Is sunlight the new oil for the UAE?

For the GCC countries, the sun could be the new oil, the cheapest to harvest and most abundant, never ending energy resource! This was the obvious conclusion of the International Renewable Energy Agency (Irena) in its latest report, launched on Wednesday at the ongoing Abu Dhabi Sustainability Week.
Gulf countries stand to save $87 billion from lower oil and natural gas consumption if they achieve goals for renewables use by 2030, according to the Irena.
The 'Renewable Energy Market Analysis: The GCC Region' report finds that Gulf countries could save 11 trillion litres of water withdrawal (a 16 per cent decrease), save 400 million barrels of oil in the power sector (a 25 per cent decrease), create close to 210,000 direct jobs and reduce the per capita carbon footprint by eight per cent in 2030, all by achieving the renewable energy targets that national and sub-national governments have already put in place.
"These current targets are entirely within reach. A solar photovoltaic tender in Dubai last year resulted in the record-low electricity price of $0.06 per kilowatt hour - cheaper than domestically produced power from gas-fired generation," pointed out Adnan Amin, director general of Irena.
"The economic and social rationale for the energy transition in the GCC has never been stronger. By maintaining their leadership in the energy sector and embracing their region's abundance of renewable energy resources, GCC countries can ensure their own long-term economic and social prosperity through a clean energy future," he added.
Mainstay of revenues
Hydrocarbon exports, in the form of crude oil, petroleum products and natural gas, have been the main source of government budget revenues in the GCC, constituting almost 80 per cent of total revenue for the region's governments.
Yet, the collapse in oil prices since mid 2014 from over $100 per barrel to an all time low of $28 per barrel this week has meant lower exports and government revenue in the GCC. Thus, export losses are estimated to be around $290 billion for 2015.
Traditionally, economies in the Gulf countries have not been major consumers of energy, but rising domestic energy demand, driven by rapid industrialisation, growing population and increasing water desalination, has stressed the region's resources.
Since 2000, energy demands are rising on average five per cent annually, which means a good portion of oil and gas production has to be consumed domestically, rather than going for exports. "The GCC countries have overtaken major consumers such as China, India and Brazil in terms of consumption growth, thereby reducing the share of production that can be exported," pointed out Rabia Ferroukhi, Irena's policy lead and one of the report's authors.
Saudi Arabia, for example, consumed domestically nearly a third of its oil production in 2014, making it the seventh largest consumer of oil. The UAE and Oman use gas for about 60 per cent of their needs, having made a strategic decision to maximise oil exports and exploit gas reserves for domestic use.
Solar resources
According to the report, the GCC countries lie in the Global Sunbelt and are endowed with solar resources that parallel those of nearby North African countries. In fact, the region boasts some of the highest solar irradiances in the world.
More than 59 per cent of the GCC's surface area has significant potential for solar photovoltaic (panels) deployment. Developing just one per cent of this area can potentially result in 470 gigawatts (GW) of solar PV capacity.
Solar, though, is the main, but not the only renewable energy option. Kuwait, Oman and Saudi Arabia hold significant wind resources.
Waste-to-energy is another renewable energy possibility, one that would also address the growing waste management challenges in the region. In the UAE, the estimated per capita generation of waste is about 1.86 kilograms per person per day of solid waste, considered very high.
The GCC's renewable energy sector is still at an early stage and deployment has lagged behind aspirations. However, the plans and targets for renewable energy are gradually translating into projects.
At the beginning of last year, the region had more than 120 GW of installed power capacity, of which renewable energy was less than one per cent. The UAE accounted for 70 per cent of the installed renewables capacity.
Investments in renewable energy in the GCC spiked in 2011 with $800 million invested in the UAE's 100 megawatts (MW) Shams 1 solar power plant, which became operational in 2013.
- silvia@khaleejtimes.com

Silvia Radan

silvia@khaleejtimes.com