In a country with the world’s seventh largest proven oil and natural gas reserves, and with predictions that Abu Dhabi’s oil supplies can last beyond another 100 years, the UAE’s current focus on renewable and sustainable power may seem puzzling at first glance.
But in such a fast-growing and energy-hungry country, planning for the future and looking for alternatives make sense from a business and environmental perspective.
Numerous initiatives and policies have been introduced by government bodies in the UAE. The country’s 2021 blueprint clearly outlines the need to develop long-term sustainable energy sources as a major pillar for the future. It is evident that the country’s ambition is to be seen as a nation that is responsible for developing global and regional best practices, an emerging international role model in this area.
And in a country where there appears to be abundant potential for solar energy, steps are now being undertaken by organisations such as Masdar to look at actively increasing the use of solar power.
One of the challenges for large-scale solar in the UAE has been the effect of dust and sand that can coat solar panels significantly, thereby reducing their effectiveness. However, continuing investment and new technical advances are set to ensure that power available from solar should become more efficient in the future.
A challenge for the alternative sector is to be cost-effective in terms of power outputs in a world where oil prices are predicted to remain low for the foreseeable future.
One possible path for countries serious about creating a truly diverse and sustainable energy production mix is to consider a subsidised investment model to realise large-scale renewable-energy infrastructure projects. Conversely, the low price of oil makes it more challenging for cost-intensive methods of fossil fuel extraction such as shale to be feasible – creating more of an opportunity for alternative production methods than before.
As solar photovoltaic (PV) cells become a viable option to conventional energy sources, the UAE is emerging as a leader in increasing investments in clean energy and reducing carbon emissions and greenhouse gases.
What is also clear here in the UAE is that there is a real commitment and determination to make sure that clean energy production is possible and will work. It is the first country in the region to set tangible renewable energy targets, and Dubai has recently increased its target for renewable energy in the overall energy mix by 2030 to 25 per cent from 15 per cent.
The UAE Vision 2021 National Agenda highlighted how sustainable development is essential for social and economic progress, by focusing on improving air quality, preserving water resources, decreasing solid waste and implementing a green growth plan. In practical terms this means there will be a requirement for skilled people, for increasingly locally driven innovation and for expertise that will enhance and strengthen the energy business in the country at all levels.
Sustainability drivers include energy efficiency, compliance with regulatory and corporate social responsibility policies, waste and water management, and emissions reductions.
These measures are already showing results. The 2015 KPMG Lower Gulf Sustainability Report showed that many companies in the UAE are already aligning their strategy with the sustainability agenda outlined in UAE Vision 2021.
Abu Dhabi is also home to the International Renewable Energy Agency (Irena) and Masdar City, while Dubai has the Mohammed bin Rashid Al Maktoum Solar Park.
One of the country’s high-profile solar power initiatives is the Masdar-sponsored Solar Impulse, the flying laboratory that showcased 12 years’ worth of R&D on clean technologies. Solar Impulse generated tremendous global attention last year when it started the first round-the-world flight from Abu Dhabi to demonstrate how clean energies can go a long way to contribute to a green and sustainable global economy.
Dubai Electricity and Water Authority (Dewa), which serves more than 725,000 customers in Dubai, has earmarked sustainability as one of its key focus areas and is using its extensive infrastructure and network to complement federal development plans for a sustainable UAE economy.
So it seems that there is a strong and positive environment for the continued and stronger development of solar power resources. The cost of solar panels and associated technology have fallen significantly in recent years and they are expected to continue to become more affordable. There are still some challenges to overcome, specifically storing power generated during the daytime. R&D initiatives to address battery storage are gaining momentum, but it will take some time before solar PV and battery storage can compete with conventional power.
With more than 300 days of abundant sunshine every year in the UAE and improved technology and storage options, increasing solar power’s share of the energy mix should be attainable. Oil and gas that is not burnt to generate electricity in the meantime can be sold or converted into value-added products to increase the national income.
Since clean energy sources also minimise adverse health effects, the benefits of switching to these sources extend beyond sustainable environmental development by reducing the long-term social costs of the government and helping global economies as a whole.
Andrew Korn is audit partner and power and utilities sector leader for KPMG Lower Gulf, based in Abu Dhabi