Rooftop Solar

Enviromena on the future of rooftop solar in the Middle East

Sami Khoreibi, CEO and Erik Voldner, executive director of operations
Sami Khoreibi, CEO and Erik Voldner, executive director of operations

Enviromena has undertaken around half of all grid connected solar photovoltaic projects in the Middle East since it was founded in 2007. Sami Khoreibi, CEO and Erik Voldner, executive director of operations discuss the future of rooftop solar in the region.

What is the situation with rooftop solar in the region?
Sami: It varies from one country to another. We are involved in the Abu Dhabi pilot scheme - which covers quite a number of solar power projects totalling 2MW on government rooftops across the Emirate - to see the impact of solar power systems on the grid.

This programme has been running for a few years now and we were involved in a number of installations. With that data we’re able to clearly demonstrate that distributed rooftop solar works, not just in Abu Dhabi but across the GCC region where you have similar demand profiles in buildings and in terms of the grid in general.

At the time the installed costs were quite a bit higher than today, so it further demonstrates the value of putting in rooftop solar, not just in government buildings, but also in residential and commercial applications, in helping to meet that peak demand load that is currently a big stress on regional grids.

Eric: The pilot project was administered through Masdar and overseen by ADWEA. Most of the projects in the region today have been based on a one time purchase with O&M. To date there’s been no tariffs but Abu Dhabi has connected solar to the grid and allowed the energy to be fed back into the grid.

Sami: The expectation is that in the very near term Dubai will also be implementing a rooftop solar programme. Our understanding of the mechanics of the programme are still unclear but the need for such a programme is quite clear. If you take a look at the way individuals and commercial entities are billed, you have slab tariffs and the peak slab is quite expensive. You’re looking at AED 44.5 fils per kWh. We’re very confident that solar can produce energy at a lower cost than that top slot the retail customer is paying.

The one barrier right now is that you’re unable to wind back your meter or feedback energy to the grid as a residential, commercial or industrial user of energy. What we expect to see is a system to enable customers to net their metering, reducing their power consumption through the use of solar power systems on rooftops, which in turn could potentially offset peak demand energy which is clearly the largest component of the electricity bill.

Eric: Net metering is a good scheme and a feasible tariff but it really depends on what the regulations and the details around that are, whether you can roll those credits on a month to month basis or on a day to day basis. Basically a net metering tariff enables you to produce one unit of energy and either consume it or send it back to the grid and clock your meter backwards.

That’s the system that exists in Jordan. Whereas in Dubai every consumer has slabs based on their consumption, in Jordan it’s categorised on industry, so you pay differently depending on whether you’re a bank or a telecom or a hotel or a government entity. In Dubai, your energy bill is dependent on consumption patterns, so high consumers will be incentivised to use solar here whereas certain industries are incentivised in Jordan.

Would the industry prefer a Feed in Tariff (FIT) in Dubai as opposed to net metering?
Sami: A Feed in Tariff, where producers are paid a fixed price for the power they produce, is definitely more attractive in terms of incentivising the market to take off quickly. We’ve seen several historical examples of FITs catalysing residential and commercial rooftop applications in parts of North America and Europe and other parts of the world as well.

We are very much in support of potentially seeing a FIT come to the market but ultimately if you just have to have net metering as opposed to a FIT, solar is still competitive today. In previous market places where FITs were implemented, there was a much higher production cost of solar and very often a subsidy associated with a FIT, so solar was viewed as a subsidised source of energy. That subsidy is no longer a necessity. We just need to be able to offset what we’re competing with.

Will net metering be enough to incentivise rooftop solar in Dubai?
Sami: Net metering is a bit too broad a term because we’re not sure if it’s going to be offset on a monthly basis or if you can utilise all your credits to take off that top slot. So until we get further clarity it‘ll be difficult to say whether or not net metering will be enough to incentivise the market place.

But if it’s put under the right structure net metering can create quite a significant market here. Our belief is that over the next months and years the cost of energy across the region is going to continue to rise. Solar today is very competitive and is going to continue to decline in price with further advances in manufacturing and efficiency. Conventional energy, although it is volatile, from the long term perspective seems to have a steady rise in the unit cost of electricity for the end user.

Are we expecting an announcement from DEWA soon?
Sami: It’s difficult for us to second guess government entities but it seems like all the right steps are being taken, a lot of activity is being stirred up – not just on the residential rooftop scale but on a utility scale.

There’s a clear path forward that we’re seeing starting off with the first utility scale plant that was grid connected last year in Dubai. So we’re quite excited. Enviromena has set up a significant presence in Dubai to be part of the expected industry that will be created by DEWA, not just for a solar rooftop programme, but for utility scale projects as well.

What else needs to be in place for rooftop solar to thrive here?
Eric: The difference between building a rooftop system in California and Germany is about 25% and that is only on soft costs such as permitting and regulatory issues. Whether net metering is feasible here will depend on the regulatory requirements the industry needs to meet. The next step would be finding the right users.

High consumers of energy have to be incentivised and willing to invest in solar. And then the banking industry would have to get behind it. Solar is all capital costs and very little opex.

You’re paying for your energy for 20 years in the first year so you need a proper financing mechanism in place to make it worthwhile. After that industry services – from designers, installers, components makers, suppliers, etc – need to be in place. Regulation, financing and services are the three things required for the industry to take off.

How will lower oil prices impact on renewable energy projects in the region?
Sami: Oil prices have historically been very volatile. Assuming we have a $75 barrel of oil for the next several years we would still see massive growth in the solar market based on the decline in the cost of solar energy. So oil would have to fall a lot lower for us to stop being competitive with oil fuel sources of energy.

We’re very conscious in the short term of the peaks and troughs in oil prices, but the long term impact is not something that has shown to negatively impact the solar industry. We were hit a few years ago by the first economic crisis but it was a much younger industry then. We’re a lot more robust than we used to be, not just as a company but as an industry, and we’re more able to handle short term cycles.

What has Enviromena got coming up?
We’re going to be announcing some very exciting projects which we can’t discuss right now. But Enviromena has contracted projects in nine countries and we have offices in Abu Dhabi, Dubai, Jordan and we will be opening an office in North Africa and we’re very excited about the market opportunity over there. We’re seeing a big energy demand and a high cost of energy and that combination is always very attractive to being able to bring on low cost solar in a very quick fashion to countries that are in need.

- 30 The number of solar projects that Enviromena has undertaken
- 9 The number of countries Enviromena has worked in


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