UAE POWER 2013 - Global Business Reports Industry Explorations EXPERT OPINION

Dear readers,

One thing we have learned during our time Many within the Gulf state would attribute here is that very little is beyond the ambition these advancements to the visionary leader- of the UAE. The world’s largest indoor ski ship of the UAE. Again, in many respects they slope situated in a desert city is perhaps the would be accurate. Sheikh Zayed Bin Sultan Al most striking, if slightly trivial, testament to Nayhan set this “nothing is impossible” phi- that. In addition, the country is home to the losophy in action, ruling the UAE from 1966 tallest building in the world, the largest shop- till his death in 2004. His son now embodies ping mall in the world, the finest hotel in the that ambition, pursuing development in every world, not one but two world leading airlines direction. and the most spectacular man-made islands There are also downsides to this philosophy. ever constructed. All this and more in a coun- The race towards development in the power try of less than 8 million people: a country sector has resulted in rampant inefficiency. As just 42 years old. the UAE power sector opens this new chapter, Many would point to the UAE’s oil riches as efficiency has been highlighted as fundamen- the foundation of the nation’s achievements, tal to progression: it is the power plant they do and in many respects this would be accurate. not need to build. Yet it must also be noted that, despite modest Whether for nuclear, solar, efficiency or hy- hydrocarbon resources, the emirate of Dubai drocarbons, players across the global power has built a wondrous city in the desert: a glob- industry are targeting the Emirates. The UAE al financial centre and a popular tourist resort. acts as a hub for commerce in the Arabian Hydrocarbons now make up less than 6% of Gulf and as a pioneer for new technologies, GDP in the emirate. innovative regulation and best practice across The “nothing is impossible” philosophy that the region. has characterised the UAE’s economic growth This report is a patchwork of opinions from continues in the country’s power sector. Heav- experts working in this exciting sector, com- ily dependant on hydrocarbons for power, the bined with quantitative data and our own on- nation is embarking on a journey to diversify the-ground research. We would like to extend its electricity generation. our sincere gratitude to all those who shared The first nuclear power station in the Middle their insights and expertise with us. East will be completed in Abu Dhabi’s western region by 2020. Now home to the Interna- tional Renewable Energy Association (IRENA), Abu Dhabi has built one of the worlds larg- est solar power plants: the 100 MW Shams One (Shams Two and Three are in the works). Meanwhile, Dubai has begun construction of the 1000 MW Mohamed Bin Rashid Al Mak- Katya Koryakovtseva & toum Solar Park. Ramzy Bamieh

Industry Explorations Global Business Reports // UAE POWER 2013 3 CONTENTS Industry Interviews The director of clean energy at Masdar 43. Interview with NEM Middle East talks about the UAE’s increasing focus on Overview JACCO JANSEN, EXECUTIVE VICE PRESIDENT AND renewable energy, with the International Beyond Oil and Gas MANAGING DIRECTOR Renewable Energy Agency providing 44. Conventional Energy an outside perspective. The Emirates MAKING USE OF THE UAE’S RESOURCES 8. A Tale of Two Cities 45. Interview with Pöyry INTRODUCTION AND OVERVIEW Nuclear Energy Corporation tell of their G.B.D. VARA PRASAD, OPERATIONS MANAGER, ambitions. 10. Interview with the Deloitte & Touche DUBAI KENNETH MCKELLAR, MIDDLE EAST ENERGY & 46. Interview with Wärtsilä RESOURCES LEADER SEPPO HAUTAJOKI, MANAGING DIRECTOR AND VICE 11. Interview with Ernst & Young PRESIDENT SERVICES & LARS-ÅKE KJELL, REGIONAL 24, 25, 30 MOBIN KHAN, PARTNER AND MENA POWER & DIRECTOR OF POWER PLANTS UTILITIES MARKET LEADER 48. From the GBRoundup 12. Interview with the PwC THE EMERGENCE OF A GREEN SUKUK PAUL NAVRATIL, MIDDLE EAST ENERGY, UTILITIES & 49. Expert Opinion From the MINING LEADER FROM RICHARD MENEZES, MANAGING DIRECTOR, GBRoundup 14. Interview with the Golden Sands UTICO Management Consultancy GBR’s own researchers provide their ROBERT M. BRYNIAK, CEO insights into the market, with a discussion 15. Shifting Sands of the UAE’s shifting power generation THE CHANGING MAKE UP OF THE EMIRATI POWER makeup and an explanation of Islamic SECTOR 18. Interview with the Regulation and finance as it relates of the energy sector. Complementing Supervision Bureau NICK CARTER, DIRECTOR GENERAL Production 19. From the GBRoundup Transmission and Efficiency CHALLENGING DIVERSIFICATION in the United Arab Emirates

19,18 52. Grids in the Desert TRANSMISSION SYSTEMS IN THE UAE Cleaner, Greener, 56. Interview with Gulf Jyoti International Diversification PRADIP K. DAS, GENERAL MANAGER The Emirati power sector is increasingly Smarter and 57. Interview with CESI looking to alternative means of energy FLORIS SCHULZE, MANAGING DIRECTOR, MIDDLE Nuclear EAST production. Nuclear energy, solar power, 58. Interview with Emerson Process clean coal and conventional sources are The UAE Power Sector Enters Management all being added to the UAE’s matrix in its an Era of Diversification COR CORBEEK, GENERAL MANAGER – MIDDLE EAST effort to diversify. AND AFRICA 59. Commitments to the Environment 22. Changing Focus PROMOTING EFFICIENCY IN A POWER-HUNGRY A BREAKDOWN OF ELECTRICITY GENERATION IN MARKET THE UAE 62. Interview with KSB 24. Interview with Masdar TONJES CEROVSKY, SENIOR VICE PRESIDENT SALES BADER AL LAMKI, DIRECTOR OF CLEAN ENERGY – REGION MEA 25. Interview with the International 63. Interview with SCHOTT 28, 32, 41, 44 Renewable Energy Agency KIOMARS DABBAGH, MANAGING DIRECTOR, FRANK WOUTERS, DEPUTY DIRECTOR-GENERAL MIDDLE EAST 26. Interview with GE 64. Interview with Schneider Electric Quantitative MOHAMMED MOHAISEN, GENERAL MANAGER GOKTUG GUR, COUNTRY PRESIDENT, UAE & OMAN – THERMAL PRODUCTS & POWER GENERATION Data SERVICES SALES 27. Interview with AREVA Statistics and quantitative data on all REMI COULON, CHIEF COMMERCIAL OFFICER elements of the United Arab Emirate’s 28. The Nuclear Age economy and power industry, presented BIG INVESTMENTS AND LONG-TERM PLANNING in easily accessible formats and 30. Interview with Emirates Nuclear Energy Appendix emphasizing trends and including Corporation Into the Future maps of electricity consumption and MOHAMMED AL HAMMADI, CEO transmission systems across the seven 31. Interview with Hatch 68. Final Thoughts ROY DABBOUS, REGIONAL MANAGER - HATCH emirates. 70. Index & Company Guide 32. Harnessing the Sun 72. Data Overview 9, 13, 23, SOLAR POWER IN A DESERT ENVIRONMENT 74. Credits 35. Interview with the Emirates Solar Industry 29, 54, 55, 61 Association VAHID FOTUHI, PRESIDENT 36. Interview with First Solar Final CHRISTOPHER BURGHARDT, VICE PRESIDENT DEVELOPMENT EAME, & MATT MERFECT, EPC Thoughts COUNTRY MANAGER Thoughts on the future potential of the 38. Interview with CSEM-UAE UAE power industry, the challenges it DR. HAMID KAYAL, CEO faces, the path it must take to overcome 39. Expert Opinion FROM DR. MICHAEL KRÄMER, SENIOR ASSOCIATE, these, and the opportunities present, TAYLOR-WESSING from leading businessmen and industry 39. Interview with Shams Power Company This research has been conducted by YOUSIF AL ALI, GENERAL MANAGER Katya Koryakovtseva, Ramzy Bamieh, figures. Alice Pascoletti and Diego Carillo. 41. Clean Coal Edited by Barnaby Fletcher | Designed by Gonazalo Da Cunha POLISHING THE DIRTY CARBON A Global Business Reports Publication 42. Interview with Utico For more information, contact [email protected], follow us on Twitter @GBReports or check out our blog at RICHARD MENEZES, MANAGING DIRECTOR gbroundup.wordpress.com. 68 Global Business Reports // UAE POWER 2013 5 Beyond Oil and Gas: An Introduction to the United Arab Emirates and its Power Sector

“It is a combination of regulation and policy that makes the UAE very specif- ic. Innovation and efficiency improvements are being promoted in a big way; the country wants the best processes and performance indicators. Clearly, Abu Dhabi’s structure and regulatory capabilities are most advanced; Dubai has a regulator on paper but is still in the early stages of development. Abu Dhabi has a more unbundled framework; this is not an end in itself but independent reg- ulation, accountability and performance improvement can lead to it. For some services, the northern emirates have been core business for DNV, but they are still highly dependent on Abu Dhabi for energy. As they mature, the first step will be to enhance knowledge through internal training.”

- Mohamed Atif, MANAGING DIRECTOR OF DNV KEMA MIDDLE EAST WAIT CITY

KUWAIT

Global Business Reports ARTICLE Industry Explorations FACTSHEET

United Arab Emirates at a Glance

Source: CIA World Factbook

A Tale of N O Population: 5,314,317 (July 2012 est)

I

T Capital: Abu Dhabi A

C IRAN Chief of State: President Khalifa bin Zayid O

L Al-Nuhayyan Two Cities Head of Government: Prime Minister Muhammad bin Rashid Al-Maktum GDP: $361.9 billion (2012 est) A brief introduction to the economy of the UAE Growth Rate: 4% (2012 est) BAHRAIN GDP per Capita: $49,000 (2012 est) Economic Sector Breakdown: Al Manamah agriculture: 0.8%, industry: 56.1%, services: Persian Gulf OMAN 43.1% (2012 est) Exports: $300.6 billion (2012): crude oil, natural gas, reexports, dried fish, dates Doha Imports: $220.3 billion (2012): machinery PAKISTAN and transport equipment, chemicals, food The United Arab Emirates (UAE) is made up est GDP per capita in the world. This will be there was, including a petition to the gov- Dubai QATAR Major Trade Partners: India, Japan, China, of seven emirates, yet two dominate the de- supported by the favourable conditions for ernment sent by roughly 100 Emirati activ- Iran mographic, economic and geopolitical land- foreign direct investment (FDI) in the UAE: ists and intellectuals, helped to spur a $1.6 scape. Dubai, home to the most populaous the country ranks a respectable 26th in the billion infrastructure investment plan for the

and fastest growing city in the UAE, has be- World Bank’s 2013 Doing Business report, poorer northern Emirates, which should in Abu Dhabi come a regional hub for the financial, retail, having risen three places since 2012; Free turn assist in further economic growth. tourism, shipping and media industries, as Trade Zones offer 100% foreign ownership Furthermore, the UAE is in a strong fiscal po- well as a byword for extravagance and osten- and zero taxes. After a significant fall in FDI sition. While slowly unwinding the stimulus tatious wealth. Abu Dhabi, the seat of central in 2009 and 2010, 2011 showed a strong package introduced during the global finan- UNITED ARAB EMIRATES government, makes up 87% of the land mass return, with FDI levels reaching $10 billion. cial crisis, the central government has man- Muscat and holds an estimated 94% of the country’s The Arab Spring, which disrupted growth for aged to maintain a budget surplus for three proven hydrocarbon resources. so many nations in the Middle East and North consecutive years. Inflation has remained at Based predominantly on the strength of these Africa region, could almost be described as a a low 0.9% in 2011 and 1.1% in 2012. This 4.9% SAUDI ARABIA two emirates, the UAE is in many ways the blessing for the UAE. Protests did no materi- should give the government the financial GDP GROWTH RATE success story of the Gulf States. Even when alize on any large or organized scale (partly flexibility to continue on the diversification OMAN 2011 encompassing those emirates outside these due to the comparative privilege of Emira- and development initiatives it has carried out dual powerhouses, the UAE beats most of ti citizens). However, what little complaint so successfully so far. • Source: World Bank 100km Arabian its regional peers in terms of GDP per capita Sea ($49,000 in 2012), which ranks as the sec- Regional Comparison: Population Exports and Imports (2011) ond highest of the six Gulf States; surpassed Gulf state rankings on the and Workforce Source: EIU, Bank Audi only by the oil wealth of Qatar surpasses. World Economic Forum’s Global information 12.2% The UAE can claim another strength: having Source: CIA World Factbook, Competitiveness Report Emirati EX Various P O R Source: CIA World Factbook, Various T reduced its dependence on its hydrocarbon $360.2451 S resources to just 6% of GDP (according to ECONOMY 2010/2011 2011/2012 2012/2013 IM P O some estimates), it can claim a more diver- R T BILLION Qatar 17 14 11 S sified economy than any other nation in the Saudi Arabia 21 17 18 region. GDP UAE 25 27 24 This diversification has not fully protected (current US dollars) 2011 Oman 35.9% the UAE from oil price fluctuations in re- 34 32 32 Other Arab cent years. The global financial crisis and the Kuwait 35 34 37 Source: World Bank accompanying drop in oil prices struck the Bahrain 37 37 35 country a dire blow, dropping its economy 5,314,317 4,337,000 into recession in 2009. The construction sites EXPORTS IMPORTS Regional Comparison: Population (2012) Labor Force (2012) Others 42.6% 49.6% that had been a feature of Dubai for the past GDP per capita in the Gulf states Japan 16.1% 3.9% decade fell silent and stories abounded of cars Source: CIA World Factbook India 5.5% 13.9% abandoned at the airport as expatriates aban- US DOLLARS 35.7% doned the city. Yet the resurgence of oil prices Qatar $102,800 South Asian China - 19.8% UAE $49,000 South Korea 14.0% - since have contributed to GDP growing by an 1.1% 3.4% 5% INFLATION RATE Kuwait $43,800 Iran 10.9% - impressive 5.2% in 2011 and 4% in 2012. Filipino Iranian Moving forward, growth is forecast at 5.1% Average Consumer Prices 2012 Oman $28,500 Thailand 10.9% - per annum until 2016: an impressive figure Bahrain $28,200 2.4% 5.4% US - 8.2% Source: CIA World Factbook European Other for a country that already has the 12th high- Saudi Arabia $25,700 Germany - 4.6%

