Gulf energy sources: Heat is on desert states to switch to renewables

Saudi Arabia plans for solar power to deliver a third of its domestic energy needs by 2032, the most ambitious of a series of efforts across hydrocarbon-hungry Gulf states to promote renewable resources.

While questions remain over whether some green initiatives announced in the region are more about public relations than serious intent, a number of projects are seen as credible because they are aimed at meeting rising energy demand.

Growth in the use of renewables rests on the contrast between the region’s huge oil and gas exports and the squeeze being exerted by rapid economic expansion on domestic energy supplies.

“The driver in Saudi Arabia and Dubai is very much economic and energy security,” says Robin Mills, an analyst at Dubai-based Manaar Energy Consulting. “[The efforts] have quite solid foundations – they are certainly not PR affairs.”

The import-dependent Gulf desert states are among the world’s worst greenhouse gas polluters per head of population. Intensive day-to-day energy demand from, for example, air conditioning and water desalination have been buttressed by construction projects fuelled by oil and gas income.

In a striking study based on 2009 data and published by the US government’s Carbon Dioxide Information Analysis Center, Qatar produced the most carbon emissions per person of the 215 countries surveyed, with Kuwait in fourth place and the United Arab Emirates sixth. All six states in the Gulf Co-operation Council – which also comprises Saudi Arabia, Bahrain and Oman – were among the top 15 polluters, four of them ahead of the US.


Even more pertinently, Gulf states are finding it increasingly difficult to meet local energy demand, in part due to rapid economic expansion and the arrival of large numbers of expatriates to work on building projects.

The UAE – which, like other Gulf states, is heavily gas dependent – has announced plans to install 5.6GW of nuclear power to increase electricity generating capacity from 18GW last year to as much as 40.5.GW by 2030.

In Saudi Arabia, the authorities burn crude oil to meet peak electricity demand in the summer, when air conditioning use is at its highest. Each barrel used for this purpose represents about $100 foregone on the international export market.

Faced with these economic and environmental imperatives, Saudi Arabia and several other GCC countries aim to meet more than 5 per cent of their energy needs from renewables, principally solar.

Qatar plans to install 1.8GW of solar capacity by 2014. Abu Dhabi, the UAE’s political centre, wants 7 per cent of electricity-generating capacity to come from renewables by 2020, while Dubai, the UAE’s commercial centre, aims for solar to account for 5 per cent of electricity-generating capacity by 2030, says Steve Griffiths, an executive director of the Masdar Institute, a UAE-based government-established research body.

“The shift is towards the greatest and most abundant resources, solar and wind,” Dr Griffiths says, pointing to the new UAE’s 100MW Shams 1 solar project, which has been developed by the government in co-operation with France’s Total and Abengoa Solar of Spain.

But Dr Griffiths and others say the uptake of renewables depends on socioeconomic trends: if electricity demand falls or domestic hydrocarbon supplies grow, solar, wind and other green options become less attractive.

One scenario is that the Gulf countries begin to use non-conventional hydrocarbons such as shale oil and gas on a large scale. These are transforming the energy position of the US and, while not yet exploited to any significant degree in the Gulf, some observers expect them to have an effect there one day, too.

But Frank Wouters, deputy director-general of the International Renewable Energy Agency, an inter-governmental body based in Abu Dhabi, says the use of unconventional hydrocarbons in the Gulf is likely to be limited for the time being. There are potential problems in transporting them within the region and a lack of the fresh water that is needed in large volumes to extract them.

Another factor that could undermine renewables in the Gulf is if increases in electricity demand turn out to be lower than projected – because economic growth is slower than expected or energy conservation measures become more effective. Cuts in electricity subsidies – which, in Abu Dhabi, amount to 50 per cent for expatriates and more than 85 per cent for nationals – could also curb energy use.

Vahid Fotuhi, president of the Emirates Solar Industry Association, a not-for-profit grouping of companies, says the task facing promoters of renewables in the region is “daunting”. But, pointing to moves in some countries to have solar systems installed as standard on some new buildings, he insists the obstacles of past energy habits and future uncertainties could be overcome.

“Next year is going to be a breakthrough year,” he says. “It is going to be raining solar projects in Saudi – if things continue as they are.”

By Michael Peel

© Copyright The Financial Times Ltd 2012