A Global Perspective on Renewable

Energy and Opportunities for the GCC

Region

Henning Wuester,

Director, Knowledge, Policy and Finance Centre, IRENA

1st GPCA Responsible Care Conference

12 October 2015

1

2

The energy sector is transforming

Electricity generation costs are falling

Investments in renewables

Rapid capacity expansion

Benefits of the transition to

renewable energy at the global scale

6

IRENA’s REmap 2030 analysis emphasises that doubling the share of renewable energy in

the global energy mix is achievable and can lead to remarkable socioeconomic benefits

Growing demand

The GCC per capita energy consumption is increasing rapidly,

22% in the last decade

Source: EIA, 2014; World Bank, 2014

Power demand has doubled in last decade while the

per capita demand has increased by 30%

Energy and power

Rising Populations

Harsh climate

(Cooling and

Desalination)

Industrialization

(steel, aluminum

& petrochemical)

Energy-intensive hydrocarbon industry serving world demand

Young and fast growing infrastructure

7

Fuel mix in the GCC power sector

Source: EIA, 2014; World Bank, 2014 8

37%

1%

2%

55%

64%

63%

100%

100%

99%

98%

45%

36%

GCC

Qatar

Bahrain

UAE

Oman

Saudi Arabia

Kuwait

Fuel Mix (%, 2012)

Oil Gas

By 2020, the GCC electricity consumption is expected to reach 856 TWh

requiring an additional 100 GW capacity

USA 13.5

EU 5.8

Total (TWh)

Per capita(MWh/person)

57 15.3

240 8.2

20 6.1

98 10.1

13 8.9

28 14.9

520 9.2

Growing Demand

Source: IEA, 2015

Rising Populations

Harsh climate

(Cooling and

Desalination)

Industrialization

(steel, aluminum

& petrochemical)

Energy-intensive hydrocarbon industry serving world demand

Young and fast growing infrastructure

Natural Gas

The consumption of natural gas in the GCC has doubled in the last decade

to reach 8 trillion cubic feet in 2013 and is increasing by around 7%.

Rationale for diversification

• Forgone earnings from fossil fuels exports

9% – 28%of government revenue

Subsidy costs in GCC countries

• Pressure on government budgets

tCO2 per

Capita

GCC 19

United States 17

European Union 7

China 5

World 4

• Interlinkages between resources

• High per capita carbon footprints

30%28%

23%

15%

10%

Qatar UAE Bahrain Oman Saudi Arabia

Percentage of Total Fuel Consumed for Desalination

10

• Resource constraints – Gas and Oil

11

Source: Deutsche Bank Research, 2015

Subsidy cuts in the UAE – A model for the GCC?

Current Momentum for Subsidy Reform

– also for GCC?

• Low oil prices make reform easier and give stronger arguments for GCC countries.

• Reform underway in: Bahrain, Kuwait, Oman, UAE

• Subsidies distort investment cost decisions, putting renewables at a competitive disadvantage.

• IRENA analysis shows that energy pricing reform in the MENA region would have fiscal benefits and level the playing field for RE deployment.

cu

rre

nt p

rice

s

RE plans in GCC

Saudi Arabia

Oman

UAE

Kuwait

Bahrain

Qatar

Targets:2020: 5% of generation2030: 15% of generation2030: 3.5GW PV, 1.1GW CSP, 3.1GW Wind

Plans2022: 24GW2032: 54GW. 41GW Solar (25GW CSP, 16GW PV), 9GW Wind, 3GW W2E, 1GW Geothermal

2020: 10%

Targets:2020: (Abu Dhabi)7% of capacity 2030: (Dubai) 15% of generation

2020: 2% of generation by solar (640MW)

2020: 5%

Policy: Bidding, Solar water heating regulation in Dubai and plans for FITs in Dubai.

Policy: Plans for auctions / bidding for the 54GW target

Policy: Bidding initiated for projects (70MW)

12

13

Seeds of enthusiasm for renewables

Saudi Arabia

Oman

UAE

Kuwait

Bahrain

Qatar

Oman• Solar thermal EOR plant 1 GW Planned• Solar thermal EOR plant (7MW) Completed• Dhofar Wind farm 50 MW Planned• Harweel Wind Farm (50 MW) Planned

United Arab Emirates• Sir Bani Yas Wind Energy plant 30 MW Planned• Solar power plant, Utico, RAK 40MW Planned• Waste to Energy, TAQA 100MW Bids invited• Masdar City PV park ADFEC 10MW Completed• Shams 1 CSP plant 100MW Completed• Dubai solar park 1 - 13 MW Completed• Dubai solar park 2 - 200 MW Financial Closure• Dubai solar park 3 - 800 MW Announced• Waste to energy, Bee'ah 83 MW Announced• Noor 1 Solar PV plant 100MW Planned

