GCC likely to pump $200bn into renewable energy plans |
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The choice of the UAE as the location of the International Renewable Energy Agency (Irena) will provide a strong push to efforts by Gulf and other Arab countries to develop such resources, said officials and analysts.
Although Gulf countries have the biggest conventional hydrocarbon resources, they need to develop other sources to meet a steady growth in domestic consumption and save those resources for future generations.
While they are among the poorest nations in water wealth, the Gulf Co-operation Council (GCC) countries control massive renewable energy potential given their desert nature, which makes them ideal for solar energy generation.
"We are pleased with the selection of the UAE as the venue of Irena... this will give a big push to GCC and Arab efforts to develop renewable energy sources," said Qatar's Minister of Energy and Industry Abdullah bin Hamad Al Attiyah this week.
Besides the growth in their national demand, GCC states also need to cut consumption of crude oil for environmental reasons.
Big potential
Experts believe GCC nations, which control 45 per cent of the world's recoverable oil deposits and a third of the global gas wealth, have the potential to meet their energy need from three main sources - nuclear, sun and wind. Being a desert terrain, the Gulf has an edge over other areas in having longer periods of sunshine, while the wind velocity in the region is also ideal to produce energy from windmills.
Some countries have already taken measures to utilise these sources to generate energy, including building of nuclear plants in the UAE, the construction of a methanol complex in Oman based on palm trees and the establishment of a $7 million (Dh25.6m) centre for the development of renewable energy at the King Fadh Petroleum and Minerals University in Saudi Arabia.
Experts believe regional states will push ahead with such projects despite their high costs, estimating that the six GCC countries could pump about $200 billion into 120 renewable energy projects in the next two decades.
"The global warming issue and the expected depletion of the conventional energy source such as oil and gas is pushing the GCC countries to search for subsidiary energy sources," said Waheeb Al Nasir, Director of Arab Section at the Germany-based International Solar Energy Society (ISES).
"The per capita CO2 in GCC countries is the highest in the world, it is estimated in Qatar at 60 tonne/person annually," he said in a study presented to a recent energy conference by the Organisation of Arab Petroleum Exporting Countries (Oapec)Organisation of Arab Petroleum Exporting Countries (Oapec)
.Solar and wind energy
Nasir said GCC countries have enough solar and wind potential to generate electricity that could meet all their needs without using the oil and gas wealth.
"If the GCC countries allocate 0.5 per cent of their 2.5 million sq km area for the generation of electricity from solar energy and assuming their equipment have a conversion rate of 20 per cent, they can generate enough energy for the year," he said.
"As for wind energy, the average wind velocity in the Gulf is around seven metres per second at 80 metres high. This speed is very suitable to operate windmills economically. As a result, a windmill with a 10-metre diameter and 35 per cent efficiency rate can produce around 24 kw of electricity in the region. Assuming that the GCC countries build 10,000 windmills in four columns stretching about three km from the coastline into the mainland and running 2,209km, they will be able to produce electricity to meet all their needs."
Nasir and other experts believe GCC states need to gradually switch to renewable energy to cut carbon emissions and meet their fast-growing power consumption.
Consumption
Oapec's estimates show that between 2003 and 2007, energy consumption in the UAE grew by at least six per cent annually from about 754,000 barrels of oil equivalent a day boed to about 960,000 boed. In Saudi Arabia, the Arab World's largest energy consumer, demand surged from 1.857 million (boed) in 2003 to 2.65 million boed in 2007.
Demand in Kuwait grew from 441,000 boed to 588,000 boed, while consumption in Qatar surged 425,000 boed to 533,000 boed. It swelled from 241,000 boed to 279,000 boed in Bahrain and from 138,000 boed to 159,000 boed in Oman.
The Oapec study said the projected electricity capacity needed in the GCC by 2010 will require investments of more than $25bn.
Investment
It put investment requirements in Saudi Arabia at about $15bn, while they were estimated at $5.1bn in the UAE and $2.5bn in Kuwait. This will add 20,000 MW to Saudi Arabia's power capacity and around 6,600 MW and 3,400 MW in the UAE and Kuwait respectively.
Investment requirements were estimated at $900m in Bahrain, about $800m in Oman and $600m in Qatar.
"GCC countries are located in an arid zone belt, with about 3,400 hours of sunshine a year. There is little natural water and 100 times more high evaporation rate than other areas. The region is most suited to use solar energy," said Nasir.
His figures show renewable energy, which is generated from natural resources such as sunlight, wind, rain, tides and geothermal heat, has rapidly grown over the past few years as most countries are expanding their reliance on such sources and cutting dependence on conventional energy.
In 2006, about 18 per cent of global energy consumption came from renewables, with 13 per cent coming from traditional biomass, such as wood burning, according to the study. Hydroelectricity was the next largest renewable source, providing three per cent (15 per cent of global electricity generation), followed by solar hot water/heating, which contributed 1.3 per cent, showed the study.
Modern technologies, such as geothermal energy, wind power, solar power, and ocean energy together provided some 0.8 per cent of final energy consumption.
Arab countries
"Gulf countries and other Arab nations are still lagging in renewable energy but they have great potential to embark on such projects. The establishment of Irena and its location in the UAE will give a strong push to regional efforts to embark on such projects," said an Oapec official.