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Indian Ocean Global Business Reports Global Business Reports INTERVIEW Industry Explorations Industry Explorations INTERVIEW

INTERVIEW WITH INTERVIEW WITH INTERVIEW WITH Kenneth Mobin McKellar Khan

MIDDLE EAST ENERGY & RESOURCES LEADER PARTNER AND MENA POWER & UTILITIES MARKET LEADER DELOITTE & TOUCHE ERNST & YOUNG

Could you give an overview of services of- We have seen an increase for demand of our and there needs to be an overall regulator The last few years have seen difficult eco- lentless since 1998: there has not been a sin- going to have a lasting impact on the inves- fered by Deloitte to the UAE power sector? services from the Northern Emirates, initial- to control power supplies overall. The real nomic conditions in the UAE and a reduction gle year without a new initiative and ADWEA tor appetite for IPP models in Dubai. Under Our core services are the key business lines ly for our core services but moving toward challenge is working more closely together in merger and acquisition activity. Moving has been at the forefront of this drive. The the visionary leadership of His Highness of Deloitte: audit, and tax services (which a more comprehensive range that wide- across borders and getting a regulatory um- into the next five-year period, which servic- results speak for themselves: Abu Dhabi now Sheikh Mohammed bin Rashid Al Maktoum, are becoming important for businesses in ly supports development in industry and brella in place, which means overcoming es do you expect to be most in demand? has eight IWPPs in operation, a nuclear plant the Emirate of Dubai has shown a great re- the UAE) as well as consulting around strate- commerce. The Northern Emirates may well political, economic and legal concerns. The Primary focus will be on the capital agen- under construction, solar and wind projects solve in overcoming its economic challenges gy, operations, human capital and technolo- be looking to the type of governance and GCC Interconnection Authority’s (GCCIA) da, operational excellence, strategic perfor- in operation, and discussions in progress and is now clearly on track for next phase gy. We also provide a wide range of financial regulation that already exists in Abu Dhabi ambition is to bridge all of the different mance and assurance services. on waste-to-energy and carbon capture and of development and growth as evidenced by advisory services from forensics to support- and Dubai as they look to develop their own regulatory regimes and create a commercial One of the most important areas investors shortage. In summary, a true success story the announcement of a number of key pro- ing banks and clients with transactions. Our electricity networks. basis for moving and trading power. In addi- will be looking at in the next five years is driven by visionary leadership of the late jects in recent months. Investors are looking risk consulting business also covers a range tion there could be the potential for export- innovative financing. Coming out of an eco- president His Highness Sheikh Zayed Bin much more positively at the Emirate of Du- of services from internal audit through to How does the structure of the power sectors ing power outside GCC. nomic crisis, attaining long term financing at Sultan Al Nahyan and His Highness Sheikh bai today, and increased investment in power enterprise risk-management systems. in other GCC nations compare to that of the good, cheap rates is going to require a very Khalifa bin Zayed bin Sultan Al Nahyan, the and utilities, potentially under an IPP model, UAE? What do you consider to be key factors that good business case. Questions will be asked president of the UAE. The Abu Dhabi market are just a matter of time. We talk about a UAE power sector but there In some ways the power sectors of other GCC will account for the increase in demand for about the markets to source the finance and also benefits from an independent regula- a stark differences between each emirate. nations are as advanced as the UAE, with electricity in the UAE? credit worthiness and technical expertise of tor, the Regulation and Supervision Bureau When do you anticipate the long awaited How do you compare the style and level of Saudi Arabia and Qatar for example current- Today, domestic per capital consumption of the investors.. Local knowledge is very im- tasked with the duty to enforce the relevant boom in the UAE solar market? maturity in the different emirates? ly in the phase of legal, financial and then electricity in Dubai exceeds that of the USA. portant; although there is much information laws through the licensing of activities to It is not easy to jump into a new form of Abu Dhabi and Dubai are equally mature in commercial unbundling of their utilities. Dubai’s Energy Strategy and other analyses about the UAE in the public domain, smart various persons who undertake a 'regulated renewable energy, but the success of early so- their own different ways. Abu Dhabi has es- There is still some way to go for all the GCC suggest steep increases in demand for the investors will seek assistance with raising fi- activity' in the sector. lar projects will bring about additional ones. tablished a strong model for incorporating nations to achieve this comprehensively, and next 20 years, with water desalination of nance and evaluating return on investments. Dubai, on the other hand, has shown grow- Solar will be a good contributor of energy the private sector, particularly on the power it is essential to put a whole cross-border course a significant element in that. Howev- Entities like ADWEA and DEWA will contin- ing desire to transform its power and util- to the UAE in the next decade, but it cannot generation side. It is fair to say that Abu Dha- energy framework in place, with the regu- er Dubai also aims to increase efficiency by ue to focus on studies to control electrici- ities sector. DEWA’s key challenge has been go from 2% to 20% straight away. This is a bi pioneered this model in many respects. latory aspect only one of its elements. There about 30% through regulation and capital ty and water demand to include concept of to manage the growing demand for power largely untried form of renewable energy Both ADWEA and DEWA are at broadly sim- is still quite a lot of imbalance between oil investment. smart metering. We also expect development in the Emirate of Dubai and it has taken key in the MENA region. Challenges lie in un- ilar levels of development, in terms of turn- & gas producers who produce heavy fuels In the wake of the Arab Spring, whose effects of low carbon strategy to include assessment initiatives to address the demand side man- derstanding the long-term competitiveness, ing their utilities into businesses, compara- for power generation and power generators were comparatively minimal in the UAE, the of current and future baseline scenario and agement. The policies of the northern emir- raising finance and evaluating return on in- ble to the level of initial restructuring in the themselves. Under the current systems those government made a concerted effort to de- developing policy framework. Other areas of ates are a little different. Abu Dhabi will play vestment. power sector that we saw in Europe some supplying the fuel can find themselves sup- velop education and healthcare systems and focus would include improving performance a leading role in providing power for the time ago. In the UAE and in many regions plying fuel under long-term arrangements to invest in the northern emirates. This of and managing costs, implementing smart northern emirates. You will see fewer IWPPs If we return for the next report in five years, of the world authorities are learning from rather than spot, and therefore need to be course means an increase in electricity de- grid and energy efficiency concepts through being set up by those emirates in future, and where will we find Ernst & Young in the these developments in the West, and con- compensated if delivering fuel at short no- mand, in addition to the demands of contin- new technology & handling customer's im- increased investment from Abu Dhabi. With UAE, and the power industry in general? sequently this should speed up the rate of tice or in an emergency. ued growth in commerce in Abu Dhabi and pact on new technologies and managing and the seven “united” Arab emirates, leveraging We are the only professional services firm in development here, especially on the regula- Dubai. The overall theme, in the UAE and controlling risk throughout the value chain. off the foundations built in Abu Dhabi makes the UAE to have doubled in size over the last tory side. This is in contrast to the oil and gas What are the key factors holding up the GCC, is to try and promote private industrial The Ernst & Young’s Power & Utilities team perfect sense. few years, and in the wake of the continued sector where most major foreign companies pending interconnection of the GCC grid? and commercial sectors separately from oil has been successfully providing these ser- economic growth in the UAE, we expect this have long been present, and any contrasting Although physically the grids are linked, and gas. So when supply of hydrocarbons vices to the key stakeholders in the UAE and After the deferral of Hassyan, where do you growth pattern to continue in the future. levels of sophistication between the oil and the challenge is having all the cross-bor- begins to decline this will provide a prop- MENA region. see the future of IPP models in Dubai? How The power and utilities industry will cer- gas sector on the one hand and the pow- der regulation in place to secure a balanced er platform for commerce and industry. The will investor confidence have been affected? tainly have celebrated the success of the first er sector on the other, are fast disappearing portfolio of GCC-wide generation, whilst key reason to have that in place is to create How would you compare the markets be- Investor confidence is growing increasing- operations of the nuclear plant, renewables as we see, for example, the development of recognizing individual issues of sovereign- jobs. So this new demand is going to be fue- tween the different emirates? ly positive with the amazing turnaround in will feature more on the investor’s agenda international partners in the UAE’s nuclear ty and ownership. Each nation has a grow- led by new industries, as well as an increase Abu Dhabi has been a role model for the UAE economic activity in the Emirate of Dubai. and potentially we may have our first carbon programme. ing demand for power throughout the GCC in domestic consumption. • and the MENA region. Progress has been re- I do not believe the deferral of Hassyan is capture and storage project in place. •

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INTERVIEW WITH United Arab Emirates Federal Electricity & Paul Water Authority EMIRATE / CAPITAL POPULATION (FEWA) ABU DHABI / Abu Dhabi 1,967,659 3,401 GWh Navratil DUBAI / Dubai 2,106,177 9,291 GWh SHARJAH / Sharjah 890,669 AJMAN / Ajman 361,160 Sharjah Electricity & Water Authority MIDDLE EAST ENERGY, UTILITIES & MINING LEADER UMM AL-QUWAIN / Umm al-Quwain 72,000 (SEWA) PWC RAS AL-KHAIMAH / Ras al-Khaimah 263,217 10,254 GWh FUJAIRAH / Fujairah 130,000 8,644 GWh

AREAS UNDER JOINT CONTROL 1 Fujairah and Sharjah Dubai Electricity & 1 Could you tell us about PwC’s services to the ber of independent projects such as Masdar tional structuring, strategy and so on. PwC 2 Oman and Ajman Water Authority 2 power sector? and Emirates Nuclear Energy Corporation has a world leading nuclear practice primari- (DEWA) PwC covers audit, tax, financial advisory and (ENEC) with the goal of creating a balanced ly based in the US and Europe to draw upon. 33,742 GWh consulting. On the consulting front, the work and potentially more competitive power sec- With renewable energy we are conducting 32,551 GWh we do is around two main areas: market tor. feasibility and market entry studies; explor- strategy, focusing on providing information ing how the potential market will develop. on the current trends and requirements and We are seeing estimates for power demand Currently there is a lot of talk, perhaps too then projecting that over the next few years; growth in the region on 7% to 10% year on much talk on the renewable side without the other covering operational effectiveness, year for the coming few years. What do you enough acting and we need to turn that cor- which is vital in the region as companies and consider the main factors for this growth? ner very quickly. authorities strive to keep up with rising de- The main culprit is the blatant energy in- mand while also remaining profitable. This efficiency on the demand side and if that Where do you see the UAE power sector in Abu Dhabi Water & is true of the energy sector, covering oil and continues we could be seeing even greater 10 years from now? Electricity Authority (ADWEA) gas, power, and water, which are increasingly growth rates, which is when things can get Where the sector needs to be is really tack- 49,942 GWh connected to one another. The more sustain- catastrophic. It is down to society not hav- ling the demand side management issue. 39,173 GWh able you are on the power and water side, the ing the proper awareness or being properly My hope is that the work of advisors such more efficient an oil exporting economy will incentivised on these matters. In addition, as ourselves in addition to public campaigns Gross Generated Electricity by be on the ability to monetize its oil and gas the power and water sector are struggling and pressure from the oil and gas sector will Authority (2010) assets. Surprisingly, the connections between to keep up with industrial diversification. In lead to an environment of change. The UAE these sections of the power sector have been the top three issues facing industrial diver- can no longer continue on this path where Electricity Consumption by Authority (2010) slow to be made in this region, and few ex- sification is the efficient, reliable and timely they are among the highest water per capita amples can clearly point to the active coordi- electricity and water connection. Subsidies consumers, emissions per capita producers, nation of the intersection and interdepend- on power are a key root to the problems of kilowatt hour consumers and so on. There is 100km UAE Electricity Consumption, Production and Population ence between these sectors. inefficiency in this region, I see no signifi- an even bigger problem in the water sector, Source: CIA World Factbook cant change on this in the near future and which goes hand in hand with power in this How would you compare the legal and reg- it is a serious problem. Tariff strata are now region. If the UAE deals with their water in- BILLION KWH UAE Electricity Consumption UAE Electricity Production UAE Population MILLION ulatory frameworks between Abu Dhabi and being put into place but much more needs to efficiency they do a great deal in reducing 80 6 Dubai? be done in this regard, whether that be fur- power problems. It should not be a case of Consider ADWEA and DEWA; the mandate of ther tariffs, peak pricing or something else. one organisation setup to solve all this, the these two companies is the same, however nation and the sector needs to feel it in a big 64 5 there are differences in the way they serve How is the diversification trend in the UAE way in order to get the collective response that mandate. DEWA is the monopoly player power sector changing PwC’s business mod- that is required. There are two ways to reach in Dubai, covering all sections of the power el? that point, one is educating and becoming 48 4 and water sector. Both DEWA and ADWEA Significantly, look at ENEC for example, aware, the other is as a consequence of pow- have structured themselves to provide what pursuing a nuclear program is great in er outages and water shortages. The latter is is necessary for their respective emirates and principal but certainly challenging when not acceptable here: a power outage in July 32 3 I see no imminent change to this system. there is a lack of depth in qualified Emira- is the worst thing that can happen in this re- Efficient management of the power sector is ti nuclear engineers. It is a huge challenge gard, yet we are not that far away from it. So increasingly at the forefront of their opera- for any company or country to embark on my message is that there needs to be a strong tions. Abu Dhabi has a variety of initiatives such a journey without having the full set focus on the way we use energy, managing 16 2 in place within its power sector allowing it of proprietary skills. This creates tremendous the interdependencies between the power, to test and gain experience in each, capi- advisory opportunities for PwC, notably; ca- water, oil and gas and other sectors of the talising what works best, including a num- pability building, organisational and opera- economy. • 2004 2006 2008 2010 2012

