The Government and power companies in the UAE need to put more effort into tapping the tremendous potential for solar energy.
We have lots of sun, so let us power ahead
The Government and power companies in the UAE need to put more effort into tapping the tremendous potential for solar energy in the country, writes Nader Jandaghi The UAE is blessed with an abundance of sunshine waiting to be harvested. Yet last year almost 90 per of all global solar photovoltaic installations were in the US and, particularly, Europe. The Europeans seem to have cracked the code for adopting solar energy, while some analysts think the US may soon match under the leadership of Barack Obama, the US president, and the initiatives undertaken by many US state governments.
Here in the UAE there are some promising signs. Dubai Municipality has been working on "green" building standards, and Abu Dhabi has put the UAE on the map with its Masdar initiative as well as its goal to reach 7 per cent of its total power production from renewable sources by 2020. With the news that the International Renewable Energy Agency (IRENA) will have its headquarters in Abu Dhabi, what can we do better to promote more adoption of clean solar energy in the UAE?
First, the UAE government needs to remove the heavy subsidies that it provides for the traditional grid electricity. As an example of the disparity in grid pricing, a regular business consumer in Dubai pays between 20 fils (US$0.054) and 33 fils per kilowatt-hour (kWh), depending on consumption, while in California a business consumer pays between 36 fils and Dh1.35 per kWh with tiered peak pricing.
In Europe, as well, most of the impetus towards renewable energy has been higher existing electricity prices, coupled with the European public's awareness and demand for renewables. This has led European governments to recognise a higher social cost for "dirty" electricity generation, with the adoption of the Kyoto climate agreement. At the same time as removing subsidies for existing power generation, the inherent value of clean solar energy needs to be quantified; along with the fact that solar generates electricity during the peak demand times in the middle of the day, which has an inherently higher value to utilities and the consumer. The Dubai Electricity and Water Authority (DEWA) has announced an awareness campaign to educate the public on the high cost of generation during the peak consumption hours of the day, from noon to 5pm.
Awareness is a good start, but DEWA should put in place an actual fee surcharge for power consumed during these hours. The result of higher true grid pricing and continual decreases in the cost of solar energy will eventually lead us to grid parity here in the Emirates. Second, our local utilities need to loosen their grip on power generation. Standards for interconnection need to be put in place so that businesses and homeowners can safely connect to and feed the grid. This type of distributed on-grid generation has been the cornerstone of solar adoption in the US; in fact only about 30 per cent of the solar PV projects last year came from centralised utility power plants, while the rest came from residences and businesses.
Businesses and homeowners should be paid or credited for inputting clean power into the grid. Much like the big centralised mainframe computers gave way to distributed computing power with personal computers, a similar fundamental paradigm shift needs to happen in the UAE to disseminate solar electricity generation and empower business and homeowners. This concept of generating the solar electricity at the point of consumption within population centres has been very successful and proven in Europe and the US. Feed-in-tariffs as in Europe, or tax credits and rebates as in the US, are among the many policy options for recognising these benefits
Third, the local financing institutions and municipalities need to become more comfortable with solar energy and offer tools for businesses and homeowners to adopt solar generation. The recent growth in solar power in the US is mainly attributed to the power purchase agreement (PPA) model. Previously a business had to commit a heavy up-front capital investment in the solar array installation, whereas the PPA model allows for zero initial capital investment.
Businesses lease their rooftop space to a solar integrator, a company that engineers, designs, installs and maintains the solar array. The business then pays for only the kilowatt-hours that are consumed on-site. An emerging model pioneered by the city of Berkeley in California for residential installations has been for cities to loan homeowners the funds to install solar units and allow them to repay the loan through a surcharge on their property tax bills. These same models need to be understood and implemented by financial institutions and municipalities in order to provide an attractive financial value proposition to homeowners and businesses.
Fourth, it is important to have the Federal Government commit to a long-term plan and goal for solar adoption. Abu Dhabi has started this with its goal of 7 per cent renewables by 2020, and Dubai Municipality's green building standards help. But these plans need to be adopted federally, not just locally at only one emirate. Compare this to China's goal of 15 per cent green energy by 2020, Europe's goal of 20 per cent by 2020, and, even more aggressive, California's goal of 20 per cent by next year, which may be increased to 30 per cent by 2020.
These overall renewable goals can be enhanced with specific targets for solar energy, such as the solar carve-out within the renewable standard that has been adopted by New Jersey and Nevada, or the goal of 3000 megawatts of solar power adopted by California. These targets also need to have a clear implementation plan and a specific government body to oversee its administration. The progress needs to be transparent so that all public and private entities are able to monitor it. In addition, of course, without long-term funding approved ahead of time the goals will never be met.
Finally it is imperative to keep educating the public on the benefits of clean solar energy generation and sustainability. This is the trump card for renewable energy, so that the public continues to pressure our government and to demand action. Already the UAE has started getting the public involved, for example the highly publicised Wipe out Waste campaign as well as events sponsored by Friends of the Environment.
The UAE has a tremendous amount of solar resource: we need to remove barriers and commit to harness this energy to live up to the mantle of IRENA headquarters. Nader Jandaghi is the Middle East director of Suntech Power, the largest manufacturer of solar panels in the world