The biggest challenges facing the development of the solar market in the United Arab Emirates are, according to market experts, the lack of a feed-in tariff and an inadequate legal framework. This is the conclusion of a new study on the barriers to the widespread use of renewable energy, in particular solar energy, in the United Arab Emirates.
The study was carried out by the Emirates Solar Industry Association (ESIA), together with PricewaterhouseCoopers. The results were presented for the first time at the "Solar Industry Summit – Middle East 2012", held on 14th November 2012 in Dubai in the United Arab Emirates. The survey included 20 questions about the solar industry in the United Arab Emirates.
Experts, members of the solar industry and local players in the solar market were questioned on topics including the technology, financing and political conditions. The study was supported by the Prime Minister’s Office. Hannes Reinisch of PricewaterhouseCoopers stated that 84 percent of respondents were of the opinion that the public sector will be a key driver for solar projects in the United Arab Emirates. 89 percent believe that feed-in tariffs would be the best incentive scheme for encouraging the solar industry in the region. Andrea Bodenhagen of China Sunergy considers that the solar market in the Middle East will develop into a significant market within the next five years.
"Up to then at least 1 gigawatt per year should be added across the Middle East. Saudi Arabia needs to cut its own oil consumption soon, and the more experimental and adventurous nations like the United Arab Emirates could prepare the way," said the marketing director. In less wealthy or more classical energy-importing countries, such as Jordan, this change might take somewhat longer, she said. Proposals for creating a significant solar market in the Gulf States were outlined by Dr Michael Kramer of Taylor Wessing.
He explained the pros and cons of possible incentive schemes. Large, open space plants in the megawatt range are currently too expensive for all but state-owned investors. This is hindering market growth. He went on to say that the market is still growing too slowly to allow a really strong local solar industry to become established, for example with commercially viable local manufacturing facilities. The Gulf States are characterized by very good solar irradiation and stable grid networks. Electricity is heavily subsidized and power consumption is high. Currently there are few private investors.
Kramer recommends a subsidy for power that is used privately, without being fed into the grid. This way to the arresting the high power consumption, which currently places little burden on the consumer, but which is connected with large opportunity costs on the state’s side. Dr Alper Çelebi of Siemens gave a talk on internal rate of return (IRR) and the factors that influence it most. He also explained that although Siemens has decided to pull out of solar energy, it is still committed to this field in the Middle East.
Matthias Schwärzle from the organizers of the conference, Solarpraxis, presented information about the use of photovoltaics in industry and commerce. An IRR of up to 20 percent is possible within two to three years here. In other countries of the Middle East and North Africa other arguments still speak for the installation of a private plant. These include poor and unreliable grid networks (with all the associated costs) as a reason for trade and industry to explore alternatives to the current power supply infrastructure.
The depth of interest in the Middle East solar market was demonstrated by the more than 100 participants at the event. The study United Arab Emirates Solar Survey 2012 is available from Sarah Fitzgerald, Emirates Solar Industries Association, e-mail: firstname.lastname@example.org