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INTERVIEW WITH INTERVIEW WITH Robert M. Shifting Bryniak Sands

CEO The changing make up of the Emirati GOLDEN SANDS MANAGEMENT CONSULTANCY power sector

There is a stark contrast within the UAE on projects have been initiated, and my feeling is ting ready for the 2022 World Cup and there is government involvement and foreign invest- that power shortages will be overcome in the a lot of construction in progress; Iraq and Sau- ment in power generation. How do the differ- next couple of years. di Arabia are also seeing huge expansion. This ent Emirates compare? all affects Dubai and Abu Dhabi, where many Almost everyone in the Gulf region has adopt- What does the Hassyan IPP cancellation mean of the engineering and legal firms are located. ed a variant of either the Omani or Abu Dhabi for future bids? How likely is DEWA to repeat Much of the construction that took place here models for procurement of power. Oman al- this, and would there still be confidence from between 2005 and 2008 has now come to lows for 100% private ownership and partic- bidders for projects in Dubai? fruition, resulting in higher power demands ipation, with no direct government or utility My guess is that companies would still bid and other projects put on hold three to five ownership, while Abu Dhabi uses private-pub- on future IPPs or IWPPS, because returns are years ago are being restarted. Abu Dhabi and lic partnerships. There, the government gets attractive enough, though there is a risk that Dubai are projecting power demand growth involved through TAQA, which takes 60% of DEWA may not get the same type of bidder, of 8% to 9% per annum, but this could easily the project, while developers take the remain- or quality of bid, as it might expect and it may go to 12% or 15%: we saw Oman underesti- ing 40%. How the remaining 40% is shared have to provide guarantees that the project mate demand by a similar amount in 2012. by the private sector is entirely dependent on will indeed be awarded. Credibility is always the bidders; we are often seeing 20:20 splits an issue with IPPs, and in this respect both Abu The low price of gas in the UAE affects the due to the large capital investments required Dhabi and Oman for instance have done ex- viability of renewables. Is the solution a reduc- and levels of risk with the power project. The tremely well: I am not aware of them failing to tion of gas subsidies, or the establishment of other key difference is that in Oman the pro- award any IPP or IWP that was initiated. Given subsidies on renewables? ject company must IPO within four years of Dubai’s track record, it seems that they are not There is a general view throughout the Gulf setting up – this is to allow Omani nationals particularly interested in public-private part- that electricity, water and other utilities are to participate and help develop Muscat’s se- nerships. The municipal solid waste-to-energy social goods that should be provided for free, To make existence comfortable in what is, in curities exchange. Both models have been ex- project lead by Dubai Municipality was also and prices have been kept low partly for this essence, a harsh desert environment requires tremely successful. never awarded, even though it was tendered reason. In Abu Dhabi, for example, electricity electricity. To build and maintain a city of the Dubai has tended to take the government and re-tendered. Part of the problem was the is subsidized by about 85% for Emiratis, while scope and scale of Dubai, which contains the standard procurement approach. Their at- way in which it was designed. To be successful expats pay much higher rates. It is therefore world’s tallest building, the world’s largest tempt at the private sector route with Hassyan with public and private partnerships, I believe very difficult for governments to raise prices. shopping mall, and has announced plans for is not generally considered successful: they that government entities interested in pub- In my view, none of the Gulf countries are a new shopping mall that will break its own floated and then canceled the project, which lic private partnerships need to take a more likely to charge cost-reflective tariffs in the previous record, requires vast quantities of discouraged many developers who spent mil- structured approach, and eventually award the residential segment for the next decade or electricity. lions of dollars preparing detailed technical contract to show they are serious; otherwise, two, though higher rates may be introduced Added to these monolithic construction pro- bids and securing financing for the project. private sector companies may not respond to for commercial and industrial customers. It jects is the simple fact that the population of The issue in the northern emirates is a gener- future request for proposals. is the same with fossil fuels: raising the price the UAE is growing at a rapid pace. Indeed, al lack of funding. As a result, several of them to market rates, as economists suggest, could the UAE’s population growth rate of 3.06% is tend to rely on the financial support from Abu Considering the UAE’s economic develop- potentially lead to significant social unrest, as the ninth fastest in the world, surpassing even Dhabi. Sharjah, unfortunately, has not invest- ment and population growth, what are your it would result in higher prices for many con- that of the much-heralded population boom ed enough in either generation or distribu- estimates for the growth of power demand in sumer goods and services. I think subsidies for in Africa. With an economic growth rate sur- tion and has therefore experienced significant the UAE as a whole? renewables are the answer, as they have been passing even the high population growth, the power blackouts and shortages over the last Power demand is likely to double by 2020. shown to be very effective in countries like UAE’s population is becoming increasingly few years. The Federal Electricity and Water Compared to Europe and North America, Spain. I would also encourage much more wealthy for larger air-conditioned homes and Authority, which has taken over the respon- where most countries are seeing just 2% to R&D in the area of renewables to help bring entertainment, such as the already existing sibility for power in the northern emirates, is 3% growth, there is still a tremendous amount prices down further to more affordable levels world’s largest indoor ski slope, estimated to largely supported by Abu Dhabi. A number of happening in the GCC countries.. Qatar is get- for residential electricity users. • use over 1,000 MWh per year.

14 Global Business Reports // UAE POWER 2013 Industry Explorations Courtesy of CSEM-UAE Global Business Reports // UAE POWER 2013 15 ARTICLE

All this equates to a staggering growth in has stated intentions to move towards an IPP electricity demand. Experts estimate year- model, however phase one of the first IPP on-year growth in demand for electricity in project tendered was subsequently deferred, the region of 8 to 12% for the next 10 years. creating uncertainty over the future of such a The main contributors are population growth model in the emirate. and industrial development and, in response, Hassyan was to be Dubai’s first partially pri- the power sectors of Abu Dhabi and Dubai vate-owned power plant and through its six are currently undergoing a rapid and ambi- phases would have reached an impressive total tious transformation spurred on by staggering capacity of 9,000 MW. The initial tender in growth in demand for electricity. 2009 was eventually deferred indefinitely in Abu Dhabi and Dubai retain relative inde- April 2012, DEWA stating officially that ca- pendence for power generation, with each pacity would be made up through efficiency structuring and developing their sector to measures. Consortiums would have spent in match their specific and differing needs. the region of $3-5 million preparing their “Companies need to go through a separate bids, so a deferral at that stage would have registration process to start doing business in been extremely disappointing for all those each. In Abu Dhabi; it is not enough to be reg- involved. istered in Dubai,” clarifies Pradip Kumar Das, On the possibility of a Hassyan re-tender, GM of Gulf Jyoti International. David Charlier, partner at Ashurst comment- Abu Dhabi’s power sector is the envy of many ed: “Although the deferral was not ideal – in the region. “Abu Dhabi has eight independ- and it will have dented bidders’ confidence, ent water and power producers (IWPPs) in op- many developers and lenders were enthusias- eration, a nuclear organization in construction tic about the opportunity to do the first IPP phase, solar and wind projects in place, and in Dubai so I suspect that if DEWA were to discussions about waste-to-energy and carbon re-tender there would be interest. DEWA will capture and shortage. Where in the world has need to consider how to address the concerns a framework like Abu Dhabi’s? It is an absolute of potential bidders and to convince them that role model,” says Mobin Khan, Power & Utili- the project will go ahead”. ties sector leader at Ernst & Young. A great deal of uncertainty remains on the Abu Dhabi’s power sector is set up accord- future of the Hassyan tender and Dubai’s IPP ing to a single-buyer model, with Abu Dhabi model in general. As Dubai’s economy contin- Water and Electricity Authority (ADWEA) re- ues to grow and develop, there will be further sponsible for overseeing the sector through its requirements for increased foreign investment subsidiaries: Abu Dhabi Water and Electricity for the construction and operation of power Company (ADWEC), Abu Dhabi Transmission plants. and Despatch Company (TRANSCO) and The five smaller emirates, or “northern Abu Dhabi / Al Ain Distribution Company’s emirates” (Sharjah, Fujairah, Ajman, Ras Al (ADDC / AADC). Thus far independent power Khaimah and Umm Al Quwain), possess producers (IPPs) have been established with minimal natural resources and are in a much 40% of each plant being tendered to inde- earlier stage of industrial development. Each pendent bidders, the remaining 60% being is seeking to build on core industrial sectors owned 90% by Abu Dhabi National Energy and encourage foreign investment to spur Company (TAQA) and 10% by ADWEC. economic growth. Dubai, meanwhile, retains a much more bun- Economic development of the northern emir- dled approach to power governance through ates will result in an increasing demand for the Dubai Electricity and Water Authority electricity, to which Abu Dhabi has commit- (DEWA). DEWA owns and operates 11 plants ted to providing in the short to medium term varying from 400 MW to 1,400 MW with through expansion and diversification of its a total capacity of almost 9,000 MW. DEWA own power sector. •

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INTERVIEW WITH Nick Challenging Carter Diversification

