August 10, 2018
Solar construction is gaining traction in Saudi Arabia and the UAE [pictured here: Dubai’s MBR Solar Park].
March 2018 saw Vice President and Prime Minster of the UAE, and Ruler of Dubai, HH Mohammed bin Rashid Al Maktoum, breaking ground on the fourth phase of the biggest concentrated solar power (CSP) project in the world. The Mohammed bin Rashid Maktoum Solar Park is undeniably at the heart of the UAE’s march towards a renewable energy future.
Saudi Arabia has also ramped up its efforts to bolster its solar infrastructure. The recent formation of its Ministry of Energy, Industry, and Mineral Resources, tasked with taking charge of the country’s promising renewable programme, is indicative of Saudi Arabia’s willingness to embrace renewable energy.
March 2018 also saw Saudi’s Public Investment Fund sign a memorandum of understanding with Japanese conglomerate, Softbank, to develop the Solar Power Project 2030. This solar park megaproject will have a renewable energy capacity, through two solar plants, of 150GW and 200GW respectively by 2030, making it the region’s, and the world’s, largest solar energy project when it is operational.
With these projects in mind, both countries have been cited as leading the Middle East’s efforts to diversify its energy producing capabilities – particularly against the backdrop of increasing energy requirements, regional mandates to reduce their greenhouse gas emissions, and wider efforts, particularly in Saudi, to diversify local economies away from oil.
Speaking to Construction Week about the appetite for renewables in the Middle East, Raji Hattar, chief sustainability officer at Dubai-based logistics firm Aramex, says.
“It’s not really a question of whether countries in the region can reach their renewable energy targets – they have to,” Hattar explains.
“Not only have they committed themselves to these targets themselves, but they also have to adhere to emission-reduction targets at an international level as per the ratification of The Paris Agreement, which came into effect November 2016.”
A report in May by the Arab Petroleum Investments Corporation (APICORP) found that MENA’s major energy-importing companies are working to improve local energy legislation and infrastructure. However, large oil reserves and cheap extraction costs mean that hydrocarbons continue to meet rising demand in oil-rich countries such as Kuwait and Algeria.
Monitor Deloitte Middle East’s managing partner, Bart Cornelissen, believes the UAE is leading the region’s push in solar energy, mainly because of the country’s mature, stable, and diverse financial markets, meaning opportunities to finance solar energy projects are more “widely available”.
Hattar also believes that the UAE’s solar energy market is “moving faster now than it ever has done before”, partly because the procedures, rules, and regulations governing entry into the sector are fairly straightforward and non-restrictive.
Dubai Electricity and Water Authority’s (DEWA) CSP project is one of the UAE’s major solar success stories, with work on the development awarded to an ACWA Power-led consortium in 2017.
The plant uses a combination of a central tower and parabolic trough technologies to collect energy from the sun, store it in molten salt, and produce steam as required to generate electricity during the day and throughout the night. Supporting the Dubai Clean Energy Strategy 2050 to increase the share of clean energy in Dubai to 25%, the project is expected to provide an annual CO², saving of 2.4 million tonnes.
Interest in the project is not limited to the immediate region. China’s Silk Road Fund pledged its support for the megaproject in July this year, acquiring a 24% equity interest to become a joint investor in the development, alongside DEWA.
The success of Saudi’s Solar Power Project 2030 will also be defined in part, Cornelissen says, by how well the kingdom’s government is able to bring together numerous stakeholders within a consortium, such as the ACWA Power-led one that is working on the DEWA CSP project.
“Saudi Arabia has never attempted something of this scale using public financing,” he says. “We’re talking about a 200GW solar field, which is by far the largest solar field in the region.
“The Saudi government now has to properly look into how it will secure financing, how to develop the field, and how to operate and maintain a huge project like this, as well as whether it will be able to link the park to the country’s existing and planned energy infrastructure.”
With the scale of this planned field in mind, building a consortium of stakeholders is the only way to ensure project costs are kept to a minimum while also ensuring the field produces the cheapest possible renewable energy.
Cornelissen believe this is the major challenge facing the kingdom as it approaches the solar megaproject: “A consortia of this size will involve a complex web of stakeholders, all of which will enter the project with different priorities and strategic objectives. Aligning all these goals will be very difficult.”
This is not to say this can’t be achieved, but experience has shown that it can be very difficult – even more so with a project of this scale, he adds: “Saudi could learn a lot, for example, from how some countries in Northern Europe have approached consortia building when constructing their wind farms. Denmark, The Netherlands, and Germany have been very successful in making sure all stakeholders come together successfully.”