Abu Dhabi, UAEFriday 24 May 2019

There’s a great deal of private sector appetite for renewable energy

While the Middle East is a relative newcomer to renewable energy, the region punches well above its weight, writes Ahmed S Nada

Solar panels. Bloomberg
Solar panels. Bloomberg

One of the most significant messages to come out of the 23rd Conference of Parties (Cop23) in Bonn is that the private sector will play a critical role in achieving global carbon reduction targets; a fact recently underscored by Dr Thani Al Zeyoudi, the UAE’s Minister of Climate Change and Environment.

If the success of the group of influential companies that have committed to going 100 per cent renewable is anything to go by, there’s a great deal of private sector appetite for clean energy solutions.

While the Middle East is a relative newcomer to renewable energy, the region punches well above its weight, setting new global benchmarks in cost and scale in less than three years. The region’s emphasis on utility-scale solar is the right approach for any market that is seeking to rapidly ramp-up its renewables portfolio. Significantly, the growth in renewables in the region is driven as much by economics as it is by climate policy.

As the renewable energy market in the Middle East starts to mature, regulators and utilities must also consider the importance of nurturing a viable corporate renewable energy segment. In fact, countries like the United Arab Emirates, with its agile decision-making processes and business-friendly, forward-thinking government, have a unique opportunity to once again set the pace for other nations to follow.

How? By introducing three game-changing schemes.

The first is the introduction of "wheeling policies" as an enabler of corporate power purchase agreements.

Wheeling allows independent power producers to offset the electricity used by their customers from the grid through a power purchase agreement, without being constrained by location. For instance, a solar power plant located near Al Ain in Abu Dhabi could feasibly supply the energy needs of an energy-intensive manufacturing facility in Kizad, in exchange for a wheeling fee, which creates a new revenue source for the grid operator.

The second is the launch of green tariffs. These tariffs allow companies to power their businesses using clean energy in partnership with a local utility. Green tariffs allow the direct procurement of renewable energy from the utility based on special rates, which either can be subscription-based or structured to allow the corporate customer to lower its rate by sharing in the fixed system cost.

Finally, as the Middle East’s renewable energy capacity begins to scale-up, utilities must follow the Dubai Electricity and Water Authority's lead in securing and trading renewable energy certificates.

Instituting these three programmes will help give corporate renewables the stimulus it needs to gain a foothold in the region and to justify investments. They will also present a true win-win situation for governments, utilities and the private sector, adding that critical element required to strengthen the Middle East’s commitment to its carbon reduction targets under the Paris agreement.

Ahmed S Nada is the Vice President and Region Executive of First Solar in the Middle East, and the President of the Middle East Solar Industry Association.

Updated: January 17, 2018 06:32 PM