DIRECTOR GENERAL REGULATION AND SUPERVISION BUREAU

Could you provide a brief overview of the ly conscious national and non-national vol- programme, and do you see it being further To meet massive increases in power demand, Creating a power sector to account for these certain amount of flexibility, power ramps Regulation and Supervision Bureau? unteers across the Emirates, which hypotheti- expanded? the UAE has chosen diversification so as to vast fluctuations is a great challenge for the from renewable energy will introduce a steep Our primary duty, established with the back- cally charge different tariffs at different times It is planned that four nuclear plants will assure energy security and to save hydrocar- UAE power authorities. Recent policies re- change in the way the power systems are op- ing of legislation, is the continuous provi- of day; if this trial is successful, within a year be in production by 2020, generating a to- bon resources for more lucrative export. The volve around incentivising off-peak usage. erated. Firstly Combined Cycle Gas Turbines sion of water and electricity for Abu Dhabi. we will be able to offer huge savings to large tal of 5.6 GW. Power demand for Abu Dhabi introduction of nuclear power creates a reli- Carter adds: “Everything comes under the (CCGTs) usually operate at an efficiency level The main functions are licensing regulated users of electricity for peak avoidance. There and the four northern emirates is projected able base-load power supply with minimal caption of ‘negawatts’ – we can, in effect, pay of about 55%, the efficiency drops as low as activities, defined by law as the production are a number of ways we can be imaginative: to be around 20 GW by then, so the nucle- CO2 emissions but inflexible electricity pro- people not to use watts by giving them very 35% when its load is reduced to 50% or less of water, generation, transmission and dis- another possibility would be interruptible ar program will contribute significantly. The duction. While the highly anticipated push cheap energy outside peak hours”. of the full power output. So we get a par- tribution, the sale of water and electricity, tariffs, where major users have parts of their bidding rounds have taken place on all four towards solar power, in this ideal climate, The emirate of Abu Dhabi has undertaken an adox where conventional thermal units that and waste-water collection, treatment and electricity switched off at certain hours of plants, although these are not issues we are will provide cheap, clean electricity but is ambitious nuclear energy program as one are run at part-load, varying their output ac- disposal. We do not regulate the gas sector or day. We are running trials on interruptible necessarily privy to: the government makes susceptible fluctuations beyond anyone’s path to meet this demand. Emirates Nuclear cording to solar production to maintain safe- district cooling, but we cover everything in AC units on five buildings here. Everything decisions, which it is our job to support. control. Energy Corporation (ENEC) was established ty and stability of supply, are penalised by the between. Another key duty is the regulation comes under the caption of ‘negawatts’: we Whether the nuclear program will be ex- This new era in the UAE power sector will to oversee the construction and operation of laws of thermodynamics. They become less of monopoly companies from a price-control can, in effect, pay people not to use watts by panded further in future is a question I don’t place new demands on conventional power the Middle East’s first nuclear power plant in efficient and more polluting. perspective; we undertake financial reviews giving them very cheap energy outside peak think anyone could answer. Nuclear energy generation, which currently makes up 97% the Barakah region of western Abu Dhabi. Secondly, power plants that run unevenly of their expected future operating expendi- hours. Electricity demand was 10 GW at its could only reach 40% of the UAE’s total ca- of electricity generation in the hydrocarbon The four units being developed by the Korea through the year have higher costs compared ture and capital expenditure, assess how well peak this year, but for many months it falls pacity if it reduced its swing-load between rich Arab state. With a nuclear base-load, Electric Power Corporation (KEPCO), set to to similar plants that are run around the they have spent in the past, and set their max- as low as 4 GW, creating inefficiencies with summer and winter, which could only really conventional power plants will be required be completed in 2020, will make up as much clock all year long. Increasing the flexibili- imum-allowed revenue. It is the same as the idle assets. be done by bringing in lots of industry which to mitigate the fluctuations of solar power by as 25% of electricity capacity in the emirate. ty requirements for conventional plants will UK’s system: price-control review periods Another key piece of work is with the Emir- provides what are known as flat loads. providing a flexible and dependable source Nuclear power plants for all their positive result in higher operation and maintenance are fixed at four years, during which time ates Wildlife Society in supporting a complete of energy. Global players in the field of con- characteristics are incredibly inflexible in costs. Components will have to be replaced we do not interfere, and companies make or replacement of incandescent lamps by their Will interconnection of the GCC grids have ventional energy are reacting with innovative their supply of electricity. They have a techni- and maintained more frequently. However, lose profits on the basis of how efficiently LED counterparts, which can save 90% of much of an impact? solutions, which will be essential in the rap- cally mandated minimum down time of ap- the impact could be mitigated through more they are run. Generation and waste water PPP lighting energy: the best way to do this will The nuclear and renewable energy plants idly growing and diversifying Middle East proximately 15 to 24 hours, and it takes up to sophisticated and smarter lifetime manage- projects are competitively bid, so we do not be simply to stop the import of incandescent have to run 24/7 all year: it might be that markets. two days to get them up and running again. ment processes. financially regulate them. The Regulation and bulbs through federal legislation. The devel- some energy is exported either to Dubai or It is expected that electricity demand in UAE Abu Dhabi’s nuclear program will make up The electricity authorities in the UAE need Supervision Bureau is currently involved in opment of LED technology in the last couple neighboring countries while they close down (and some other GCC countries) will grow the base-load in the emirate’s supply. to consider the additional costs on conven- the structure of power-purchase-agreements of years has been truly phenomenal, and it plants in winter. Those discussions are yet to by 8-10% year on year for the coming dec- The other key element of this diversification tional power plants used in a flexible manner for nuclear projects, and in determining the will get better and better. happen, however, and there is no hurry for ade due to population growth, commer- plan is the highly anticipated influx of solar and offer capacity remuneration mechanisms value of renewable energy projects. We look A further area of interest is dynamic response. them just yet. We have studied the transmis- cial-industrial expansion and then further power, primarily through a program of large such as those seen in more mature markets. at fair value and then make sure these compa- Because frequency is the same everywhere on sion system extensively and know it will exacerbated by the need for water supply solar parks. Due to abundant and costless Other important factors, which could help nies are able to deliver. a network at any voltage, you can program AC not need a fantastically huge investment to through energy intensive desalination pro- sunlight, it is a fair assumption that electric- mitigate this problem, include the role of or refrigeration units to automatically trip if it further integrate Abu Dhabi with Dubai; we cesses. ity from solar power will be given a guaran- smart grids in balancing demand and supply The UAE has been known for its overuse of falls below a certain level and other appropri- have the Emirates National Grid in any case. Seasonal fluctuations see significant dispari- teed priority for feed-in into the grid. How- from different sources. The issue of demand electricity. Does the Bureau have a role to play ate conditions are met. We would like to make But we only have one link to the GCC, with ty with residential and commercial demand ever solar power production varies greatly side management is also crucial in reducing in rectifying this? this an ordinary feature of all AC and fridge firm capacity of just 1.2 GW, which is no big seeing huge increases during the hot summer due to the weather or time of day. As a result reliance on conventional power plants. In ad- The Regulation and Supervision Bureau does type units sold here: as long as they are far game-changer. • months through substantial use of air condi- of this, there is a growing need for flexible dition the role of cross-border interconnec- have a huge part to play in rectifying the over- through their duty cycles when they switch tioning systems. Nick Carter, Director Gener- conventional power plants, which can cover tion in ‘smoothing’ fluctuations could be an- use of electricity. We have set up two offices, off, customers will rarely notice. al of Abu Dhabi’s Regulation and Supervision the fluctuating residual load. other way of solving these issues, but is very Waterwise and Powerwise, focused on the Bureau explains: “Electricity demand was 10 Gas and light oil – conventional power plants much still in the discussion phase at the GCC provision of information to customers and Some people have suggested 40% of the GW (Giga-watts) at its peak this year, but for currently meet approximately 98% of pow- interconnection authority (GCCIA). These the development of smart tariffs. Powerwise UAE’s capacity could be covered by nuclear many months it falls as low as 4 GW, creating er demand in the UAE. Whilst traditional points are beyond the scope of this article but has installed meters in the villas of 400 social- energy in future. At what stage is the current inefficiencies with idle assets”. variability of demand has always required a will be explored in our upcoming report. •

18 Global Business Reports // UAE POWER 2013 Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 19 Cleaner, Greener, Smarter and Nuclear: The UAE Power Sector Enters an Era of Diversification

“Abu Dhabi plans to generate 7% of its electricity from renewable sources by 2020, while Dubai is looking at 2% by 2020 and 5% by 2030. So the journey has started and what is most exciting is that the UAE has taken the first step in this part of the world. Saudi Arabia is now establishing very ambitious plans, the same can be said of Kuwait, Morocco, Jordan, Egypt and so on, which is great to see us all heading in the same direction with the UAE leading the way in many regards.”

- Bader Al Lamki, DIRECTOR OF CLEAN ENERGY AT MASDAR Courtesy of Masdar Courtesy of Masdar Global Business Reports Global Business Reports ARTICLE Industry Explorations Industry Explorations FACTSHEET

Projected Energy Composition

TWH ‐ ELECTRIC Under Current Policies 300 Source: EU-GCC Clean Energy Network Changing 250

200 Fossil Based Low‐Carbon Energy (Nuc, CCS) Focus 150

100 A breakdown of electricity generation in the UAE 50

2015 2020 2025 2030

TWH ‐ ELECTRIC Under Current and 300 Announced Policies Petroleum is the bedrock of the United of its remaining hydrocarbon resources. enced double-digit growth in the region Source: EU-GCC Clean Energy Network Arab Emirates’ economy, and forms a sim- “The UAE might well have enough gas to and would like to repeat this for the next ilarly dominant foundation in its power last until 2030 or 2050, but it doesn’t want three years; this is also a profitable place to 200

sector. Today, 97.5% of the 90.48 TWh of to take the risk,” says the regional manag- operate. In five years, all the solar plants Fossil Based electrical generation across the country er of Hatch, Roy Dabbous on the push for will be up and running, and we will be Low‐Carbon Energy (Nuc, CCS) Renewables comes from natural gas-powered plants, nuclear power. “In the last four years, there entering the nuclear phase.” 100 Efficiency Gains fed by the UAE’s 6.089 trillion cubic me- has been good push to develop the more The excitement from investors is a good ters of natural gas reserves, the eighth larg- of the UAE’s sour gas fields. These tend to indication of the promise of the UAE’s

est in the world. cost more and require greater diligence power sector, yet also a cause of challenge. 2015 2020 2025 2030 Yet the massive investment forecast for the when it comes to HSE”. “Apricum is convinced we will see some UAE’s power industry in the short to me- The opportunities that this growth and first tenders in Saudi Arabia this year, and TWH ‐ ELECTRIC Discussed Ambitions 300 dium term ($25 billion over the next eight diversification brings have made the UAE the overall mood of the industry will im- Source: EU-GCC Clean Energy Network years, according to a recent report by the a focus for companies such as German prove. The word is that initial tenders will Kuwait Financial Centre, Markaz) is not all manufacturer active in the oil and gas also be on the table in the UAE in 2013. pouring into the hydrocarbon sector. Of and energy sectors. “In the current global Competition will definitely be high; the 200 Fossil Based far more interest to investors looking to economy, the Middle East is Weidmuller’s market is oversupplied, with a strong chal- Low‐Carbon Energy (Nuc, CCS) take advantage of the expected 8% annu- highest-priority region,” explains Gupreet lenge coming from China… The industry Renewables al growth in the sector until 2015 is the Singh, regional sales manager at Weidmul- is in a consolidation phase, which is bound 100 Efficiency Gains country’s potential for renewable energy ler. “In the last year, leading figures in the to continue this year as prices remain low,” generation, smart grids, and the entire company have shown interest in flying out explains Niklai Dobrott, managing partner non-oil section of the power spectrum. here to meet customers. We have experi- of consulting company Apricum. • 2015 2020 2025 2030 The next 10 years will see the introduc- tion of a nuclear program in Abu Dhabi: Electricity Capacity Forecast Planned Capacity versus Forecast Consumption Existing Power Stations

by 2020 nuclear energy is planned to con- Source: EU-GCC Clean Energy Network Source: EU-GCC Clean Energy Network Source: various tribute 7% of the country’s total power CAPACITY GW ELECTRICITY GROSS MW NAME GENERATION TYPE demand. 60 4000 The highly anticipated move towards re- Shuweihat 1 IWPP 1,615 MW Thermal newable technologies has also begun in 3000 Shuweihat 2 IWPP 1,627 MW Thermal earnest, with landmark projects including 50 2000 Shuweihat 3 IWPP* 1,647 MW Thermal a 1,000 MV solar park unveiled in January 1,671 MW Thermal 2012. The famous Masdar City, designed 1000 Taweelah A1 IWPP to be a model of an environmental city, is Taweelah A2 IWPP 760 MW Thermal 40 now home to a renewable energy research 0 Taweelah B IWPP 2,220 MW Thermal hub, home to roughly 150 energy com- -1000 panies. Al-Awir 1,834 MW Thermal This push towards power diversification is 30 -2000 Jebel Ali 6,888 MW Thermal in line with the strategy of industrial di- -3000 Fujairah 1 IWPP 861 MW Thermal versification away from fossil fuel depend- 2,114 MW Thermal ence. For Dubai this will reduce the cost of 20 -4000 Fujairah 1 IWPP liquefied natural gas (LNG) imports, while Umm al-Naar IWPP 2,430 MW Thermal in the case of Abu Dhabi diversification -5000 Shams 1 IPP 100 MW Solar will give greater opportunities for export 2005 2010 2015 2020 2025 2030 -6000 2012 2014 2016 2018 2020 *full production planned for 2014

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INTERVIEW WITH INTERVIEW WITH Bader Frank Al Lamki Wouters

DIRECTOR OF CLEAN ENERGY DEPUTY DIRECTOR-GENERAL MASDAR INTERNATIONAL RENEWABLE ENERGY AGENCY (IRENA)

