Overview

We featured renewable energy in April 2015 as a sector of interest. Since then, the focus on this industry has increased dramatically, both here in the UAE and internationally.

The recent COP21 conference, held in Paris in December, was the first such global get-together in five years. The agenda it sets will shape the world’s green agenda in a dramatically new way. Renewable energy is at the very heart of this, and the UAE at the heart of that sector.

According to Fatih Birol, executive director of the International Energy Agency (Irena), almost all other GCC countries face troubled times ahead because of their dependence on fossil fuels. Speaking at COP21, he said “the exception is the UAE, as they are the first to move towards renewable energy and energy efficiency.”

For that reason we’ve revisited renewable energy, to look even more closely at how the opportunities of this key sector can be maximized by SMEs.

Size

The renewables sector is less defined by value, and more by potential – especially as clear targets exist. For example, in 2011 Dubai set a target to generate 1% of all energy from renewable sources by 2020, and 5% by 2030. This 5% target equates to approximately 1GW to be installed by 2030.

Similarly, in 2009 Abu Dhabi set a target for renewable energy to account for 7% of the energy mix by 2020, equating to around 1.5GW. The emirate only has approximately 100MW of wind potential, so solar will make up most of this target. In March 2013 the 100MW Shams 1 CSP project came online in Abu Dhabi. Currently the world’s largest operational concentrated solar power project, this took three years to bring online, representing a total investment of $768 million. Source: Clean Energy Pipeline

Growth

In the GCC, the fastest-growing area of related technology is water technologies (desalination and wave power), followed by solar power, green buildings, waste management and wind power. Source: CleanTech Report 2014.

The three biggest barriers to the sector are seen as:
– Insufficient government policy frameworks and regulations (59%)
– Price competitiveness 25%
– Environmental/technology issues (such as dust and humidity). Source: CleanTech Report 2014.

Opportunities

The first area of opportunity for SMEs commonly is in “micro-renewable” technologies (solar, heat pumps, biomass) that are typically smaller scale projects, including domestic installation. The next area covers larger scale developments (solar farms, wind clusters or farms etc) where SMEs are more likely to be second or third-tier suppliers, for example in maintenance or parts.

While the small systems and projects area is seemingly ideal for SMEs, there is a trend for larger organisations to actively acquire small specialist and innovative businesses, making it harder for independent SMEs to win projects. One tactic for SMEs might be to partner with complementary firms where appropriate and build a track record, rather than only operate through large corporate supply chains.

SMEs in the professions or consultancy and specialist trades that understand electricity provision should benefit most as renewables technology is mainstreamed. Equipment needs to be planned for and specified, so architects and designers, planners, and mechanical and electrical and other consultants are needed. Electricians, plumbers and general builders will be ideally suited for installation and maintenance requirements.

For larger projects, particularly where wider consultation is needed, SMEs can offer a range of services including community consultation, planning, legal and other professional services. They could also expand into providing due diligence services as consumers are presented with more and more options and products.

While most major renewables technologies are well developed (solar, wind, biomass), further innovation is still required to increase their efficiency and range (for example, “hybrid” solutions – combining two or more technologies), and broaden deployment opportunities. In many areas, small and flexible R&D organisations can prosper by creating holistic and bespoke solutions with multiple technology applications.

 

Disclaimer:
“The opinions expressed within this article are generic. Mashreq is not responsible for the accuracy, completeness, suitability or validity of any information on this article. The information, facts or opinions appearing in this article do not reflect the views of Mashreq. Mashreq does not assume any responsibility or liability for the same.”

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