UAE to reduce dependence on fossil fuel
Published: 17 January 2020 - Carly Wills
The Federal Electricity and Water Authority (FEWA) of the United Arab Emirates (UAE) has invited expressions of interest (EOI) for the development of a 500 megawatt (MW) solar photovoltaic (PV) power plant in the emirate of Umm Al Quwain - the smallest and least populated emirate in the UAE.
This will reduce its dependence on fossil fuel and diversify its economy, which is based on tourism, hospitality, fisheries and trading, says GlobalData.
The PV project will be built on a design, build, finance and operate (DBFO) model under the Independent Power Producer (IPP) framework. The project will be owned 60 per cent by FEWA and the government of Umm Al Quwain, while the selected developer or consortium will own the remaining 40 per cent. The special purpose vehicle (SPV) company will enter into a long-term power purchase agreement (PPA) with the FEWA.
Tarun Bhutani, project manager at GlobalData, commented: “Historically, oil and gas has driven the UAE’s economy, however, the country aims to diversify its energy mix and achieve sustainable energy infrastructure to sustain economic progress with minimum environmental impact. The UAE Energy Strategy 2050 targets are 44 per cent renewable energy; 38 per cent gas; 12 per cent clean goal and six per cent nuclear. These targets will balance its economic needs and climate goals.”
The UAE estimates that it will have to invest AED600bn (approximately USD163bn) by 2050 to achieve the power mix with the growing energy demand. Solar PV is set to lead the transformation to renewable power generation, as the UAE has abundant solar radiation, and generation cost has decreased substantially in recent years.
According to GlobalData, the share of solar PV generation capacity in the UAE’s overall power capacity will increase from 3.5 per cent in 2019 to 9.6 per cent in 2025, and 14.8 per cent in 2030, with an estimated cumulative capacity of ten gigawatt (GW). Meanwhile, gas power generation capacity contribution is estimated to fall to 66 per cent in 2030 from 93 per cent in 2019, marking the shift in the energy mix.
Bhutani concludes: “Most of the solar power facilities have been planned or operational in the emirates of Abu Dhabi and Dubai till date. The tender marks the importance of diversifying solar installation within UAE emirates to create sustainable power generation infrastructure.”