Why is it important to have associations like the ESIA? How does it help shape the solar industry in the MENA region?
It serves the same purpose as organizations like the SEIA in the U.S. or the EPIA in Europe; particularly in this region where there is no formal policy at this time. We have seen a lot of talk about solar projects, but they are more trophy, one-off projects with no apparent pipeline of development to them. Companies that are coming into any new market want to develop a long-term program in that country. It is difficult to do that without a single source for information or a regulatory environment for that yet. There are no clear policy statements like the FITs in the EU and initiatives like renewable energy credits in the U.S. that are driving the solar business development. What the association is meant to do is: develop the industry within the country, create an awareness and educate, help foster the development of local companies and industry and reach out to policy makers and players to help them move the solar program forward to enable a real development.
There are solar plans underway, like the Shams 1 and 2 and the Noor 1. Other countries have also been actively starting, like Morocco. Do you think the pace of development is promising or do you see the potential for faster growth?
The countries in the MENA region are all so different. Unlike the U.S. and Europe, each country has somewhat of a different model. Some countries are wealthier. The problem with projects like Shams and Noor are they are closed projects, run and operated by one entity, in this case Masdar. It doesnt necessarily mean that the government is embracing a policy for solar energy. There is neither a clear framework nor a regulatory, legal structure. An independent company cannot come in and develop easily. You have ADWEA (Abu Dhabi Water & Electricity Authority) who have monopoly in providing power in Abu Dhabi so the concept of distributed power like Shams and Noor runs against that. They are working on agreements but there is no clear law that establishes such solar projects to occur on a regular basis.
An important aspect for the growth of renewable energy is the national grid and its ability to support the generated power. How prepared are the national grids in the MENA countries?
You have the grid within the UAE, which runs in the seven different emirates: the independent operators DEWA(Dubai Electricity and Water Authority), ADWEA and then you have SEWA (Sharjah Electricity Water Authority). In terms of the grid, they have the capacity but perhaps they lack the coordination at this time. The problem in the UAE is that they are such independent entities.
An interesting question would be the acceptance of solar power among the locals who have depended on oil thus far. How has the response been towards solar power from the public?
The general public sees the logic in solar, being in a sun-intensive region. There are, however, urban myths about solar that works against it: it is expensive and the issue of dust on solar modules. This is where the solar associations have to work on educating the public, the institutions and the government.
In the UAE, there are several different economic situations: Abu Dhabi, where 90 plus percent of the oil wealth is and Dubai, where the oil is lesser but energy is significantly subsidized.
Solar has not been embraced in Dubai at this stage but they need to grasp the real cost of energy. When they generate power today, subsidized energy prices apply. More and more oil for export is being consumed domestically and this creates huge opportunity costs. Solar has a longer return on investment term. In a country which looks for very quick returns, three to five years is a very long horizon for them. They need to have projects with more visibility and highlight successes and problems and then you are going to get better results overall.
When do you foresee a proper structure emerging in the region?
Unlike the EU and the U.S., sometimes it comes down to the King saying this is what we have to do. Saudi Arabia has established a smart organization called the King Abdullah City for Atomic and Renewable Energy or K.A.CARE. It is an organization tasked to handle the atomic and renewable policy for Saudi Arabia. This group has been working for about a year now and I expect late this year, early next year, for them to make an announcement on the steps and projects they want to undertake. The same thing has to take place in the UAE. You need someone, like the Crown Prince or the executive council, to come out and say this is what we are going to be doing. Then things will move very fast.
So, thats something we can look forward? The Crown Prince making an announcement soon hopefully?
It is beginning to happen but right now I think the UAE is stalled. They made headlines for Shams and Noor. They do not do much for the overall renewable or solar scheme for the country. They are great reference projects but they are not really creating an industry of companies.
Shams and Noor have one or two companies involved. In the case of Noor, Masdar is the client. Potentially, probably, one company is going to get the 100 megawatt job. 50 percent of that project will have modules supplied by Masdar in Germany.
How is the solar labor force in the MENA region?
There is plenty of manpower. One of the things we are working on with associations is bringing in training for specifics of solar, within utilities and on the side of installers and developers side. I have been speaking to international groups and trying to set up a training and certification program within the GCC region, to get the mid-upper labor force educated in solar. We are trying to make education and training an essential part of what we are doing.