Wednesday, Jun 09, 2010
(Adds details, background.)
By Nour Malas
Of ZAWYA DOW JONES
ABU DHABI (Zawya Dow Jones)--Abu Dhabi government-owned Masdar, the renewable energy initiative, Wednesday appointed France's Total S.A. (TOT) and Spain's Abengoa Solar (ABG.MC) as partners on a $600 million concentrated solar power, or CSP, project in the Gulf emirate, the world's largest.
Shams 1, which will have an approximate capacity of 100 megawatts, will be developed on a build-own-operate basis in a joint venture led by Masdar, which owns 60% of the project, while Total and Abengoa each hold a 20% share, the companies said in a joint press release.
Construction on the plant--a flagship project of Masdar's that has been delayed due to the global financial crisis--will begin in the third quarter of this year and will take about two years to complete, the statement said.
"We expect construction to start in a few weeks," Mohamed Al Zaabi, project manager for Shams 1, said in a presentation in Abu Dhabi. Commercial operations are due to start in the third quarter of 2012, he added.
The CSP plant will extend over a 2.5-square kilometer area, situated at Madinat Zayed about 120 kilometers southwest of Abu Dhabi, the capital of the United Arab Emirates. It will have enough capacity to supply 20,000 households.
Abu Dhabi launched Masdar in April 2006 to establish the sheikdom as a hub for renewable energy and green technologies at a time of rising concerns over global warming fueled by increased consumption of hydrocarbons. The emirate, the largest of seven that make up the U.A.E. and producer of almost all the country's crude oil, has a plan to generate 7% of its power capacity from renewables.
Shams 1 will be the first utility-scale, commercial solar power project in the U.A.E., and the first CSP plant to be registered under the United Nations' Clean Development Mechanism and is eligible for carbon credits, according to the statement. It will displace about 175,000 tons of carbon dioxide per year, the equivalent of taking 15,000 cars off Abu Dhabi's roads.
Total and Abengoa will invest in the project alongside Masdar according to their respective equity shares, with the plan to borrow via project financing, Masdar Chief Executive Officer Sultan Al Jaber said.
"We always try to leverage on project financing to raise funding," he said, adding that specific borrowing plans have not been outlined yet.
"We are going to start construction in July with our own financing resources, and we will be leveraging in the future," Santiago Seage, president of Abengoa Solar, told reporters.
The solar plant is being built under the independent water and power producer, or IWPP, model that Abu Dhabi already uses for power generation and water desalination.
Under the model, the project company will sell power to state utility Abu Dhabi Water and Electricity Co., or Adwec, under a power purchase agreement.
Abu Dhabi's government will pay a "green tariff" to compensate Adwec for the difference between average domestic power generation cost and generation cost for the CSP project, said Nick Carter, director general of Abu Dhabi's regulation and supervision bureau.
"It's a way for the government to compensate the cost of renewable energy," he said, adding that the cost gap is expected to narrow over the next 10 to 15 years.
Masdar, which is also building a carbon-neutral city on the outskirts of Abu Dhabi, has had to review its project plans as the global financial crisis also hit the oil-rich emirate.
Masdar in February called itself a work in progress "by definition" and said it would adjust its project plans as renewable technologies evolve.
-By Nour Malas, Dow Jones Newswires, +97150 2890223; nour.malas@dowjones.com
Copyright (c) 2010 Dow Jones & Co.
(END) Dow Jones Newswires
09-06-10 1026GMT
