP plants because output fluctuates with the sunlight’s intensity. Traditionally, PV technology has been associated with smaller, independent installations and CSP has been seen as better suited for utility-scale deployments.
That appears, however, to be changing. Phase one of Mohammed bin Rashid Solar Park uses First Solar’s PV technology. Saudi Arabia’s K A Care plan envisions a mix of PV and CSP plants.
“It is worth noting that the efficiencies and applicability of both technologies have yet to be determined in the Gulf region, where various metrics are being tested,” says Belal at Innovations Unlimited ME. “This takes into consideration extreme temperatures and sandstorms as well as grid integration.”
Accenture’s Sanna adds: “In the end, the market will decide the best-fit technology to implement, and investors are very savvy about evaluating the different solutions’ costs and their performance and addressing the technical issues.”
Experimenting with the technology and finding the right solutions for the Middle East is only one of the issues to address as solar gains momentum within the region. Plants need to be connected to the grid and the regional solar skills base needs to be built up. In countries that are taking the IWPP approach to power generation, the rates utilities pay for independently generated solar power need to be agreed upon. What definitely seems clear is that there is a keen interest in solar and a desire to harvest its considerable potential.
MENA countries’ utility plans
KSA: ‘K A Care’ plans envisions 40MW of solar capacity by 2032. First tenders set to be released by Q1, 2014. Capacity will be a mix of PV and CSP.
UAE, Abu Dhabi: Masdar’s Shams 1 in Abu Dhabi is GCC’s first working utility solar plant. 100MW plant uses CSP technology.
UAE, Dubai: 13MW phase one of Mohammed bin Rashid Solar Park under construction. DEWA plans to have 1000MW of solar capacity, equivalent to 5% of its total generation capacity, in place by 2032.
Morocco: Target of 2GW of capacity by 2020; 500MW facility in Ouarzazate will be one of world’s largest solar thermal plants.
Qatar: Reports that country will float tenders for 1800MW plant or plants in 2014. Capacity would come online by 2018 and could provide around a fifth of country’s generation capacity.