What is your view on the trend towards en- scope for renewables will potentially be in the what role is Masdar playing in these projects Could you tell us more about IRENA: its man- a target is extremely important, but a lot of working to reduce the cost of solar power. The ergy diversification currently taking place in region of 1,500 to 1,800MW. So there is a and how profitable are they? date and operations. detailed behind-the-scenes work then needs only ways to improve efficiency are through the UAE? need to do more and we are marching toward Masdar is a commercial enterprise and we IRENA is the only truly global organization to implemented; financial mechanisms and innovation, supply chain management and This part of the world has long been a ma- that goal in a way that is cautious, and coor- screen projects for technology risk, partners dedicated to advancing renewable energy. We legal and institutional frameworks need to scale, the last two of which only happen when jor contributor to the global energy sector, dinated in conjunction with developments risk, potential returns and project execution. have near-universal membership: more than be aligned. Having worked with countries you actually build things. PV cells will contin- be it through the supply of fuels such as oil in technology. Year on year we continue to We have world-class criteria for selection of 100 countries, plus the EU, are full members, around the world, we have a unique under- ue to follow a normal cost-reduction curve. and gas or by building capacity for electricity re-prioritise the renewable energy resource, these projects giving us a taste of being an in- and including others that are in the process standing of what does and doesn’t work – if They have fallen in price by 60% in the last generation. The UAE has been blessed with a aligning with the stakeholders involved who ternational serious player in this sector. For the of joining we are now supported by more you are new to renewables, it is of great help two years, and can already compete with LNG leadership who have a long-term vision. As will all need to be involved to help achieve London Array we have played a significant role than 160 countries. This gives us tremendous to work with IRENA. and burning diesel in a place like this. The the UAE continues to develop into the next this target. in the project development phase in addition convening power and the mandate to be the Dolphin gas supply from Qatar is limited, and decades and the next century, the demand for to collaborating with the partners on the pow- global voice for renewables, something which The UAE’s targets are very ambitious. What demand is growing. Unless they build another power also develops through population, in- We know the potential for solar power in the er purchase agreement with the UK govern- was missing before IRENA was set up. We are does it need to do to meet them? pipeline, it will not be enough – and I am sure dustrial and commercial growth. There is also region, perhaps more than any other region. ment. The London Array is a true demonstra- a global hub for technology and policy debate, Meeting your targets all boils down to having the next contract will reflect current market a strong link between demand of energy and How do you consider the significance of wind tion of a large-scale renewable project which and are able to help countries implement spe- the appropriate regulatory framework; it really prices. water in this part of the world with 97.5% of power in the region? is commercial. cific action, which has been very successful in goes down to the specific details. I have no current water supplies coming from desalina- The potential is there for wind power to be Gemasolar is the first solar power plant that recent years. doubts about the feasibility of the UAE’s tar- Masdar has won international acclaim for its tion, which depends on thermal power plants. part of the selection of renewable energy runs for 24 hours a day by utilising CSP and gets. Solar power can be developed faster than work. How significant is its innovation and This development calls for both demand side sources that we need to tap into. The GCC heat storage technology. Valle 1 & 2 are also Was there any significance in choosing Abu anything else: Germany installed the equiva- vision? management and diversification of the energy region however has been blessed twice, we CSP plants but using the parabolic trough Dhabi, at the center of an oil-rich region, as lent of six coal-fired power plants in the space Nobody else is building anything like Masdar mix. By diversifying you are not only ensur- have resources under the ground in the form system and some storage capability. They pro- the headquarters for IRENA? of a month just through individuals putting City. There is much talk about its slowdown, ing energy security but also ensuring the sus- of oil and gas but also blessed with abundant duce 50MW each, while Gemasolar produces The main reason for placing IRENA’s head- panels on their roofs. but there is no lack of commitment: the pro- tainability of our prime fuels while creating sun. The obvious pick with renewable energy 20MW meaning these three beautiful power quarters in the UAE was the country’s ded- ject just had to adapt to the local real estate opportunities for the export of those fuels would be one that involves solar thermal (CSP) plants constitute 120MW. ication to renewable energy. Despite being Germany achieved success through bringing environment. The entire world looks differ- now and in the future. If we look at the emir- or PV. Wind is of course location specific, we rich in hydrocarbons, the UAE still has a very in private investment. Do you see a similar ent today from 2007, and the current level of ate of Abu Dhabi; gas will retain a strong influ- do consider there to be areas with potential Along with these major projects, Masdar is substantive and ambitious renewables agenda; system working in the UAE? ambition is much more realistic. If you can ence on electricity generation, the safe nuclear to generate wind energy in the UAE but small also involved in projects in Mauritania, Tonga, Abu Dhabi has a 7% target for 2020, com- You can tap into the private investment of make this type of project work in Abu Dhabi, programme will take up its proportion of the in comparison to solar. Having said that we Afghanistan and the Seychelles. Could you tell plemented by 5% in Dubai for 2030, and the individuals and local banks by including a it shows you can make it work anywhere. energy mix and they have setup Masdar to be still see merit in pursuing wind power tech- us a little more about them? Masdar Institute is growing into a globally feed-in tariff for smaller distribution. For this its arm in developing renewable energy both nology not only to attain the knowhow for While we are primarily an institution to de- significant organization. to work, though, the solar sector needs to be Where can we expect to see IRENA five years locally and internationally. local generation but also to give us a strong- liver the large-scale projects, with our exper- subsidized to the same extent as other power from now? In terms of demand-side management, a er platform to engage in more wind power tise and credible track record, the UAE gov- How can IRENA work with the UAE to help it sources. I don’t necessarily agree that there is IRENA is the global voice for renewables, so number of initiatives have been established, projects internationally, such as in Morocco, ernment have entrusted us with supporting meet its targets? more opposition to feed-in tariffs in Dubai people will listen to us and continue to use among them is the Green Building Code Egypt and Jordan. In addition Masdar has been special projects in those regions. This is in IRENA is partnering with the Masdar Institute than Abu Dhabi. On the contrary, Dubai has us as a hub for information exchange. In five whereby new buildings must abide by certain involved in the world’s largest offshore wind someway connected to Abu Dhabi’s successful on its Global Atlas, a GIS-based online plat- an extra incentive from no longer having fos- years, we will have a substantial portfolio of regulations promoting efficiency in energy farm with the London Array in the UK, which bid to host the International Renewable Ener- form providing a quick but detailed overview sil reserves; it is now buying quite expensive services in terms of training, policy advice and water. started producing electricity in October 2012. gy Agency (IRENA) which will be based here of the potential of renewables. So far we have fuel. and overviews on cost and standardization. Masdar is a commercial enterprise and we in Masdar City. It is the first UN agency based developed the atlas for solar and wind, nor- One of IRENA’s challenges is showing people Masdar currently has Shams 1 active and set to will embark on those projects, be it solar or in the Middle East and will bring the atten- malizing the available data to make it usable, For solar power to take off, it needs to become renewables are much more competitive than expand, Noor 1 and Sir Bani Yas developing. wind, where we see potential for commercial tion of the world to the region and renewable and next year we will expand it to include bi- economically viable. What role should the they realize, because change is so rapid. Watch How much do these plans go to achieving that returns for us and our shareholders. energy. • omass and geothermal energy. Next year we government play in incentivizing it? this space. • 7% target for renewables? will also be working on targets – what they A combination of technological progress and In 2020 we will be looking at a total capaci- On Masdar’s international projects, namely actually mean and how they are embedded government support is needed. The Masdar ty in the region of 22 to 23GW, meaning the the London Array and Gemasolar in Seville, in the regulatory framework. Announcing Institute is a great example of an organization

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INTERVIEW WITH INTERVIEW WITH Mohammed Remi Mohaisen Coulon

DIRECTOR-GENERAL - THERMAL PRODUCTS & POWER GENERATION SERVICES SALES CHIEF COMMERCIAL OFFICER GENERAL ELECTRIC AREVA RENEWABLES

Please provide an overview of General Elec- we continue to invest in new products and happened at Fukushima. People are question- How important is renewable energy becom- Do you see space for experimentation in the corporate support. Our solar credentials have tric’s power and water division. upgrade our existing equipment. GE spends ing whether the plants can ever be considered ing for this region, and how important is the leading solar models here? already been proven, with three projects General Electric (GE) provides an array of $6 billion on R&D every year. safe, and you can count the number of new region becoming for the global industry? There is room for experimentation in the dif- worldwide deploying our technology, includ- energy solutions and power technology pro- ones being built on the fingers of one hand. Renewables are very strongly growing in the ferent types of solar here. AREVA is only in- ing the largest Asian CSP plant in India; and cesses. We are involved in the conventional There have been global trends toward flexi- It is possible the UAE’s nuclear program will region: clearly, saving precious oil resources volved in CSP, still a relatively new industry; the our technology is more suitable than our CSP power, wind, solar, biomass and nuclear sec- bility and efficiency. How does your FlexEffi- be expanded. They took a very bold decision for export is a key driving issue. Saudi Arabia technology was pioneered about 30 years ago competitors’ for booster/hybrid and desalina- tors. There are synergies with our water treat- ciency range compare to the similar products to go ahead with it, and will evaluate the sit- has calculated it may have to import oil in a but went into sleep mode until just recently. tion applications. ment and desalination capabilities, which of your competitors? uation in a few years’ time when the first pro- few decades if it cannot change the current We see the room for improvement every day. The question is now how we, the CSP indus- are why we have combined the two utilities Our FlexEfficiency 50 and 60 models have duction is underway. It is a very long process: trends. Committed to renewables for now over With so many different types of CSP and all try, face up to photovoltaics; which are, like under one unit. It receives $30 billion of an- achieved record efficiencies. The key differen- there are about 15 years between announcing 10 years AREVA acquired advanced technolo- the developments taking place, it would be a the field of renewables in general, growing at nual revenue and employs 100,000 people tiator, however, is their flexibility: the ability a nuclear plant and seeing it operate. If there gies, such as offshore wind and concentrated big mistake for a country to pick one technol- an incredible rate. Many countries have sep- in more than 100 countries. We are proud to switch on and off, and ramp up quickly. are any more tenders, we will certainly bid solar power (CSP) to develop a diversified and ogy and stick to it for the next 20 years. Our arate programs for these two types of solar to generate 25% of the power on the world’s We compete not only on the quality of our again. complementary portfolio. own technology has been able, in just a few energies. The potential for localization is one grids. equipment, but also on our service support, The group was among the first to enter the yers, to dramatically increase the temperature important political advantage we hold with Our UAE story began in 1975. We provide personnel and local footprint. Without the GE also possess market leading renewable high-output offshore wind market with the of steam reached at the outlet, from 300 to our CSP technology, and our clients clearly 30% of the UAE’s generated power, includ- quality of our equipment and services, GE technologies. How important is the sector Alpha Ventus park located in the North Sea, 500 °C, thereby increasing its efficiency and see also the benefits of CSP in providing much ing most of Dubai’s, and employ 400 people would not have achieved such great success within your power portfolio? demonstrating the high performance and re- economics. There is scope for R&D in adapt- more storage and dispatchability than PV. here. We have developed relationships within in the Middle East. GE has been successful in wind. Enron Wind liability of AREVA’s offshore wind technology. ing to the specific needs of a region, such as When clouds come over PV, production stops the public and private sectors across the UAE. was worth $350 million when we acquired To date, the group has over 600 MWe being desalination in the Gulf. There is also potential instantly, while CSP has at least 20 minutes In Dubai, we have completed phase one for Your TS1000 coalescer is well suited to the it; now it is an $8 billion business. This re- installed, over 1,500 GW confirmed in its here for the type of solar projects we are do- of thermal inertia, and we are bringing in a the largest aluminum site in the world, dur- desert environment here. Do you find there gion does not have a great wind map, how- pipeline and much more under advanced ne- ing in the US and Australia, which directly use storage solution, which allows power produc- ing which we installed our brand new DLN are unique challenges to the power sector in ever. The Gulf has only occasional wind farm gotiation, placing the company among the top the steam produced by our solar field into the tion to shift for up to 10 non-sun hours. Our 2.6+ to drive down carbon emissions. We this region? opportunities – there was one we showed in- three in the industry globally. AREVA is also turbines of neighboring conventional power clients more and more also compare the grid also have a waste-to-energy project with the When you build a power plant, the ambient terest in last year – and we don’t expect them the worldwide leader in the bioenergy sector, plants to reduce fossil fuel consumption. The impacts of PV and CSP in their assessments, municipality, which has shown great will- temperature and environment are key factors. to play an important role in future. Dubai has with more than 2,500 MW installed capacity economics of these booster/hybrid applica- and this is an area where we clearly have an ingness to apply new technologies. Our gas You need units robust enough to survive un- set extremely bold renewable energy targets, or under construction and an expanded mar- tions are very compelling. edge. In any case, this Darwinian race between turbine repair shop in Abu Dhabi has existed der the local conditions, with the right filtra- and we are used to the emirate executing its ket position. We are also active in energy stor- us drives down costs and is good news for the for years; it employs 100 people and serves tion to deal with dusty weather, and nearby promises, of course Abu Dhabi also. I believe age through hydrogen and fuel cell technolo- Considering the slow uptake of projects and region. neighboring countries as well as the UAE. service facilities and people. Because summer solar power is the future of renewable energy gies, and have several key innovative projects the recent influx of companies into the region, This is an oil-rich region but it is short of is when energy demand is highest, we plan here. A lot of big companies are leaving the being deployed and in use. how competitive are you finding the market? The UAE’s ambitious renewable energy targets natural gas, the most valuable source of pow- ahead of time to avoid outages occurring sector, but GE still feels it has growth poten- In solar energy, AREVA’s Compact Linear It is competitive, there is no doubt about it. mean a boom has to take place sooner or later. er generation. This is driving the need for then. Being an oil-rich region, with diversity tial. Efficiency and costs are the two challeng- Fresnel Reflector (CLFR) CSP technology was The uptake of projects may be slow, but we When do you envisage it happening? efficiency and diversification. In the last year of fuel and special climatic requirements, the es, which we are on the way to overcoming. the first to deliver direct, superheated steam take a long-term view; it takes time to build What we see at the moment is an explosion GE unveiled its FlexEfficiency concept, which Middle East is a hub for innovations. Technol- Our diversity of solutions includes thin-film at the Kimberlina power station in Bakers- and implement an energy program the right of pre-project activity. It will take a few quar- can also be integrated into renewable ener- ogies developed by GE in the Middle East are PV and CSP. Mixing CSP with combined cycle field, California. The group has 300 MWe of way. AREVA has set up a local office in Riyadh, ters to get the projects launched and financed gy plants. We have built two integrated solar fully transferable to the rest of the corpora- high efficiency will represent a revolution. CSP capacity in operation and construction, and is not discouraged by the pace of move- but, believe me, business is already quietly and combined cycle pilot plants, which can reach tion. We are in dialogue with all the government of which a 2X125 MW project in India for ment in the region. In the Middle East, busi- invisibly picking up. Although solar power is 70% efficiency, and it is only a matter of time stakeholders in solar power in the region. Al- Reliance Power to become Asia’s largest so- ness is gained through trust and long term much less complex than nuclear, people still before the technology is implemented in this Do you expect a further expansion of Abu though Mubadala is a major GE shareholder, lar power installation. Solar is the key; help- commitment, although of course you also want to see through demonstration projects region. We have also improved the efficiency Dhabi’s nuclear program beyond the four we do not have any special privileges with ing the industry benefit from the abundance need good products and technologies, as well that things can be done, showing the feasibil- of heavy fuel oil in our combined cycle gas units currently under planning and construc- its subsidiary Masdar; it is a very respectable of sun here is an important policy issue. The as project bankability. Backed by the weight of ity of solar projects in the UAE. • turbines. If the UAE is to double its genera- tion? customer of ours, and we are always seeking big question is which type of solar power to our shareholders and our strong and stable fi- tion capacity by 2020, it needs our help, as Global nuclear activity has slowed after what to improve our relationship. • pursue. nancial position, we are able to provide strong

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UAE Nuclear Energy Timeline

Source: ENEC

The Nuclear Age UAE nuclear Preparation for First safety Operations First fuel energy program construction of related concrete training under delivery for announced the first nuclear to be pured for way first unit unit under way first unit

Big investments and long-term planning 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 First Nuclear and Control room electricity Prime contractor "safety culture" simulator to be to the selected training to begin completed grid

Countries by Nuclear Energy With all the worries about nuclear am- proposed nuclear power plants in the Production (2011) bitions in Iran, it is encouraging to see wake of the 2011 Fukushima disaster in Planned UAE nuclear power reactors Source: World Nuclear Association atomic power being harnessed with al- Japan were praised recently by Dr. William Source: World Nuclear Association

