Solar and wind are UAE's most competitive energy sources

Solar and wind may now be the cheapest sources of new energy supply in the United Arab Emirates (UAE). A new study estimates US$ 1.9 billion in annual savings by 2030 if UAE can achieve 10 % renewable energy mix.

Marking the Emirates first public comparison of different energy technology costs and potentials, the Renewable Energy Prospects: United Arab Emirates (link is external) report finds the UAE could achieve a 10 % share of renewable energy in its total energy supply – and almost 25 % in the power sector – resulting in energy system savings of US$ 1.9 billion annually by 2030.

The report, released by the UAE Ministry of Foreign Affairs, International Renewable Energy Agency (IRENA), and Masdar Institute of Science and Technology, leverages local resource expertise and earlier UAE energy modeling efforts. To create a portfolio of renewable energy options and their associated costs for the UAE Masdar Institute, researchers localized an IRENA energy model and applied the results.

The report cites sharp declines in renewable energy costs in the UAE, as well as rising costs for natural gas as domestic production declines and the country turns to more expensive imported sources, as the key drivers for renewable energy's financial attractiveness. Solar PV costs, for instance, have fallen by 80 % since 2008, while the cost of new gas supplies in the UAE has grown from under US$ 2.5/MMBtu in 2010 to US$ 6 to 8/MMBtu for domestic production and US$ 10 to 18/MMBtu for imports today. The report estimates that solar, wind, and waste-to-energy are preferable for power generation when new gas is above US$ 8/MMBtu – making them immediately competitive in the UAE, where natural gas supplies almost 100 % of power.

The report also reveals that solar costs are poised to decrease even further. In January, the tender for the second phase of Mohammed bin Rashid Solar Park in Dubai was awarded to the lowest bidder for fewer than 6 ct/kWh for a 25-year fixed contract. This is the lowest solar price ever achieved worldwide.

"This report is an eye-opener," said Dr. Fred Moavenzadeh, President of Masdar Institute, Abu Dhabi’s graduate-level research university focused on advanced energy and sustainable technologies. "It provides policymakers and investors with an objective cost baseline, making the clear case that renewables, and especially solar, will have a much larger role sooner than we ever expected in the UAE and Middle East."

The report notes that solar and wind are still challenged by intermittency, which will require natural gas to fill gaps in output. However, the savings from generating solar power during the daytime, instead of consuming gas, are so great that they could justify 17,500 MW of PV in the UAE by 2030, up from around 40 MW today.

Katharina Garus