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Alan Mammoser

Alan Mammoser

Alan Mammoser writes about energy, environment, cities, infrastructure and planning. He writes the weblog, www.warmearth.us

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The 2 Energy Giants Reshaping The Middle East

Countries of the Middle East and North Africa (MENA), which today are powered mostly by fossil fuels, are now implementing far-reaching renewable energy programs. Saudi Arabia has a target to achieve 59GW of renewables by 2030. The UAE has set a national goal to gain 44% of its energy from renewable sources, mainly solar, by 2050. Egypt, Morocco and other countries also have ambitious goals. They are quite ambitious, considering that the Gulf countries’ share of renewable electricity capacity is less than 1 percent today.

Two regional companies are leading the way, gradually building the renewable energy framework to power the future.

Riyadh-based ACWA Power began in 2004 building combined-cycle power and water desalination plants. It later expanded into solar and wind power generation and now approximately 22% of its assets are in renewables. The group, which is owned by a combination of Saudi-based investors and public funds, has offices in 11 countries. It had net operating income of approximately $420 million in 2017.

Masdar, or Abu Dhabi Future Energy Company, was established in 2006 as a wholly owned subsidiary of the Abu Dhabi government’s Mubadala Investment Company. Its Masdar Clean Energy division is a major developer of renewable energy projects in the MENA region, while its investments extend to projects in Europe, the Caribbean and Pacific Islands.

While the company does not publically disclose its financial results, its parent Mubadala states that it has over $1.7 billion of equity invested across a portfolio of renewable energy projects, which have a total value of $6.4 billion. Masdar Clean Energy employs about 80 personnel at its offices in the experimental sustainable development Masdar City. Site work is performed by qualified contractors in the various countries. Related: The Gas Flaring Crisis In The U.S. Oil Patch

Building a record-breaking solar park project-by-project

Both companies have played major roles in developing one of the region’s premier renewable energy projects: the Mohammed bin Rashid Al Maktoum Solar Park (aka MBR Solar Park), an enormous facility in the desert southeast of Dubai, which is being developed in stages under the independent power producer (IPP) model. Planned to provide 5GW of electric power at build-out in 2030, it has been the scene of record-setting low bidding for utility scale solar power in recent years.

It was in 2015 that an ACWA-led consortium broke records in bidding for MBR Phase 2, agreeing to deliver electricity to the Dubai Electricity and Water Authority (DEWA) for 5.84 cents / kWh. That was for a 200MW solar photovoltaic (PV) installation that became operational in 2017.

A year later in 2016 a Masdar-led consortium broke records again with a winning bid to deliver electricity for 2.99 cents / kWh. That was for MBR Phase 3, consisting of an 800MW solar PV installation featuring robotic cleaning and solar tracking technology. Much of this phase, developed with France’s EDF Energies Nouvelles, is now in operation and the rest is scheduled to be completed next year.

ACWA came back in 2017 to win MBR Solar Park’s phase 4. Leading a consortium with Shanghai Power, it will build a 950MW hybrid CSP/PV facility that includes 700MW of concentrated solar power (CSP), combining a 600MW parabolic basin complex and a 100MW solar tower. This project, called Noor Energy 1, breaks world records for size of a CSP facility and for the 260 meter height of the solar tower. It is scheduled to enter service late next year.

Masdar (and possibly ACWA) is now bidding on MBR Solar Park’s Phase 5, a 900MW photovoltaic facility that was tendered by DEWA last month. When finished, this phase will put the big solar park at the halfway point to its build-out and well on the path to completion by 2030, when it could provide 25% of Dubai’s power requirement.

Leading the way in KSA

The two companies are also active in the stiff competition to build Saudi Arabia’s small but quickly expanding renewable energy infrastructure. Masdar, in consortium with EDF Renewables, is now approaching financial close on the 400MW Dumat Al Jandal wind farm, which will supply electricity for 2.3 cents / kWh, a record low tariff. It will deploy Vestas wind turbines. Meanwhile, ACWA is developing the Kingdom’s first big utility-scale solar facility, the 300MW PV plant at Sakaka.

