More than $5 billion of solar energy projects have been unveiled in two Gulf States over the past week, as oil-rich states turn to renewable energy to reduce domestic demand for oil and gas. The emirate of Dubai announced at the World Future Energy Summit that it would construct a $3.2 billion solar park with a potential capacity of 1000MW as part of its plans to reduce energy imports by 30 per cent by 2030, and to cut greenhouse gas emissions. (Dubai is one of the highest emitters of greenhouse gases per capita in the world).
Reuters reported that the solar park will cover an area of 48 square km, with the first 10MW plant to begin operations by the end of 2013. The first stage of the project is being financed by the state’s Supreme Council of Energy, which includes various government entities such as the Dubai Supply Authority and Dubai Petroleum Establishment, as well as Dubai Aluminum Company and Emirates National Oil Company. A clean energy fund is being considered for financing the rest of the project.
Meanwhile, two European private investment funds – Terra Nex of Switzerland and Germany’s Middle East Best Select (MEBS) – have announced plans to build 400MW of solar PV capacity in Oman, Reuters reports. The $2 billion project includes facilities to manufacture solar panels for domestic consumption and export, and to reduce the country’s reliance on oil and gas. Oman aims to produce 10 per cent of its energy needs from renewable sources by 2020. The two investors plan to invest around $600 million of equity into the project, with the remainder sourced from debt provided by European financial institutions.
The announcements came as a separate study from the Emirates Solar Industry Association found that solar PV is now competitive with fossil fuel in many Middle East and North Africa (MENA) countries. The ESIA report, also presented at the summit, said solar was a better proposition for oil or LNG when the prices for oil topped $80/barrell. It has been estimated that countries such as Saudi Arabia and Kuwait are foregoing an opportunity cost equivalent to 10 per cent of their GDP because of subsidies for using oil in local power plants rather than selling it on the export market.
The ESIA report found that summer demand of about 10.8 GW in the MENA region is met with baseload combined-cycle turbines running on cheap legacy gas and expensive imported liquefied natural gas. But the introduction of 3.5 GW of nominal solar PV capacity changes the optimal generation mix, and means that high cost fuel used in open-cycle turbines at midday can be replaced by solar generation. Even at the current installed cost of solar PV (at $US2.50/w), solar is cheaper than peaking gas plant at gas prices of more than $5/mmBtu, or around $US30 a barrel. Solar is also competitive with baseload solar at $US17/mmBtu, around current LNG prices.
Singer’s fun in the sun
Nashville songwriter and music executive Steve Ivey, an award-winning Nashville songwriter and owner of music publishing and production company IMI, is to partner with Silicon Ranch to build a 30MW solar farm on a family property in Georgia – one of the first large scale solr projects in the heart of the coal-rich south-east corner of the US.
According to Recharge, Ivey developed an interest in solar power after trying to find alternative ways to heat water at his home outside the US country music capital, and decided that an $85 million utility-scale project would make good environmental use of land owned by his grandparents east of Atlanta, and preferable to returning the property to each traditional cotton farming or to housing developers.
“I realized in 2010 that I had a rare triple combination of fairly flat farming land within a belt of good solar radiance, the financial capability to carry the idea forward and a direct connection point into the Georgia Power energy grid,” he says on his project website. “Large projects like mine will help drive down solar panel production costs and make it feasible for the average homeowner to soon have their own solar array on their house or carport and be in control of their own power needs. Not only do I see solar energy as a trend for the future, I see it as the smartest way to source power.”
Wind betters coal in India
Indian wind farm developer Mytrah Energy says energy from wind farms is cheaper than coal-fired electricity because of the rising cost of imported coal.
“With increased reliance on imported coal in India, we believe that our cost of production of electricity is reaching parity, or better than, new thermal capacity being developed,” Mytrah executive director Alastair Cade told Bloomberg in an interview. “We’re producing electricity at around 3.5 rupees per kilowatt-hour at our capital cost, which is either equal to or better than some of the bids that are coming in from new thermal players.”
Bloomberg New Energy Finance estimates that bids from developers in auctions for coal-fired power stations have ranged from $US49 to $US78 a megawatt-hour, while tariffs for wind farms have come in at between $US66 to $US105/MWh. Mytrah, which is backed by Henderson Global Investors, Blackrock Capital Partners and other institutions, plans to install as much as 3000MW of wind capacity in coming years, and expects its first 500MW to be installed by March.
Giles Parkinson is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the former editor of Climate Spectator.