GCC states to harness winds of change

GCC countries, sitting on a quarter of the global oil and gas reserves, have traditionally used fossil fuels for most of their needs. Of late the GCC countries are diversifying their sources of energy, by focusing on alternative energy sources. Generally, alternative energy indicates energies that are non-traditional and have low environmental impact.

Describing the major trends in the alternative energy scene and the implications and opportunities for the GCC countries, Dr Eckart Woertz, Programme Manager, Economics, the Dubai-based Gulf Research Centre (GRC), says the share of renewables in world final energy consumption is surprisingly high if traditional biomass, which is still largely used for heating and cooking in Africa, Asia and Latin America, is included.

Dr Woertz says solar power, wind power and biofuels have attracted most of the renewable energy investments in recent years. Hydro power is still the most important form of renewable energy worldwide, especially in the field of electricity generation, where it has a worldwide share of 15 per cent, but as in the case of traditional biomass, its growth potential is limited because of lack of further suitable locations and increased environmental concerns.

The same could be true for first-generation biofuels – in the wake of the recent food price hikes, they have been critically scrutinised as trade-offs exist between food production and the production of biofuels. The environmental effect of biofuel monocultures is also far from negligible.

A major disadvantage of renewables is intermittency. If the wind does not blow or the sun does not shine, there is no energy production. A major challenge will be to develop storage facilities.

First positive experiences have been made with pumping pressurised air in geological formations and releasing it at night or when the wind does not blow. Also storage with the help of molten salts can last to up to seven hours.

In terms of geographical distribution, there has been a strong concentration on a few countries with Germany, the United States, Spain, Japan and China undertaking the vast majority of investments. "The GCC countries have been reluctant to adopt renewable energy. Although they have favourable conditions to produce solar energy, the prevailing attitude has been that the Gulf countries are sitting atop a sea of oil and gas that will last forever and, therefore, alternatives need not be contemplated," said Dr Woertz.

According to him, this is understandable to some extent, as low oil prices in the 1980s and 1990s put renewable energy initiatives in other parts of the world on hold as well.

Saudi Arabia made some foray into solar power projects in the 1980s; the King Abdulaziz City for Science and Technology (KACST) was established in 1977 and its Energy Research Institute (ERI) has conducted research in the field of renewable energies and energy efficiency since then.

It published the Solar Energy Atlas for Saudi Arabia and the Saudi Arabian Wind Energy Atlas in 1986 in co-operation with King Fahd University for Petroleum and Minerals in Dhahran. Saudi Arabia also signed two major international agreements to promote solar energy – one with the US and the second with Germany.

Soleras was established in 1975 and concluded in 1997, and the funding of $100 million (Dh367m) was jointly provided by the Saudi and American sides. A second programme was started in 1989 with the US Department of Energy (DoE), which addresses various other renewable energy technologies in addition to solar energy.

Within the framework of Soleras, Al Jubaila and Al Uyaina, two villages located five kilometres north of Riyadh, were supplied with electricity by one of the largest PV systems worldwide at that time (50 kW).

KACST has implemented other solar power projects as well, like solar cooling, PV powered highway lighting and the use of solar dryers in agriculture.

Hysolar started in 1986 and concentrated on solar hydrogen technologies. It was jointly financed by KACST, the federal German Government, and the regional government of Baden-Württemberg. The programme had two five-year phases and ended in 1995, but the involved universities continued co-operation on a lower level afterwards. Hysolar comprised research plants in Stuttgart and Jeddah and a 50 kW PV production and demonstration plant in Riyadh.

Following the recent surge in fossil fuel prices, however, the interest of GCC countries in renewable energies has resurfaced. With the exception of Qatar, every GCC country faces a gas shortage now. There is an urgent need for new discoveries, improved recovery rates, better energy efficiency and intra-regional gas trading schemes from Qatar and Iran. The Dolphin pipeline from Qatar to Abu Dhabi is a case in point.

The GCC countries are increasingly aware of this problem, which is likely to worsen in the future with growing populations and economies. Oil is in good demand and yields higher profits as an export item than being fired in gas strapped power plants at home. Therefore, the GCC countries now envisage nuclear energy, coal and renewable energies as additions to their energy mix. The aim is to extend the lifeline of their most precious export good and use it more efficiently.

Saudi Oil Minister Ibrahim Al Naimi has clearly stated that Saudi Arabia is planning to make solar energy an important pillar of the national energy mix. While blaming biofuels for harmful ecological effects, receiving government subsidies and increasing food prices, he has hailed solar energy as "abundant, clean and available to all", and assured that Saudi Arabia is "giving that sort of energy special attention".

