Overview


While countries in the GCC have been undertaking renewable energy projects for over 30 years, there has been a significant concentration of effort and focus in recent years (well ahead of the current pressure on oil prices).

Renewable energy now represents a keystone of the UAE’s strategy to:

  • Diversify and build new industries, and reduce any dependence on fossil fuel revenues.
  • Ensure a leading and long-term role in the global energy market.
  • Enable “green growth”.
  • Decarbonize, especially the power sector.
  • Engage with leading international partners.

 

Size and growth

Regional growth:

  • Regional electricity consumption is growing at almost 8% a year – meaning generating capacity has to be doubled every decade. Gulf countries will require 100 GW of additional power over the next 10 years to meet demand. Also, any electricity produced from renewables means less oil and gas needs to be consumed domestically, freeing them for export.
  • Abu Dhabi has a target of 7% renewable energy electric generation capacity by 2020 (1500 Mega Watts).
  • Dubai has a target of 1% solar renewable energy by 2020, and 5% by 2030 (1000 Mega Watts).
  • The six GCC countries are in the top 14 per capita emitters of carbon dioxide in the world. Renewable energies offer a financially viable way to change this.

Global growth:

  • The UAE is helping to build the global supply of clean energy, investing hundreds of millions of dollars in some of the largest utility scale solar and wind projects in the world, as well as water desalination, energy storage and energy efficiency.
  • The UAE is home to Masdar City, the world’s first carbon neutral, zero waste city that is completely powered by renewable energy. Masdar City will become a blueprint for cities around the world that are striving for sustainability, and intends to attract international businesses, academics, entrepreneurs and advocates. Eventually growing to over 50,000 residents, Masdar City will test the boundaries of current and future thinking in sustainable design.

Opportunities:

  • Renewable energy power generation is becoming more cost effective: improving technology and growing competition have seen the cost of renewable energy drop dramatically. In some parts of the world, especially when compared to diesel generation, it is already the cheapest option. There are numerous opportunities for R&D SMEs specialising in this field.
  • Furthermore, solar power generation fits very well with demand patterns where air conditioning use dominates the electricity demand curve. This is of course particularly true of the UAE and other GCC countries.
  • The construction, operation and maintenance of renewable energy facilities present opportunities for related industries, from construction to facilities management. SMEs can benefit here.
  • Policies and regulations that promote the development of renewable energy are unlikely to only address large-scale centralised generation. Governments will almost certainly promote small and medium-scale projects, such as installing rooftop solar PV panels and solar water heaters in major cities. This is a particular strong opportunity for SMEs.

 

Risks and barriers

  • There are limited renewables-friendly regulations in place, and changes in the regulatory framework are probably necessary.
  • Fossil fuels remain highly subsidised.

 

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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