Q: How much momentum is building behind clean energy across the globe? Solar PV in particular appears to be gaining a big foothold in the Middle East.
A: Before the Covid-19 pandemic, we were clearly seeing strong momentum building for clean energy and this remains robust subsequently. Renewable power accounted for almost three quarters, 72%, of global power expansion last year, according to the International Renewable Energy Agency (Irena).
While the pandemic has been an unprecedented shock to the global energy system, renewables have proven to be the most resilient energy source – the International Energy Agency estimates global usage of renewable energy climbed 1.5% in the first quarter. It predicts renewable electricity generation will increase almost 5% in 2020.
In the longer term, we fully expect the renewables sector will benefit as governments around the world invest in stimulus and recovery packages to get their economies back on track. If we are to meet long-term climate objectives, it is vital these responses are aligned with the UN Sustainable Development Goals, and national development agendas, such as the UAE’s 2050 energy strategy.
Regionally, we have seen a major commitment to clean energy, with energy security at the top of most regional governments’ agendas as they look to meet growing power demand and the needs of rapidly growing populations. Of course, we also benefit from natural resources like wind and sunshine that make renewables an obvious and commercially competitive investment.
Indeed, thanks to technological advances, cost decreases due to economies of scale, and the attractive risk profile of renewable energy investments, the economic case for renewable energy is stronger than ever. The cost of installing utility-scale photovoltaic solar power has fallen 82% since 2010, according to Irena, which predicts renewables installed capacity for the Middle East and North Africa could reach 80GW by 2030, based on countries’ plans.
Masdar was an early driver of renewables in the region, developing the Masdar City 10MW Solar Photovoltaic Plant back in 2009. Since then, we have gone on to set a number of regional and global firsts, including the Shams 100MW solar plant – which was the largest Concentrated Solar Power plant in the world when launched in 2013.
We are also a proud partner in Shuaa Energy 2, the operator of [800 MW] Phase 3 of the Mohammed Bin Rashid Al Maktoum Solar Park in Dubai, which set a new global standard for commercially competitive solar power.
Our selection after bidding a record-low price for solar power generation of 2.99 US cents per kilowatt hour (kWh) was a game-changing moment for the renewable energy sector. Solar PV projects with a levelized cost of energy (LCOE) of below US$0.03/kWh have since become the norm.
Q: Is there a risk that the recent falls in the cost of oil, gas and coal will slow down the growth of renewables?
A: Again, I would highlight that we are not seeing this in the market, with the IEA expecting renewables to be the only energy source to show increased demand this year. Renewable usage is holding up despite lower overall electricity demand as they are generally dispatched before other electricity sources due to lower operating costs or because of regulatory priority.
Further, renewable energy increasingly continues to be cost-competitive with conventional power sources – a process Masdar has played a significant role in, having set a number of benchmarks for electricity tariffs. Renewable energy is increasingly the cheapest source of new electricity – as well as the cleanest.
More than half of renewables capacity added last year achieved lower power costs than the cheapest new coal plants, according to Irena, and we’ve seen record-low prices being set this year at auctions in the UAE, Saudi Arabia, Chile, Mexico, and Portugal. By next year, as much as 1,200 GW of existing coal capacity could cost more to operate than the cost of new utility-scale solar PV, according to Irena data.
Q: How much expertise is Masdar bringing back into the UAE through its overseas work?
A: The development of expertise goes to the very heart of why Masdar was established; we were founded by Abu Dhabi’s leadership to foster innovation and the development of cutting-edge technologies, to support diversification of both the UAE’s economy and energy supply. The aim is to build local talent and R&D capabilities, develop innovative industry solutions and help solidify the UAE’s position as a hub for renewable energy and clean-tech industries.
With our home market here in the UAE being comparatively small, since our inception in 2006 we have pioneered commercially-viable solutions in clean energy, sustainable urban communities and clean technology not just in the UAE but around the world.
Today, we are active in more than 30 countries, with projects totalling more than 5GW in capacity either installed or in development. By developing the latest technologies in the field, we can enhance their commercial viability, helping to attract investment and promoting their wider deployment at scale.
Solutions we have developed in our international operations will definitely have applications here in the UAE.
To give just one example, while we benefit from abundant sunlight in this part of the world, solar power is by its nature intermittent, making balancing of electricity grids in real time more difficult. Storage solutions are therefore strategically very important for us, and we are building capabilities through projects such as Batwind in Scotland – the world’s first battery connected to an offshore wind farm, our 30MW Hywind plant. The project uses algorithms to determine when to store and release electricity, helping to increase its value.
Another landmark Masdar project is the Gemasolar CSP plant in Spain, which uses molten salts as a heat storage technology; the plant is the world’s first utility-scale facility to deliver electricity to the grid 24-hours-a-day.