Both are now bidding on more Saudi projects, as the Kingdom’s National Renewable Energy Program gears up to produce 60GW of renewable power by 2030. For its part, Masdar is currently bidding on four Saudi projects that will generate a total of 1.4GW of electricity: Al Faisaliah Solar PV (600MW), Jeddah Solar PV (300MW), Rabigh Solar PV (300MW), and Qurayyat Solar PV (200MW).

Yousif Al Ali, Acting Executive Director of Masdar Clean Energy, thinks there is a good business case for renewable energy in Saudi Arabia, even as technology advances and auctioning have driven down its price.

“Saudi Arabia has a very ambitious program and good financing to produce low cost electricity,” he says. “What will make the difference in winning projects now are the conditions,” he says, referring to the cost of site preparation.

There is need to flatten the dunes for huge sites like MBR Phase 3 that covers 16 square kilometers. “In the ‘old days’ it was not so critical if your site costs were 5% higher,” he continues. “But that’s not true now because, with very low prices, it becomes a big job to move sand.”

Masdar on the move

“We are technology agnostic,” Al Ali says. “We don’t hesitate to offer new technologies for the projects we bid on.”

Masdar gained notoriety early on for its development of concentrated solar power plants. It entered a joint venture with Spain’s Sener to build the Gemasolar and Valle 1 and 2 plants, now producing 120MW of power in southern Spain. Another high profile project was Shams 1, a 100MW CSP facility in Abu Dhabi’s western desert inaugurated in 2013.

Just last month, Masdar in a consortium with EDF won a tender to develop an 800MW Hybrid Plant (CSP trough plus PV), the first phase of the Noor Midelt project in Morocco. Noor Midelt 1, to be built in the country’s central Atlas Mountains area, is part of Morocco’s ambitious Noor Solar Plan.

While bidding on big solar projects in Saudi Arabia and Morocco, the company continues developing and investing in a diverse array of renewable energy projects worldwide.

In the Middle East, it is constructing the first commercial waste-to-energy plant in the Emirate of Sharjah; a 50MW wind farm in Dhofar, Oman; and the 200MW Baynouna Solar Energy Project, the largest single solar energy project in Jordan. The company developed a CO2 capture and sequestration process with injection for oil recovery for the Abu Dhabi National Oil Company (Adnoc) in 2016.

In Europe, the company is developing a 158MW utility-scale wind farm in Serbia. It has a 20% share in the enormous 630MW London Array offshore wind farm that has been operational since 2012, and a 25% share in the Hywind (Scotland) offshore project that features the world's first commercial-scale floating offshore wind farm. Related: OPEC’s Struggle To Avoid $40 Oil

Masdar is exploring two solar projects in Ethiopia in cooperation with the International Finance Corporation of the World Bank. And, in the South Pacific, its Special Projects Unit is delivering solar, wind and clean water projects for 11 island nations with grant funding from the Abu Dhabi Fund for Development.

ACWA active across the region and beyond

ACWA Power has been quite active in Morocco, taking a leading role in development of Noor Solar Plan sites. It led development of the NOOR PV I project, which comprises a total 135 MW at three sites near Ouarzazate. And, with Sener and other consortium partners, it built three projects including: NOORo I CSP IPP with a capacity of 160MW with three hours of thermal energy storage (to deliver power at the evening peak times); NOORo II which features parabolic trough CSP technology with a capacity of 200 MW and 7 hours of storage; and, NOORo III with a CSP tower with a capacity of 150 MW and 7 hours of storage.

ACWA is now developing Noor IV, that will produce 176MW of solar power at plants to be constructed at Ouarzazate, Laayoune and Boujdour. The Ouarzazate Solar Complex, in south-central Morocco, is to become a 500 MW solar park that incorporates several utility-scale solar power plants, as planned by the Moroccan Agency for Solar Energy (MASEN).