TOTAL NUCLEAR SHARE OF together more peaceful intentions on the Travers, Director General of the Federal TYPE MWE GROSS CONSTRUCTION START START UP PRODUCTION TOTAL ENERGY other side of the Persian Gulf. Abu Dhabi’s Authority for Nuclear Regulation (FANR). RANK (TWH) PRODUCTION (%) 1. USA 790.4 19.2 nuclear program is the first nuclear project The UAE is also in close consultation with Barakah 1 APR-1400 1400 7/12 5/2017 in the Gulf Cooperation Council (GCC), the International Nuclear Energy Agency. Barakah 2 APR-1400 1400 mid 2018 2. France 423.5 77.7 the political and economic union made Nuclear energy is important for the sec- Barakah 3 APR-1400 1400 2013 2019 3. Russia 162.0 1 7. 6 up of Saudi Arabia, Kuwait, Bahrain, Qatar, tor. A 2008 study by the UAE projected Barakah 4 APR-1400 1400 2020 4. Japan 156.2 18.1 Oman and the UAE. electricity demand shooting up from 15.5 The plans for nuclear power in the Unit- GWe to 40 GWe by 2020: natural gas sup- TOTAL 5600 5. South Korea 147.8 34.6 ed Arab Emirates are relatively recent: Abu plies are sufficient to meet just 50% of 6. Germany 102.3 1 7. 8 Dhabi established the Emirates Nuclear this, renewables are estimated to be able to 7. Canada 88.3 15.3 Energy Cooperation (ENEC) in December account for just 6% to 7%, and imported Design Features of the APR-1400 Nuclear Reactor 2009 to oversee the nuclear sector. Current coal was dismissed as an option due to en- 8. Ukraine 84.9 47.2 Source: Korea Hydro & Nuclear Power Co. plans are to establish four nuclear reactors vironmental and energy security concerns. REACTOR SAFETY INJECTION SYSTEM (SIS) 9. China 82.6 1. 8 in the Barakah region of western Abu Dha- Yet quite apart from its necessity, this new - Thermal Power : 4,000MWth - Independent 4-Train SIS 10. UK 62.7 1 7. 8 bi. The tender for the project was contest- field represents a significant opportunity ed by a number of consortiums including for companies. ENEC was initially funded - Hot Leg Temperature : 615ºF - Direct Vessel Injection 21. UAE (expected 2017) 15.0 13.6 GE-Hitachi, EDF-Areva and the eventual with $100 million and no doubt there will - Thermal Margin : >10% - Fluidic Device in SIT

winners Korea Electric Power Company be a lot of contracts on offer for private PRESSURIZER STEAM GENERATOR (KEPCO) with compatriot partners Sam- firms. Estimated Project Finance Sources - Total Volume : 68m³ - Tube Material : Alloy 690 sung and Doosan, with a $20 million bid. “We have already worked for ENEC, al- Source: Bloomberg - POSRV for safe depressurization - Plugging Margin : 10% Construction started on the first reactor though our involvement in the nuclear (set to come into operation in 2017) in program is not so extensive yet… The nu- Comparison to other Reactors TO Source: World Nuclear Association TA L July 2012, and all four are scheduled to clear reactors do, however, need a lot of $3 0 B IL L APR1400 AP1000 EPR ABWR I be completed by 2020. Combined, they instrumentation, which we can supply in O N could make up as much as 25% of the partnership with Endress + Hauser in Ko- emirates electricity capacity, representing rea. Certainly for any work going to local Developer KHNP WH/Mitsubishi Framatome ANP Hitachi/Toshiba/GE a total of 5.6 GWe, providing the primary providers, Descon is right at the forefront, Power Capacity (MWe) 1,400 1,100 1,600~1,700 1,300 baseload of power demand. this should be very applicable to the re- Even in these early stages, this develop- newable sector,” explains Basu Sil, CEO Design Life (Year) 60 60 60 60 ment is already being viewed as a success of Descon, one of the largest local instru- Construction Period (Months) 48 (APR Nth ) 36 57 48 in many regards. “Our project is today re- mentation and automation companies in Operator Response Time (Min.) 30 - 30 - garded as employing global best practice, the region. • so ENEC is being looked at as a role model. Refueling Time (Months) 18 18~24 18 18~24 This is something to be proud of, but not Emergency Core Cooling System DVI DVI CLI 3Train SI complacent about: we have a long journey Abu Dhabi $10 billion ahead of us,” states Mohammed Al Ham- Core Damage Frequency 2.46x10- /RY6 2.5x10- 7 - 1.6x10- 7 madi, CEO of ENEC. Export Credit Agencies $10 billion Earthquake-Resistant (g) 0.3 0.3 0.25 0.3 Bank Financing and The pride of ENEC is not misplaced. The $10 billion Sovereign Debt design changes made to the UAE’s four Tube Material Alloy 690 Alloy 690 Alloy 690 -

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INTERVIEW WITH INTERVIEW WITH Mohammed Roy Al Hammadi Dabbous

CEO REGIONAL MANAGER – MENA EMIRATES NUCLEAR ENERGY CORPORATION HATCH

What were the key factors influencing the ENEC has a very comprehensive program in come qualified nuclear suppliers by upgrad- In the power sector, how important is this re- ity for years to come. What trends do you see ties does the sector provide for Hatch? decision to pursue a nuclear program in the place. It was clear in 2008 that staffing would ing their quality standards to ASME Nuclear gion for Hatch’s global corporation? over the next decade? There has been discussion about expanding Abu Dhabi? be a key challenge, so we introduced various Component Certification programs. This region’s power industry is large and con- Co-generation of gas with desalination plants the nuclear program further, but I suspect they The decision to launch a nuclear program streams for human resource development. tinues to grow impressively. Even supporting will certainly continue: it is the most environ- would like to first see how smoothly the early was based on an evaluation in 2007 of the More than 170 UAE nationals went to study The pros and cons of nuclear energy are hotly our key local and international clients on a por- mentally friendly way of meeting power re- stages go. The UAE has again shown tremendous UAE’s energy needs. Although the UAE is a relevant degrees abroad. With Khalifa Univer- debated around the world. Where does public tion of the work would be significant amount quirements. The UAE’s renewables program will vision in nuclear: it is always looking 10 years fossil fuel-rich country, unfortunately the sity, we established a nuclear bachelor degree opinion stand here, and how is ENEC battling when compared to other energy markets, as take time to have an impact, but they are taking ahead. The country might well have enough gas quantities of gas cannot supply electrici- program; and we have more than 60 students against negative perceptions? such this is a strong focus area for Hatch. It takes all the right steps and have extraordinary vision to last until 2030 or 2050, but it doesn’t want ty demands in full. Renewables and nuclear taking conversion courses from electrical to The nuclear industry has provided a clean, time to establish the relationships and reputa- to push it through. Even during the financial to take the risk. Hatch is eager to get more in- power were identified as good energy sourc- nuclear engineering at Abu Dhabi Polytech- safe and secure source of energy for decades tion which are all-important here. Initially, we downturn, it was the correct decision to make volved in the sector; close to 20% of our global es to make up the shortfall; nuclear energy is nic. We recruited talent from the nuclear now. A fingertip-size of uranium oxide pro- had been supporting our international clients those capital investments. 2017 is being given business comes in operational services, which more economical than burning diesel, and it energy sector, as well as utilities and oil and duces the equivalent energy of a ton of coal; (developers) in the market. Based on this suc- as the year when, to be comfortable, the UAE extend to nuclear power. Nuclear plants are produces almost no CO2 emissions. In 2008 gas, and have received support from Korea the fuel is very condensed in size, and can be cess Hatch is now focusing our efforts on re- needs nuclear power; beyond then, its abundant not like traditional oil and gas facilities – even the government published its nuclear energy and Westinghouse to develop senior reactor stored safely and securely for 20 years inside gional utilities as well. supply of gas at max production maybe tight changing out valves are very complicated tasks policy, committing itself to the highest stand- operators. Today, more than 65% of our man- the spent fuel pool. Following this, nuclear based on current power demand growth projec- – so you need an experienced engineering team ards of safety and security. This was trans- power is Emirati, but we still have a good in- energy operators have the option to store What power projects are you currently working tions. In the last four years, there has been good to support your operations team. lated the following year into law, leading to ternational mix of more than 30 nationalities. spent fuel in drycask storage or in geologi- on in the UAE? push to develop the more of the UAE’s sour the establishment of an independent nuclear It is a very healthy work environment. cal repositories. Security of supply is much Hatch has worked for many of the developers gas fields. These tend to cost more and require This region is ideally suited for solar power. Is energy regulator and, of course, the Emirates more reliable for nuclear plants than, for in the UAE, such as Sumitomo Corporation; we greater diligence when it comes to HSE, but that the current framework adequate in pushing it Nuclear Energy Corporation. Since then we Because of its cleanness and reliability, there example, coal. Plants around the world have also work with a lot of the lenders. For exam- is one of Hatch’s core strengths, of course. forward, and how much interest does Hatch have awarded contracts for construction of is also the potential to export nuclear power. been shown to be safe. ENEC has chosen a ple, we have been the lender’s technical advisor have in the industry? what is one of the biggest energy projects in Are any agreements in place? very advanced generation three reactor and for the recent project financing of all the Power Do you see good opportunities for Hatch from The solar framework is moving in the right the Middle East, and we have received con- Our nuclear program only took into consid- the safety systems among the most robust in Plants associated with aluminium smelters to- these developments, and how competitive is the direction. It is not clear when the appropriate struction and environmental licenses for our eration domestic requirements, which can the world. taling some 3,500 MW capacity. Our energy di- market for your services? feed-in tariffs will come in, but the push is power plants. still only be met with a combination of other Independent surveys have shown higher level vision locally is growing and supported by in- One of our biggest projects in the UAE came as there from the government. establishing Masdar developments. The Abu Dhabi Water and Elec- of public support for nuclear energy in the ternational staff from our centers of excellence a result of these sour gas projects. It has allowed was a fantastic step: it is a world-leading organ- There must have been a lot of interest in the tricity Company (ADWEC) will be ENEC’s UAE as in the US and other mature nations. around the world. us to add permanent staff to the office. Being an ization which has started something of a domi- project’s tender. Why did you choose KEPCO single buyer, any further agreements will be The engagement of the public and education employee owned company, we have a different no effect across the region. Hatch is growing its as the primary contractor? through them. is critical, because the industry is not well What differences have you seen between Dubai, risk-profile from other companies and prefer to solar business globally, and the UAE’s industry ENEC scanned the market and short-listed How do you see the development of the in- understood – mainly because of its size in Abu Dhabi and the northern Emirates in de- grow based on projects in hand. Competition will increasingly be of interest to us. three companies that were qualified to run dustry around nuclear? Will there be oppor- relation to oil and gas. More than 4,500 indi- mand for your services? is very strong in our market, but Hatch was the project. We had a comprehensive evalua- tunities for local companies? viduals have attended our regular public fo- Abu Dhabi’s model appears to be the envy of able to differentiate itself through combining How would we find this office if we returned in tion team of 120 people carefully reviewing In 2008 we looked at all the infrastructure rums: some are concerned parents, but others the region. It brought in foreign support the its niche capabilities in sulfur and material han- five years’ time? these companies for their records in safety, surrounding the nuclear industry. Some are just there to gain a greater understanding. right way from the start, and is always look- dling. Overall we have higher rate of PhDs per I would like this office will have blossomed to a environmental stewardship, human capacity things needed to be upgraded, and others did Those who do arrive with a negative view of ing at unique ways of doing things. DEWA is capita on staff than most of our peers, as such few hundred people in five years’ time, strong development, security and for their ability not exist. New entities, besides ENEC, were nuclear energy often leave with their percep- an established utility with an excellent and up we prefer technology projects and First of Kind across all the sectors Hatch covers. Hatch’s mod- to deliver. KEPCO matched up to our crite- created. Infrastructure, maintenance systems tions completely reversed.se who do arrive and coming PPP program. SEWA and FEWA and Projects. For example, we have an excellent gas- el has always been to follow its clients; the UAE ria, and we are delighted with the project’s and material supply would all have to be with a negative view of nuclear energy often the northern Emirates are also trending well for ification group which is strong in such technol- now has some very good companies which are progress so far. Today, there are 6,500 people provided by the private sector. An industri- leave with their perceptions completely re- the future, but some of their additional power ogies as IGCC; and we were at the cutting-edge going global and we are already assisting them working on-site. al road-map is being developed to make our versed.. Nuclear technology is set to advance requirements may well be coming from Abu of the wind industry during its infancy. here and in other parts of the world, a trend we nuclear program sustainable. It helps that the in the coming decades, further enhancing its Dhabi. hope to continue. • What training and educational schemes has UAE has a very robust oil and gas platform advantages: safety, efficiency reliability, cost Do you anticipate the nuclear program being ENEC put in place? to build on; various companies have be- and sustainability. • Gas will remain the primary source of electric- expanded beyond 2021, and what opportuni-