Masdar City itself is also developing as a regional –and global – hub for innovation, with Mohamed bin Zayed University of Artificial Intelligence, the world’s first graduate-level AI institute, due to welcome its first intake of students next January.
We aren’t just focused inward however: knowledge platforms such as Abu Dhabi Sustainability Week are helping to accelerate sustainable development across the globe, while the Zayed Sustainability Prize honors the sustainability legacy of the UAE’s founding father, the late Sheikh Zayed bin Sultan Al Nahyan, by recognizing innovative, impactful and inspiring solutions from around the world.
Q: Which of your ongoing projects are you especially excited by?
A: Phase Three of Dubai’s Mohammad bin Rashid Solar Park is a good illustration of our strategy of deploying the best technology suited to the specific technical requirements of each project to maximize return on investment. The third phase is the first solar park of its kind in the world to use robots that clean the solar panels without the need for water, both making it more efficient and conserving a valuable resource in the arid climate of the UAE. Phase Three is also the world’s largest PV plant to use solar tracking technology to follow the path of the sun, which also enhances panel efficiency.
The $500mn Dumat Al Jandal wind farm in Saudi Arabia, which we are developing in a consortium with EdF Renewables, is a monumental project; with an installed capacity of 400MW, it will be the first wind farm in the kingdom and the largest in the Middle East. When operational, it will displace almost 1mn tons of carbon dioxide each year.
We won the project with the most cost-competitive bid of 2.13 US cents/kWh (MEES, 18 January 2019), demonstrating that wind power can be an economical solution in the energy mix. Financing for the project was over-subscribed, with local and international lenders recognizing the potential for onshore wind in Saudi Arabia.
We are also currently developing Indonesia’s first floating solar photovoltaic (PV) plant – we see this project as being a game changer for countries with limited free land resources, where there is a pressing need for reliable and sustainable sources of renewable energy. Leveraging innovative solutions, such as floating solar, will be critical to Indonesia achieving its renewables targets and to supporting its sustainable growth.
We signed a power purchase agreement, in collaboration with PT Pembangkitan Jawa-Bali (PT PJB), a subsidiary of the state electricity company in Indonesia, to develop the 145 MW plant, which will be developed on the Cirata Reservoir, in the West Java region. As well as being our first floating solar PV project, it is also Masdar’s first venture into the Southeast Asian market, and builds on the UAE’s strong relationship with Indonesia.
We are also a proud partner in the UAE’s first waste-to-energy plant, having signed a joint development agreement with Bee’ah of Sharjah to work on the project. On completion, the plant will divert more than 300,000 tons of solid waste from landfill each year and produce 240,000 megawatt hours of clean energy.
The problem of dealing with everyday waste is a global challenge, with more than 2 billion tons of municipal solid waste generated each year. In January, we announced the acquisition of a 40% stake in Australia’s second utility-scale waste-to-energy facility, the East Rockingham Resource Recovery Facility in Western Australia; this also marked our first investment in Australia.
We have also recently entered the US market – this is one of the largest renewable energy markets in the world, by far, and very important to us – and also invested in India. Most recently, we have announced an agreement with the government of Uzbekistan to design, build and operate a landmark 500MW utility-scale wind farm project in the country (MEES, 12 June).
Q: What are the key obstacles that need to be overcome for renewable energy to become a much larger part of the energy mix?
A: Firstly, we need further investment in grid infrastructure and new technology - this investment is required to manage the intermittency challenges of solar and wind energy.
As well as our Batwind/Hywind projects in Scotland, we are also commercializing new technology through the development of the Noor Midelt project in Morocco with EdF Renewables, an advanced hybridization of concentrated solar power and photovoltaic technologies. On completion, the plant will provide dispatchable solar energy during the day and until five hours after sunset for a record-low tariff at peak hours of 0.68 Moroccan dirhams [$0.07] per kilowatt-hour, setting a new global standard for commercially competitive solar power (MEES, 31 May 2019)
Effective policymaking has also helped costs to fall and supported technology innovation. However, zero-marginal-cost renewable energy is becoming a reality; the rapidly decreasing cost of renewable energy requires business model innovation to maintain investor confidence.
Transparent rules are just as important as access to capital and bankable technologies. Clearer guidelines improve overall project bankability, speed up development and further reduce costs. Among other areas, regulators and governments need to provide transparent permitting and approval processes, a stable regulatory regime, enforceable contracts that can be bankable, and access to grid infrastructure for electricity generators.
Financing for projects in lower-risk jurisdictions is typically not an issue since prevailing clean energy technologies, such as solar and wind have a well-understood risk profile, and are cost-competitive.
However, access to financing is harder for developing countries, those that need it most; emerging economies have a critical need for modern energy services to meet the demand of their growing population and to realize potentially high GDP growth.
Interview conducted by MEES Senior Editor Jamie Ingram. See MEES, 10 July for related analysis.