ACWA also has a controlling position in the 120 MW Khalladi Wind Farm near Tangiers in northern Morocco. In Egypt, it is developing three solar photovoltaic power plants with an aggregate capacity of 165.5 MW, located in the Aswan Province at Benban.

In Jordan, the company built the Mafraq PV project, a 50 MW solar PV plant located within the King Hussein Bin Talal Development Area near the city of Al Mafraq north of Amman. It is now developing the Risha solar PV project, a 50 MW solar plant located 300 km east of Amman.

In South Africa, the company has invested in the 100MW Redstone CSP plant, with 12 hours of energy storage to deliver a stable electricity supply well after the sun has set. It has also participated in the development of a large solar project in Bulgaria and is leading the development of another in Vietnam. 

By Alan Mammoser for Oilprice.com

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  • Mamdouh Salameh on May 18 2019 said:
    Two countries in the Middle East, Saudi Arabia and the UAE are leading the diversification of the Middle Eastern economies. And two innovative regional companies, namely Saudi company ACWA Power and UAE’s Masdar are leading the renewable energy revolution in the Middle East.

    Abu Dhabi’s Economic Vision 2030, Dubai Strategic Plan and Saudi Vision 2030 are leading the drive towards diversification.

    Diversification for Saudi Arabia, UAE and other GCC countries is not a luxury but a necessity. It is high time that these countries rid themselves from almost total dependence on oil revenues and the impact of oil price volatility on their economies.

    A major aspect of diversification is intensive investment in solar and nuclear energy for electricity generation and also for replacing oil with solar power in water desalination plants throughout the Gulf region. Such measures have economic and environmental benefits in prolonging the longevity of the oil wealth and also being friendly to the environment.

    Countries of the Middle East and North Africa (MENA), which today are powered mostly by fossil fuels, are now implementing far-reaching renewable energy programmes. Saudi Arabia has a target to achieve 59 GW of renewables by 2030. The UAE has set a national goal to gain 44% of its energy from renewable sources, mainly solar, by 2050.

    Both ACWA Power and Masdar have played major roles in developing one of the region’s premier renewable energy projects: the Mohammed bin Rashid Al Maktoum Solar Park (aka MBR Solar Park), an enormous facility in the desert southeast of Dubai planned to provide 5 GW of electric power in 2030.

    The two companies are also active in the stiff competition to build Saudi Arabia’s small but quickly expanding renewable energy infrastructure. Both are now bidding on more Saudi projects, as the Kingdom’s National Renewable Energy Programme gears up to produce 60 GW of renewable power by 2030.

    As part of its diversification policy, the UAE has also made great progress in installing new, sustainable methods of generating electricity. This is evidenced by various solar energy initiatives at Masdar City and by other renewable energy developments around the country.

    Rising from the desert outside the capital Abu Dhabi, Masdar city is laying the groundwork for when the UAE’s oil wells run dry. The Masdar Initiative has four key elements:

    1- Support, demonstration, commercialization and adoption of sustainable energy technologies.
    2- The Masdar Institute of Science and Technology with graduate programmes in renewable energy and sustainability.
    3- A development company focused on the commercialization of emissions reduction, and Clean Development Mechanism solutions as provided by the Kyoto Protocol.
    4- A Special Economic Zone to host institutions investing in renewable energy technologies and products.

    The greatest threat to the Saudi economy comes from the steeply-rising domestic energy consumption for power generation, water desalination, costly and wasteful energy subsidies and a lack of diversification.

    It is estimated that Saudi Arabia currently uses up to 28% or 2.8 million barrels of oil a day (mbd) to power its 27 desalination plants and generate electricity.

    This means that the Kingdom will have to cut its domestic oil consumption drastically or replace oil by nuclear power and solar energy in electricity generation and water desalination. Failing to do either would result in its relegation to a minor crude oil exporter by 2025 or ceasing to remain oil exporter altogether by 2030.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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