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Harnessing the Sun

Solar power in a desert environment

The UAE is a hot country. Rain, or overcast structed in association with Total and Aben- lenges for solar installations. “This is not weather of any kind, is extremely infre- goa Solar. Dubai has also made its intentions as good a place for solar power as the likes quent, at least in the more populated coastal clear with the announcement of the 1,000 of North Africa, Australia and Chile, which areas. On this extremely unscientific basis MW Mohammed Bin Rashid Al Maktoum have excellent direct sunlight, but it is the alone, the country should have significant Solar Park, which began construction in late second best” points out Hamid Kayal, CEO potential for solar power. 2012. of CSEM-UAE. Luckily, more scientific estimates confirm A debate still runs within the solar indus- “The main two concerns in the Middle East the initial perception. Solar power is a key try about which technology is best suited with regard to solar deployment are the element in the UAE’s forthcoming era of di- to this market; photovoltaic (PV) or con- high heat and dust, and our technology out- versification and its highly anticipated adop- centrated solar power (CSP). “There should, performs in both these aspects,” explains tion of renewable technologies. however, be space for both in the UAE; each Matt Merfert, project manager at First Solar, The region’s ideal climate for solar technolo- technology is good, and people who talk whose thin film PV modules have been cho- gy has been matched by the commitment of about the front-end investment cost advan- sen for phase one of the Dubai project. governments in Abu Dhabi and Dubai. The tages of PV are taking too simplistic a view. “There is a clear advantage for thin film Abu Dhabi government, through its invest- What you should do is calculate costs across when it comes to utility- scale plants, and ment arm Mubadala, has established Masdar the 20-25 year life cycle of a power plant” most of the new markets have large-scale City to advance renewable energy and sus- suggests Tonjes Cerovsky, senior VP of sales plants. Less electricity is used to produce tainable technologies through education, in the Middle East and Africa region for KSB. the thin film modules,” adds Christopher research and development, investment and The 100MW Shams One project has chosen Burghardt, First Solar’s VP of business de- commercialization. Along with regional of- a hybrid CSP and gas model but when com- velopment, referring to the reduced time of fices for major players in the power sector paring the two technologies, Yousif Al Ali, energy payback from a more efficient man- such as Siemens and Boeing, Masdar City general manager of Shams Power Company, ufacturing processes. will also be home to the United Nations In- suggests: “In 2008, CSP technologies were The market is flooded with solar-related ternational Renewable Energy Agency (IRE- still cheaper than photovoltaic (PV); how- firms positioning themselves to make the NA). “The main reason for placing IRENA’s ever, as a result of the financial crisis and most of the highly anticipated boom in headquarters in the UAE was the country’s large excess production capacity in China projects. Yet this has been the case for some dedication to renewable energy. Despite be- the price of PV dropped dramatically. Ac- years now, and the most significant obsta- ing rich in hydrocarbons, the UAE still has cordingly the generation of electricity from cle to the establishment of solar projects re- a very substantive and ambitious renewables PV became very competitive, with electric- mains: the lack of a regulatory framework agenda; Abu Dhabi has a 7% target for 2020, ity prices from PV now below those of CSP. in place to give confidence to both potential complemented by 5% in Dubai for 2030, If the dispatch-ability is not that important, investors and the utility companies. and the Masdar Institute is growing into a companies will go with the cheapest tech- However, there is a case to be made for globally significant organization,” said Frank nology, which at the moment is PV. When patience. “Although the lack of regulatory Wouters, deputy director-general of IRENA. countries begin to increase the percentage framework is an obstacle to the development “Masdar City is concerned with the energy of renewable energy in the system, they will of the solar industry, rushing the process as sector at large and we are specifically am- need a reliable, dispatch-able source of en- in the case of Jordan results in a framework bitious to be a growing important player ergy, and thus they will initially need to go that many find overly complex, perhaps dif- in the renewable energy sector,” explains for a mix”. ficult to understand. The real challenge for Masdar’s Bader Al Lamki, director of clean It is clear that this region should make full the UAE is whether it can create a regula- energy. use of its ideal climate for utilising solar tory regime to give the certainty to attract Masdar is the major partner in the UAE’s first power. However, despite the year round investment without it being overly complex major solar project, Shams One, a 100 MW sunlight and cloudless skies this harsh de- and prescriptive,” suggests Micheal Rudd of solar park in the desert of Abu Dhabi, con- sert environment creates some unique chal- legal firm Bird & Bird. •

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INTERVIEW WITH INTERVIEW WITH Saeed Vahid Ghubash Fotuhi

DIRECTOR PRESIDENT ENPARK THE EMIRATES SOLAR INDUSTRY ASSOCIATION

Could you provide an overview of Enpark and We always promote collaborations with our land packages, but we are certainly moving in Could you give us an overview of the Emir- companies putting in place legal frameworks price in the UAE, how does this impact the the services it offers here? business partners; for instance, we have re- the right direction. International companies ates Solar Industry Association (ESIA)? that will empower the residents of the UAE to viability of renewable energy? Enpark is a free zone business park dedicat- cently worked with a waste management understand the abundance of sunlight in this ESIA is a non-profit organization focused on install solar systems on their roof and create The most successful energy strategy is a di- ed to facilitating and fostering the growth of company on a reverse vending machine in- region, but the development of the solar in- growing the solar community in the UAE their own electricity, thus reducing the gen- versified energy strategy. It would be compet- alternative energy and environmental indus- centivizing the recycling of plastic bottles and dustry also requires the government to design and the broader Middle East region. We do eration burden on the utility company while itive to tap into solar resources for domestic tries. We focus on the energy, renewable ener- cans, unique to this part of the world. We un- good regulations and provide the right financ- this by bringing together three key groups in also reducing the country’s carbon footprint. consumption and to use fossil fuels for ex- gy, green building, recycling and solid waste derstand we are not experts in waste manage- ing tools. We know it is working on feed-in in the solar industry: the private sector, aca- Everyone wins! ports. The difference between the solar and management sectors. Along with our sister ment ourselves, but there are still benefits to tariffs, which I believe would act as a trigger, demia and the public sector. We achieve this the gas revolutions is that solar energy is sus- business park DuBiotech, we belong to the the company partnering with us. enabling viable investments from businesses through the various events and launches that What is your perspective on the differing tainable. To produce gas you need substantial science cluster of a family of free zones under and consumers. Solar water heaters are anoth- we organize throughout the year, including level of political backing for solar power in amounts of water and energy, which makes it the umbrella of TECOM Business Parks, which Dubai has consumed energy inefficiently over er major topic of the moment. networking opportunities, breakfast brief- Dubai and Abu Dhabi? not very sustainable, particularly in this part covers other sectors such as ICT, education and the years. To what extent is there the political All in all, the future is very promising and we ings, surveys, and gala events such as the ESIA I am pleased with both Dubai and Abu Dha- of the world where countries are covered by media. will to focus on efficient usage? foresee significant growth, not only in the so- Solar Awards. bi’s initiatives to promote solar power in the over 90% desert with very little water. ENPARK provides resources for environmental It is clear that efficient consumption of energy lar industry, but in the entire renewable en- past few years. They have shown determina- and energy companies to establish themselves is becoming more important to the UAE’s fed- ergy sector. Your report earlier this year was fairly posi- tion and willingness to put into place the Your report earlier this year suggests a 5% in the relatively untapped market of Dubai, eral and emirate governments. This is apparent tive, whereas your upcoming report explores policy framework and the supporting infra- cost improvement per year for solar energy giving businesses easy access to the Middle from investments in renewable projects and Are solar PV and CSP companies entering Du- the challenges the solar industry will face: structure needed to sustain a healthy solar technology, do you still believe this can be East and North Africa. These include: first-class the recent release of the Ministry of Energy bai a major source of potential business for have there been significant changes in the industry. Dubai in particular has been very sustained? infrastructure in conjunction with DuBiotech, and Environment’s federal strategy in collab- Enpark? past 12 months? impressive with the launch of the Sheikh Mo- Easily. We have seen a 50% cost decrease in free- zone benefits, comprehensive support oration with the GGGI. The government has a Enpark is strongly targeting solar compa- The overall outlook looks very positive. What hammed Bin Rashid Al Maktoum Solar Park the past two years. The cost structure can system and a number of value added services roadmap toward the UAE becoming a greener nies. We participated in the Solar Middle East this shows is that the local industry has strat- which will eventually house some 1,000 MW decrease as long as there is more innovation such as programmes, partnerships and amen- economy, touching on a whole spectrum of 2013, which for the first time is being held ed to dig deeper and look at all the various of solar energy. Already, they have tendered beyond the solar panel and into the balanc- ities to facilitate synergies that favour innova- issues including renewable energy, demand within Dubai’s long-running electricity show. steps involved at incorporating solar power and awarded the first 13 MW slice of this ini- ing system; the panel, the mounting struc- tion, growth and development. It is an ideal management, waste management and water This gives us further confidence the sector is into the region’s energy mix. Through this tiative within the first year of its inception. By ture, the invertors, combiner boxes and the one-stop platform to coordinate large projects consumption. Shams One, Shams Two, the growing; and the number, and quality, of solar exercise some challenges were uncovered. regional standards, this is fantastic. cabling. I see prices continue to fall for a few and deploy new green technologies across the Sheikh Mohammed Solar Park and Abu Dha- companies exhibiting at the World Future En- This is to be expected whenever you try to more years, which is exciting news for the region. bi’s nuclear program are all proof of how se- ergy Summit is an indicator of the industry’s change things. But rather than walking away, Siemens recently announcement that they are utility companies and the end-users. riously the UAE is taking its environmental potential in this part of the world. One way we see policy makers and the private sector to step out of the solar energy market, what What differentiates Enpark from Silicon Oasis strategy. the industry can demonstrate its environmen- coming together to find tangible solutions to are your views on this move by a major play- Summing up, where do you see solar energy and Masdar Free Zone in the minds of compa- tal credentials is through local manufacturing; overcome these challenges. This is a very ex- er? for the UAE in the next five years? nies entering the UAE? But we have been hearing the same message this is not yet featured at Enpark, but given citing and promising development. It bodes The market continues to evolve, with new There will be two key markets in the UAE. The idea behind TECOM Business Parks’ in- for a long time, and yet there are few projects the recent regulatory changes in the market well for the long-term prospects of solar companies entering the market while some Abu Dhabi is targeting 1500 MW of solar dustry-specific free zones is to foster the on the ground. Why have we been waiting for it is only a matter of time before companies power in the UAE and the broader Middle others exit. This shows you that the market energy by 2020 and Dubai is aiming for at growth of vibrant industry hubs and business so long? see the benefits. I have no doubt the UAE will East region. is very dynamic. Perhaps for Siemens it was a least 1000 MW by 2030. We are confident to drive the development of knowledge-based I disagree that there are few projects on the come to act as a scientific research and man- matter of allocating its focus and resources to that both of them can achieve the targets they economies in line with the UAE Economic Vi- ground: we have seen some real develop- ufacturing hub for solar power in the whole The lack of a legal framework is a key chal- better performing business units. If I was the have set. In the case of Dubai, they even have sion 2021. ments. For example, the 13 MW first phase of region. • lenge, have you seen signs on development CEO of Siemens I would likely do the same the potential of exceeding it. So this is very Besides providing a full range of sustainably the Sheikh Mohammed Solar Park has already in this regard? thing. But despite their decision, we see the exciting news for solar companies who are designed real estate products, and a legal plat- been awarded to a multinational; by the end Yes. When we published our earlier report industry continue to grow globally as the cost looking to establish a hub in the Middle East. form to supply their technologies and services of 2013 this project will start to reap bene- we identified the lack of a legal framework of solar energy continues to drop. Not only does the UAE offer fantastic living to the GCC market, Enpark also offers its busi- fits. It will take time to see all the goals of the as there was no framework for solar power standards for expatriates, it also holds poten- ness partners networking opportunities with renewable program being met. These projects in Dubai. But gradually this is changing. In Supply of low cost natural gas from Qatar tial for lucrative solar contracts in the years to other businesses and relevant authorities. are very capital intensive and require large Abu Dhabi and in Dubai we see the utility would suggest a sustained low natural gas come. Such a combination is hard to beat. •

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INTERVIEW WITH Christopher Burghardt & Matt Merfert

VP BUSINESS DEVELOPMENT EAME & EPC COUNTRY MANAGER FIRST SOLAR INC.