"So far, only three Arab countries are involved in wind energy. They are Egypt (145 MW, Morocco (64 MW) and Tunisia (20 MW). But I think regional countries are gradually become more aware of the importance of relying more on renewable energy, some of them, including the UAE, are planning to build nuclear facilities, while others have plans for solar energy generation."
The expert refered to this week's agreement between the government-owned Saudi Aramco and Japan's Showa Shell to study the feasibility of generating power from the sun using proprietary Showa Shell technology.
The pilot project not only involves the transfer of cutting-edge technology and the exchange of expertise between the two companies but also leverages their existing relationship, as Saudi Aramco, through an affiliate, holds an equity stake in Showa Shell.
As part of the project, Saudi engineers will receive specialised training at Showa Shell's solar energy plant.
Analysts said the UAE's plans to acquire nuclear technology for power generation and other peaceful uses will allow it to save its oil and gas wealth and maximise its income from hydrocarbon exports in the long term.
Nuclear technology
Although it is importing gas from Qatar and is planning to get more supplies from Iran, the UAE could curb any increase in such imports in the future by introducing nuclear technology for power generation, they said.
The nuclear programme, which is expected to be implemented in phases in the long term, could also help offset a steady and rapid increase in oil consumption in the UAE because of growth in most non-oil sectors.
Figures by Oapec, which groups the UAE with nine other Arab oil producers, showed the UAE has the third-largest energy consumption rate in the Arab World after Saudi Arabia and Egypt although it has one of the smallest populations.
"The UAE's massive oil and gas wealth supports the view that it needs to preserve its hydrocarbon wealth for future generations," said an analyst.
In a recent comment, the Abu Dhabi-based Emirates Centre for Strategic Studies and Research (ECSSR), a government think-tank, said the UAE nuclear plans would support its efforts to preserve the hydrocarbon wealth, meet growing domestic energy demand, protect the environment and boost the economy.
"Generating power though nuclear energy is a very viable option commercially, it will effectively contribute to economic development," it said.
"The country's decision to introduce strict regulations for its nuclear programme reflects its keenness to ensure transparency and peaceful use of nuclear power."
IRENA
Reacting to last week's vote by more than 120 countries to support the UAE's bid to host Irena, the ECSSR said it was a victory for all developing nations
"This victory achieved by the UAE is a triumph not only for the country but for the entire Arab World and for all developing nations," it said. "These nations have long been deprived from the presence of a headquarters of any international agency.
"This is the first time that a developing country succeed in wresting agreement to host the headquarters of an international organisation." The centre said it believes the location of Irena in Abu Dhabi would largely boost the organisation after the UAE pledged an initial sum of $136m to finance the group's activities during its founding stage.
"The UAE will be the springboard for that role. The presence of Irena in the UAE constitutes a strong support for this infant agency and this will serve the future of renewable energy worldwide, which means the world has selected the ideal place to host that organisation," it said.
"It is worth mentioning that the UAE has pledged $136m in financial support for Irena until 2015 and will surely offer all types of support and facilities to enable it to achieve all its objectives."
In a statement sent to Emirates Business, Al Nasir said the UAE is the world's third-largest oil exporter but "it wants to place itself at the forefront of developments that may shape the future energy industry, and hosting Irena was part of that plan".
"Housing Irena in Masdar City, a project under way to build a zero carbon city in the desert is fabulous. The Irena headquarters would be ready by 2011," he said.
"At the end, there is no winner or loser in hosting Irena headquarters. Irena is a credit to the planet earth and will be located in zero-emission city in the middle of a desert and financed by oil and gas, which is the sources of all energies in the globe. Sunshine for 22 minutes is enough to power all the energy needs in the planet earth with no pollution and at no running cost."
Research funding
In a recent study, Oapec said plans announced by Saudi Arabia and other Gulf states in 2007 to create a fund to finance research on cleaner energy is a welcome move that should be followed by other producers and consumers.
"The developments being witnessed in the renewable energy sector require some contemplation by Oapec countries, where oil and gas revenues are almost the only source of income. Members also should not ignore the policies of major consumers that have adopted long-term plans to increase their reliance on renewable energy and take more measures to rationalise their consumption of energy, mainly crude oil," said Oapec.
"These consumers have even gone further by announcing that their main objective of encouraging renewable energy is to reduce their dependence on crude oil, mainly from the Middle East, this should constitute an important message to member states that the world will sooner or later stop its reliance on oil as a key source of energy... this in turn should prompt them to intensify their programmes to diversify their economies and lessen reliance on oil sales."
The study said Oapec nations should be encouraged to embark on renewable energy projects but added such programmes must be intended to offset the gradual decline in oil production in some members.
The requirements
GCC power investment needs:
Bahrain - 1,200 MW at an estimated cost of $900 million
Kuwait - 3,400MW at an estimated cost of $2.5 billion
Oman - 1,100MW at an estimated cost of $800m
Qatar - 800MW at an estimated cost of $600m
Saudi Arabia - 20,000 MW at an estimated cost of $15bn
The UAE - 6,600MW at an estimated cost of $5.1bn
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By Nadim Kawach © Emirates Business 24/7 2009
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