Qatar• Mesaieed waste to energy 40MW Completed• Al Duhail Solar PV Park 10 MW Announced• KAHRAMAA–Solar Power 230 MW Announned

Bahrain • Waste to Energy Plant 25MW Planned• BAPCO Bahrain PV Plant 5 MW Commissioned• Petro Solar-Manama Solar PV Park 5 MW Completed

Kuwait• MEW/KISR–Shagaya Wind turbine 10MW bidders shortlisted• MEW/KISR–Shagaya Solar Thermal 50 MW bidders shortlisted• MEW/KISR-Shagaya PV 10 MW bidders shortlisted• Al-Abdaliyah ISCC project 60 MW planned• KOC – Umm Gudair PV 10 MW permitted

Saudi Arabia• PV Plant Makkah 100 MW Bid Invited• KAUST rooftop PV panels 2MW Completed• KAPSARC PV Phase 1 - 3.5 MW Completed• KAPSARC PV Phase 2 - 1.8 MW Completed• Princess Nora University solar water heating 17MW

Completed• ARAMCO, 300 MW capacity off-grid Planned• Saudi Aramco North Park PV Project 10.5 MW Completed• SEC – Duba ISCC Power plant phase 1 CSP 50 MW Planned• Waad Al-Shamal ISCC Project 50 MW Announced• Al-Aflaj Solar PV Park 50 MW Announced• KACST Al Khafji PV desal Plant 10 MW Planned

CompetitionRenewables and hydrocarbons

14

2

4

6

8

10

12

14

16

18

Solar PV Gas ($1-$8/MMbtu)

LNG ($8-$16/MMbtu)

Oil ($20/Barrel) Coal Nuclear

LCO

E ($

/kW

h)

LCOE OF GENERATION IN THE GCC (UTILITY SCALE)

Sources: Includes information from Channell et al. (2015), MANAAR (2014), Scribbler (2015), (Utilities ME 2015) and others.

REmap UAE states that Solar PV is possibly the cheapest source of new power in the country.

A 25% share of renewables in power generation by 2030 could be even cheaper to achieve than the current targets.

15

• Flexibility for variable renewables -

gas turbines can ramp up quickly.

• In the GCC context, gas is a better

partner than oil given the emission

savings and economics

• Niche applications enhanced oil

recovery

Potential Challenges

• Loss in efficiency of CCGT as load

followers

• Managing upstream gas pipeline

variability

Integrated planning of the mix is key

Renewable and gasComplementarity at system level

Pilot EOR 7 MW - Oman

© GlassPoint

16

Renewable and gasComplementarity at plant level

Gas can complement solar thermal plants by:

• Providing a firm capacity asset to utility.

• Increasing the efficiency of solar electricity

generation.

Shams 1 provides an interesting example.

Solar fields can augment fossil based plants by:

• Reducing the carbon footprint of generation.

• Increasing generation capacity; and adding

flexibility.

Examples include Ain Beni Mathar, Morocco

and Hassi R'Mel, Algeria.

Shams 1, UAE

© Abeinsa

© Shams Power Company

Ain Beni Mathar, Morocco

20%

reduction

in water

withdrawal

in 2030

17

ConclusionRenewables development brings multiple benefits in the GCC

6

22

46

75

2015 2020 2025 2030A N N U A L F U E L S A V I N G

( M T O E )

12

45

94

155

2015 2020 2025 2030

A N N U A L E M I S S I O N S A V I N G ( M T C O 2)

4.0Billion BOE

Cumulative Fuel Savings

Target Year

Bahrain 5% 2020

Kuwait 15% 2030

Oman 10% 2020

Qatar 2% 2020

KSA 54GW 2032

Abu Dhabi 7% 2020

Dubai 15% 2030

115-150Billion

$Discounted*Fuel Savings

6.4Billion

Monetized and Discounted*CO2 Savings

1.2GT CO2

Cumulative Emission Savings

$131,000Jobs Every Year(on average)

18

ConclusionIntegrating Renewables brings multiple benefits for industry

Options for the Oil and gas industry:

• Integrating renewables in small applications in remote settings:

Examples include PV or wind powered systems for communications,

data transmission and process control.

• Integrating renewables in oil extraction through Enhanced Oil

Recovery (EOR):

In regions with ample sunshine, solar assisted steam generation

offers a cost effective solution for EOR

Option for industry at large:

• Adopting internal carbon prices:

Number of firms using internal carbon prices has trebled in the last

year to almost 450. A further 580 companies anticipate introducing an

internal carbon price within the next two years.

Thank you!