The country could be "a centre for solar energy research and hopefully over the next 50 years [it] will be a major megawatt exporter". "It remains to be seen to what extent Saudi Arabia will come up with sufficient financial backing for this vision in order to go beyond the pilot projects of the 1980s and 1990s and move to the next level. In a remarkable step, Gulf Opec members pledged $750m at a summit in Riyadh in November 2007 to fund research on clean technologies. But the emphasis in this case will be on carbon capture and storage to fight global warming.

In Oman, the Authority for Electricity Regulation has outlined a roadmap for the development of renewable energy resources in a landmark study. The establishment of large-scale solar thermal plants and a 750MW wind farm in the south of the country rank prominently among the proposed projects. The study pays specific attention to the development of an appropriate policy framework and institutions to administer clean development mechanisms (CDMs) and assist renewable energy investment.

Oman, like Bahrain, also has some experience with solar-powered reverse osmosis units for desalination and photovoltaic systems or wind power for water pumping and electricity generation.

The Kuwait Petroleum Company (KPC) has earmarked $100m for new energy technologies. Here, however, the focus has not been on renewable energies but on more environment-friendly use of fossil fuels by fuel cell technology, carbon sequestration and oil gasification, with the aim of taking advantage of the CDM of the Kyoto Protocol.

Earning CDM credits would, therefore, also be a possibility to make renewable energy projects in the GCC more cost efficient. Masdar City in Abu Dhabi, for example, will use CDM credits to partly fund its investments. But thus far renewables offer lower emission credits compared to other CDM projects like waste disposal or industrial efficiency and emissions trading. The potential for wind power on the Gulf coast is limited and confined to fewer spots. German GTZ has constructed a pilot wind generator on Sir Bani Yas island near Abu Dhabi, for example.

Renewable energies are about to capture a significant portion of the global energy mix. This portion is only likely to grow given the rising energy demand and supply worries with regard to fossil fuels and environmental concerns. Especially solar energy in the form of concentrated solar power and thin film PV cells integrated in buildings offer huge potential for the GCC countries. Rising domestic energy needs for power generation and desalination, favourable conditions for solar energy production and interest in acquiring technological know-how make a perfect argument for renewable energy in the Gulf.

Renewable energies can stretch the lifeline of the GCC's oil and gas exports, and in some decades from now, they even have the potential to develop into a major pillar of the economy, said the report.

Masdar – the bellwether project

Abu Dhabi's Masdar initiative is the most significant project for renewable energy in the GCC so far. According to Masdar officials, the projected overall investment volume over time for Masdar City is $22 billion (Dh80bn) and for Masdar renewable energy projects $15bn. It seems the Government of Abu Dhabi has taken on the Saudi initiatives of the 1980s on a much larger scale, in order to take advantage of the technological progress and the improved economics that have taken place in renewable energy since then.

Masdar has six strategic thrusts: The City aims to be the first carbon-neutral area in the world. It will house 50,000 people in close vicinity to their work places, educational facilities and light industries. It will be characterised by emission-free energy supplies, mainly from solar power, modern ecological architecture with a good passive energy balance and high energy efficiency, extensive recycling of waste and a modern system of public transport.

The Masdar Institute of Science and Technology has been set up in co-operation with Massachusetts Institute of Technology and aims at acquiring and developing know-how in the field of renewable energies. The goal is to convert the UAE from a technology importer to a technology exporter.

Like the Masdar institute, the Masdar Research Network aims to conduct technology related research in the field of renewables. To this end, Masdar will co-operate with research institutes in Europe, Asia and the United States.

The Special Projects business unit deals with production facilities for renewable energies, and especially eyes technologies that are close to commercial breakthrough and can be upscaled to marketable solutions.

The Carbon business unit encompasses one branch for carbon emissions trading and CDM projects, and a second branch for Carbon Capture and Sequestration. This technology offers the opportunity to make fossil fuels more environment-friendly, and if pumped into mature oil fields to keep up the reservoir pressure, it can also function as a substitute for natural gas, which is so far used for this purpose. Masdar has commissioned a feasibility study for a multi-billion dollar project for Carbon Capture and Storage and its usage in projects for enhanced oil recovery.

Natural gas would be processed to hydrogen and carbon dioxide, with the former being used for power generation and the latter reinjected into oil fields. The Abu Dhabi initiative will be the largest CCS programme worldwide.

The business unit Innovation and Investment comprises a $50 million Clean Tech Fund and a power plant project unit. The fund is financed by Masdar and Credit Suisse (one half each) and invests worldwide in companies that develop clean technologies. The power plant unit deals with the implementation of power plants that are fuelled by solar, wind, biomass or municipal waste.

The first project is the construction of a 100 MW Concentrated Solar Power plant, with a possible extension to 500 MW at a later stage. This is equivalent to a mid-sized conventional power plant and would be a substantial addition to the UAE's currently installed capacity of 14 ,800 MW.

Dubai has launched a green building initiative and will introduce a sustainable building code in 2 008, most likely modelled after the US Leadership in Energy and Environmental Design (Leed) standard.

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