It may be famous for its vast oil and gas wealth, but the United Arab Emirates (UAE) could enhance its competitiveness by increasingly relying on lower-cost wind and solar power.
That is the "eye-opening" conclusion of a major new report from the UAE-based International Renewable Energy Agency (IRENA), the Masdar Institute of Science and Technology, and the country's Ministry of Foreign Affairs. It calculates that sharp reductions in the cost of renewables mean that sourcing 10 per cent of the country's energy from clean sources by 2030 could save $1.9bn (£1.27bn) a year.
The report argues the country's plans to source a tenth of its energy from renewables, including sourcing almost quarter of its power from renewables, will save money compared with a continued reliance on fossil fuels.
"Renewables have decisively emerged from a niche technology to a major component of the energy mix and have been the majority of global power capacity additions for the last three years," said IRENA director-general Adnan Z Amin in a statement. "The dramatic technology cost declines we are mapping present a real possibility to move to a sustainable energy future even in the hydrocarbon producers in the MENA region."
The report joins a host of recent studies that have demonstrated how sharp reductions in the cost of solar power and onshore wind farms in particular have made renewables cost-competitive with fossil fuels in numerous regions around the world.
It details how solar PV costs have fallen 80 per cent since 2008 at a time when gas prices in the UAE are increasing as domestic production declines, raising the prospect of heightened reliance on expensive imports.
The cost of new gas supplies in the UAE has climbed from under $2.5/MMBtu in 2010 to $6-$8/MMBtu for domestic production and $10-$18/MMBtu for imports currently, even when the recent decline in oil prices is taken into account.
As a result, the report claims that solar, wind and waste-to-energy projects are already capable of undercutting gas power on cost in the UAE. Moreover, solar costs are expected to continue to fall, while experts predict overall renewables costs will fall as emerging energy storage technologies start to come online.
The UAE is at the forefront of efforts to accelerate the reduction in solar costs and in January the tender for the second phase of the Mohammed bin Rashid Solar Park in Dubai was awarded a 25-year fixed contract for under six cents per kilowatt hour, earning it the title of the "lowest solar price ever achieved worldwide".
"This report is an eye-opener," said Dr Fred Moavenzadeh, president of Masdar Institute, in a statement. "It provides policy makers and investors with an objective cost baseline, making the clear case that renewables, and especially solar, will have a much larger role sooner than we ever expected in the UAE and Middle East."
The report is one of a series of studies designed to support the UN's United Nations' Sustainable Energy for All initiative which aims to double the global share of renewable energy by 2030.
Significantly, the report attempts to quantify the health and environmental benefits that would be achieved in addition to the financial savings that would result from increasing reliance on renewables. It calculates that these benefits would result in an additional $1bn to $3.7bn of annual savings for the UAE by 2030.
The report will represent a further boost to the Gulf region's fast-expanding renewables sector. A number of countries in the region are pursuing plans to increase their reliance on renewables, with a particular focus on solar power.
The report argues gas will continue to play a major role in the region to address the intermittent nature of renewable power, but it claims the savings from generating solar power during the daytime, instead of consuming gas, are so great the UAE could justify 17.5GW of PV in the UAE by 2030, up from just 40MW today.
Could solar and wind undercut fossil fuels in the United Arab Emirates?
Solar farms shelved following government contract controversy
NRG Energy and Warren Buffett's MidAmerican top solar ownership table
Will the plummeting oil price force your business to reconsider its green investments?”
No, we remain committed to our clean tech investment plans regardless of the price of oil
Yes, we have scaled back our green investments in response to the oil price collapse
Become a BusinessGreen member for unlimited access to our exclusive range of in-depth articles and reports, full archive and priority event invitations. Find out more.
Get free access to our exclusive range of in-depth articles and reports, full archive and priority event invitations with your two week trial. Find out more
Taylor Hopkinson's Client, a UK based developer is seeking to add a Development Manager to their team to be responsible for project management of the development and planning process for a number of current sites.
A discussion of the “risk perception gap”, its implications and how it can be closed
It is both simple and inexpensive for any data centre, regardless of size or age, to get started allocating costs and carbon
© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, Haymarket House, 28-29 Haymarket, London SW1Y 4RX, are companies registered in England and Wales with company registration numbers 9177174 & 9178013