1. Shaking up the energy mix
The advent of a new energy mix is a game-changer for the Middle East and North Africa (MENA) region. According to the Middle East Solar Industry Association, a total of 12 gigawatts of solar projects are either under construction or have been awarded across the region. And a 2019 International Renewable Energy Agency (IRENA) report forecasts that the GCC alone will have 65 gigawatts of solar power by 2030. From a GCC perspective, nuclear – whether you agree with it or not – will be the energy backbone, complemented by a significant amount of renewable energy. This will be mainly solar, with some wind and then energy storage rounding out the mix.
2. Phasing out traditional power plants
The transition from traditional gas power plants to the type of large-scale renewable energy-supported installations we have seen emerge in the last few years continues to support regional goals. Dubai’s Clean Energy Strategy, for example, aims to generate 75 per cent of the emirate’s energy consumption from clean sources by 2050. And these gigawatt plants are just the beginning.
Over the next 10 to 15 years we can expect an additional 10 gigawatts in the GCC alone, with Saudi Arabia playing a major role. As we speak, there are two to three gigawatts of programmes being tendered within the next six to eight months and a lot happening in terms of mega-plant deployments. For example, Oman has a 500-megawatt upcoming upcoming tender, there are a couple of large installations under development in the UAE, and Saudi Arabia’s Renewable Energy Project Development Office (REPDO) tender was recently extended.
3. Increased deployment, lower costs
Decreasing panel prices are frequently touted as a trend, but I would put a slightly different twist on this with lower deployment costs the real benefit. Lower panel prices don’t automatically mean lower Power Purchase Agreement (PPA) prices. If you consider that the panels only represent 20 to 25 per cent of total project costs, then a 10 per cent drop in panel pricing only realises a 2.5 per cent decrease in project cost. We do see minor panel pricing fluctuations, but with growth in the number of large-scale plants and overall increased prevalence and growth for solar globally, this leads to a lower levelised cost of energy and lower total project costs, which naturally translates into decreased PPA pricing.
4. Increased efficiency, simplified installation
Although solar is a mature technology, there is still a constant improvement process. The leaps aren’t as dramatic as you would see with breakthrough technologies, but, as we approach 2020, there is a new generation of panels on the market. The development of high-efficiency panels and the impact of new technologies are driving change and adoption. The trend is clearly leaning towards bifacial mono panel module technology, rather than polycrystalline. Looking at solar cells, n-type technology, which is a different production process from p-type, translates into higher efficiency and lower deployment costs. Put simply, you have the same output as two or three individual solar panels but packaged into a single panel. This means you don’t need a mounting structure and cables, which greatly reduces the build complexity.
And that’s why it’s not just a question of panel prices, it’s the whole delivery cost and value chain that drive cost savings. Mono- has a 10 to 15 per cent market share and has become the dominant product because of higher efficiencies and now bifacial panels are becoming standard. If I look at our own projects, we use exactly the same product specifications, and for mega plants in the GCC and North Africa region where you need ultra-high efficiency in order to achieve ultra-competitive prices, these are becoming the go-to standard for new plants.
5. Next step: energy storage
By 2050, solar and wind will generate almost 50 per cent of the world’s electricity, and energy storage is where we are seeing dramatic year-on-year leaps in terms of performance and gains in competitive pricing. Today, battery technology is developing at the same rate that solar panels were 15 years ago. This translates into a 10 to 15 per cent negative price differential every six months. A recent Bloomberg New Energy Finance report noted that the energy costs generated through utility-scale storage technology have dropped by 76 per cent since 2012. The sector is expected to be a US$50 billion global industry by 2020 with installed capacity of over 21 gigawatts in 2024. Gigawatt storage is being tendered in other markets as governments actively demand storage capabilities as a way to stabilise the grid, making solar increasingly base load relevant. Even looking at our portfolio, just two years ago we had zero projects with storage attached and now 10 to 20 per cent of projects under development have some kind of storage component.
6. Distributed solar comes home
Distributed solar is coming of age, and although the primary focus has recently been on mega plants, this is changing. What has been achieved with the large solar photovoltaic (PV) plant in the desert is impressive, but to optimise the new energy mix you need to include decentralised delivery of solar-generated power. Dubai is leading the way in the MENA region through the Shams initiative, which is part of the emirate’s distributed renewable resources generation programme whereby individual households and building owners are encouraged to install PV panels and connect them to DEWA’s grid. Phanes Group is supporting the government’s clean energy strategy with the delivery of DP World’s solar installation – the largest project in this space in the region. We are now also seeing the emergence of corporate PPAs and Dubai World Trade Centre is a great example with one of the country’s largest rooftop solar installations. Its 3,000 PV panels have combined capacity of one megawatt, plus a further 400-kilowatt peak capacity from its parking structure panels. Additional photovoltaic solar panels are planned across the other halls’ rooftops, with the potential to deliver another two-megawatt capacity in the future.
Dubai will continue to lead the region in innovation thanks to its advanced regulatory framework and strong solar technology ecosystem, while Saudi Arabia will lead with gigawatt volume. The hot topics driving today’s global renewable energy agenda are amplifying solar photovoltaic efforts worldwide. With these six trends shaping a new solar landscape, it really is a one size fits all solution for the MENA region.