Could you give us an overview of First Solar’s What type of involvement did First Solar thin-film semi-conductor, as opposed to 90 the field before it has produced the energy operations in the UAE? have on the Masdar project? per cent of the market which uses typical that was used to manufacture it. Because our CB: We have a Middle East commercial team MM: The Masdar city plant is a 10 megawatt crystalline silicon. The main two concerns in process is highly automated and continu- of 12 people, which is based in the UAE and project installed in 2009, and it includes the Middle East with regard to solar deploy- ous, our modules take 2.5 hours to produce in Saudi Arabia. I am based in Dubai, cover- five megawatt of First Solar modules. Envi- ment are the high heat and dust, and our from the time a sheet of glass is fed into our ing Europe, the Middle East and Africa. Our romena was the general contractor on this technology outperforms in both these as- production lines until a completed module office(s) will grow alongside growth in the project. pects. First Solar modules have a proven per- comes out the other end. A crystalline sili- regional markets. From a power plant per- formance advantage over conventional solar con module takes about a day and involves spective, we have the Masdar plant as well as Looking towards the future, will First Solar modules, due to a superior temperature co- many separate operations, often in differ- our DEWA project. be more heavily focused on providing EPC efficient. This shows up in our energy yield, ent factories. From a CO2 perspective that MM: We are using the DEWA project as our services or PV modules? and we therefore enjoy a strong advantage makes a big difference. Our raw material use showcase project, to act as a launching pad CB: First Solar business is focused on pro- in this climate. Our modules are calibrated is also minimal: we use by-products from for First Solar in the region. The DEWA pro- viding integrated PV power plants, so EPC at 25 degrees Celsius, but in these environ- mining as semi-conductor materials, and ject will allow us to make key hires, engage services is an important part of our business, ments the modules will typically spend the glass which is fully recyclable. About 90% suppliers and local engineering firms, and but it is also a way for First Solar to sell its majority of their time above this. of our modules and 95% of the semicon- establish the connections required for a more modules. We are the most experienced com- CB: There is a clear advantage for thin film ductor material is recycled and reused. From permanent presence. We will have about 20 pany in the world at designing and building when it comes to utility scale plants, and an environmental perspective it is almost a First Solar employees on the project, and we utility-scale solar power plants, so especially most of the new markets have large-scale closed loop, and it is extremely efficient. The have built up a project management struc- in a new and quickly growing market like plants. First Solar has close to two thirds of lifespan of our modules are also extremely ture, partnered with a local engineering firm the Middle East we believe that expertise the market share of above 100MW plants, long. So on a life-cycle basis, we believe we and built up our compliance framework. I can help the government and our custom- most of which were built in hot environ- our technology has the best environmental expect us to break ground in early 2013. ers meet their objectives. That said, if we can ments such as the south-western US. Al- attributes of any solar technology. provide greater value by partnering with lo- though the production of thin film is less How important is the Middle East region for cal contractors, we will certainly do so, and expensive and more automated, it is also Where would you like to see First Solar UAE First Solar on a global level? we evaluate this on a case-by-case basis. We much more complex, so it is difficult for five years from now? CB: We believe the Middle East has the po- have a strategically opportunistic business new companies to penetrate the market. To- MM: From the EPC perspective, our goal is tential to be one of the most important solar model and are focused on supporting a sus- day there are only two large thin film compa- to translate our leadership and experience markets in the world. We expect significant tainable solar market in each region. nies, Solar Frontier and First Solar, although from the U.S. to the Middle East. Our mis- company growth to come from the Middle When supplying a public good like power GE is also potentially entering. Aside from sion is to enable a world powered by solar East over the next five years. Projects are you want to ensure that the citizens receive these three companies it is mostly small electricity. The opportunity cost of oil and coming up in Kuwait, possibly in Oman or the economic and social benefits. For this players entering this area of technology. And gas is vast, and First Solar can help oil-poor Qatar, and in large North African markets reason, we work with governments and local since we have the most experience building countries either offset very expensive im- such as Egypt and Morocco. companies to provide knowledge transfers. and operating large-scale solar power plants, ports in energy or solve the energy security The market is very young here, and besides we have a substantial amount of real-world problem. My goal for the next five years is Could you elaborate on which technologies just paving the way for the solar market, we data that enables us to optimize the design to see more widespread solar adoption, and you are providing in the Mohammad Bin are trying impact the market through our of our power plants. I believe First Solar has the technology and Rashid Al Maktoum Solar Park? technology and expertise. experience to facilitate that. MM: The Mohammad Bin Rashid Al Mak- Could you elaborate on the ‘green’ advan- CB: In the future, we hope that Dubai and toum Solar Park project involves a contract Could you elaborate on the advantages of tages of the thin film technology? Abu Dhabi will execute their solar plans, and for both turnkey EPC (engineering, procure- First Solar’s thin film PV technology? CB: Less electricity is used to produce the that we will earn a large share of the market ment and construction) services and supply MM: First Solar modules can be differentiat- thin film modules. Our modules are in- by supporting them. We also hope that our of our own proprietary thin-film PV mod- ed by the basic semi-conductor physics and dustry leading in terms of Energy Payback business can help create economic and so- ules. raw materials used in production; we use a Time—how long a module needs to be in cial value for the UAE. •

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INTERVIEW WITH Dr. Hamid Race towards the Sun Kayal in the Sunbelt

CEO Dr. Michael Krämer – Senior Associate CSEM-UAE Taylor Wessing (Middle East) LLC

Could you provide a brief introduction to terest not only within the region but also for by first building a prototype, a low-cost, The Middle East, and particularly the Gulf re- mix. In addition, most GCC member countries erwise, is likely to create a healthy demand for CSEM in the UAE? the energy sector worldwide; in Switzerland, high-performance, low power-consumption gion, is rich in oil. It is equally rich in solar have committed to more or less ambitious re- solar products. This, in turn, is likely to result This company, in the UAE, is shared between for example, people want to move beyond and high-precision technology. CSP and PV irradiation, however, and while extracting oil newable energy targets. in the establishment of a local solar market, RAKIA and CSEM in Switzerland. In our nuclear energy. After eight or nine months, may be well-established, but they still re- from the ground has now been done for vari- At present, both Saudi Arabia and the UAE because supply usually follows demand. home country, we were originally founded it became clear that renewables in this re- quire huge new investments. RAK has less ous decades, making use of the Gulf’s renewa- would appear to be closest to actually imple- There are lessons to be learnt from other and funded by the government of our lo- gion basically meant solar. Our research over money than Masdar, which is also actively ble fortunes has yet to really begin. menting a solar strategy. The UAE have taken markets. One of the most important lessons cal area. Our shares were left open to public the last few years shows the need to focus collaborating with multinationals, so the so- The incentive to generate electricity from so- the lead, having connected Shams 1 (a 100 to be learnt is that solar investments require companies, about 55 of which own part of on the harsh weather found locally: humid, lar island seemed a good solution for medi- lar resources varies from country to country. MW CSP plant in Abu Dhabi) and the Masdar stability. A reliable policy without sudden, CSEM in Switzerland, including Logitech, dry and dusty. This is not as good a place for um-to-low level energy supply. It can serve Saudi Arabia, for example, currently consumes City 10 MW PV plant to the grid. Another 100 unforeseen changes is key to enable banks ABB, Siemens and Swatch: the watch indus- solar power as the likes of North Africa, Aus- villages or districts, and does not need to about one third of its annual oil production MW PV plant in Abu Dhabi (Noor 1) and an to develop low risk (and thus, low interest) try makes up 40% of our ownership today, tralia and Chile, which have excellent direct be built out in the desert. It is not ugly and to cover its domestic demand for electricity. initial 13 MW PV plant in Dubai (first phase of financing solutions for solar investments. It the Swiss government 30% and the local sunlight, but it is the second best. If we can has been shown not to cause environmen- The generated electricity is then provided to the 1 GW Mohamed Bin Rashid Al Maktoum also creates long-term demand for solar prod- governments 30%. CSEM’s laboratories as- develop economically viable products in this tal damage to the sea. From the solar island, the Saudi population at a fraction of its gen- Solar Park) are in an advanced planning phase. ucts, thus making it worthwhile for producers sure its competing shareholders of full con- region, they are certain to sell in the oth- we can produce electrical energy as well as eration cost. Needless to say that one third Saudi Arabia, on the other hand, has an- and suppliers of such products to set up shop fidentiality. The idea was for industry to be er countries as well. Given the main uses of heat for coal production and desalination. It of Saudi Arabia’s annual oil output equates nounced concrete plans on building a total of where the market is. In order to be reliable, able to use our facilities and specialized en- energy here, it may be more economical to consumes very low quantities of power; we to dollar amounts that many countries could 41 GW of solar capacity by 2030. the incentive scheme cannot be too ambitious. gineers for certain periods of time without transfer solar power directly to cooling or are turning 300 tons of material with the comfortably live with for several years. Hence, Who will win the race? In the long run, Saudi Overly generous incentives that cannot be sus- needing to make investments of its own. For desalination than to electricity; our platform equivalent power of two hairdryers. We are replacing oil fuelled energy generation with Arabia is most likely to be the most important tained in the long run inevitably create boom trial projects, the government can pay 50% is designed to integrate existing technolo- not aiming for the highest of yields; our such that is solar powered makes a lot of fi- solar market in the Gulf region. It has the need and bust cycles as has been witnessed in Spain. of the costs and companies have the option gies and products to provide workable solu- intention is not to compete with the best nancial sense. to move away from burning oil as the hand This must be avoided at all cost. to buy back all the IP rights at a later date. tions for the region, whether for generation technology, but to bring an implementable The State of Qatar is a different story altogeth- which feeds it. It has also the biggest popu- What does the future bring? My guess is The emirate of Ras al-Khaimah (RAK) knew or the reduction of consumption. solution. We are using cheap mirrors at high er. As one of the planet’s biggest exporters of lation in the Gulf and the financial means to that the UAE will “win” the race and estab- the story of our success, and in 2004 it de- Our objective is not to compete against oth- precision to get the best yield-cost combi- natural gas, Qatar is able to generate electrici- invest in solar technologies. lish themselves as the first market in the Gulf cided to build an industrial facility to attract er institutions in the country; we have at- nation. ty at much lower cost. Of course, Qatar could Due to its size and that of its population, Sau- with a working solar market. In the mid-term industry by providing it with R&D assistance. tempted to learn from Masdar and Dubai, export those natural gas resources it currently di Arabia usually cannot act as quickly as its perspective, however, it will not be possible to I think it was too early: CSEM arrived to sup- and form a mutually beneficial partnership Which companies have you partnered with consumes for domestic consumption. Even smaller sized neighbors. The UAE, particularly ignore Saudi Arabia with its massive projected port an industry not yet in existence. We had with the government of RAK. As in Switzer- for the solar island? then, however, generating energy by burning Dubai, have frequently made use of this ad- demand. • to conduct projects for outside companies, land, we aim to recoup our investment in The first partner for the solar island was a natural gas is cheaper than using oil for the vantage and have positioned themselves as like South Americans studying high-preci- incubated companies by selling our shares Swiss start-up: it originally owned the IP same purpose. Hence, the incentive of gener- gateway to the Gulf and wider region. This About Taylor Wessing: Taylor Wessing is a leading International law firm with a single-minded approach: sion telescopes, which could have been bet- once they are successful. CSEM-uae is a not- but gave the rights in GCC to CSEM-uae ating solar electricity which comes at a higher could happen again, this time by the UAE to help its clients succeed by thinking innovatively ter done in Switzerland. From 2008 we had for-profit organization and, while supported in 2010. Now we are working with three cost is rather limited. implementing an ambitious policy for the about their business issues. the idea to concentrate on areas of regional by the RAK government, we are tasked with world-leading universities and opening up In the United Arab Emirates (UAE), virtually development of a UAE solar market. A step Taylor Wessing numbers around 900 lawyers working across 22 offices in Europe, the Middle East and Asia, strength and need. In the context of a region producing enough income to ensure our the concept to PhD and master’s students. all electricity is generated by gas power plants into the right direction is that both Abu Dhabi offering an integrated service across the full range with rapidly rising electricity demand, and own growth; we therefore work on projects Industry is also collaborating by testing ma- which are fuelled by natural gas supplied by and Dubai consider incentivizing private in- of practice areas, with core strengths in corporate, gas, which could be more profitably sold with economic possibilities, or which can terials in the project, but CSEM-uae worked Qatar at far-below market rates. The situation vestment into renewable energy generation. finance, real estate, IP and private wealth. The firm also has particular expertise in advising clients in North abroad, we decided to build infrastructure enhance our reputation and, thereby, our re- on the design alone. Where we subcontract is thus quite similar to that in Qatar, apart Other markets have demonstrated that a mul- America, Brazil and India. for clean-tech and renewable energy. We cruitment power. work, we try to give it to local companies from the fact that the UAE are almost fully de- titude of comparatively small, rooftop solar About the Author: Dr. Michael Krämer is a senior have concluded it is possible to fulfill the who can learn from it; less than 5% is so pendent on foreign gas supplies to meet do- installations usually make up the bulk of all associate at Taylor Wessing (Middle East) LLC who has been practicing in Dubai since 2005. He advises growth requirements of local industry in a Tell us about your specific innovations. The specialized it needs to go to the supplier. In mestic electricity demand. installed solar capacity. Hence, encouraging clients in relation to all corporate and commercial law sustainable and evolving way, while main- solar island was one that hit the headlines. the meantime, the government is using us By now, all countries of the Gulf Cooperation home owners and small and medium sized matters and has a particular interest in environment taining our original Swiss structure. The solar island was our first project. Our as consultants for companies proposing new Council, namely Bahrain, Oman, Kuwait, Qa- enterprises to install solar systems on the roofs related topics. He has published numerous articles and is a frequent speaker at conferences on legal matters There has been extensive debate on renew- location, next to a built-up coastline, made ideas; we have an international field of ex- tar, UAE and Saudi Arabia have committed to of their homes, warehouses or production fa- related to renewable energy. He can be contacted on able energy here, which we see to be of in- it easy to construct. The aim was to find, perts to draw upon. • including renewables in their overall energy cilities, be it by paying feed-in tariffs or oth- [email protected].

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INTERVIEW WITH Yousif Clean Al Ali Coal

GENERAL MANAGER Polishing the dirty carbon SHAMS POWER COMPANY

Could you provide us with an overview of The success of Shams 1 will increase compe- about 25 years. How does this compare with Shams Power Company? tition and attract more bidders in the future. CSP? Shams Power Company is a joint venture es- When the tender took place for this project The lifespan of both PV and CSP plants is tablished solely in order to run the Shams 1 in 2008, only two bidders, or consortiums around 25 years. This is the assumption made project, a hybrid concentrated solar power qualified. Shams 1 was a very risky project, in the financial models, but often these plants (CSP) plant that generates power from gas both due to its size and as the first plant of its last longer. For PV, the modules have a guar- and solar; it is a similar model to many plants type in the region. However, the project has antee of 25 years, but often they last for many in Spain. On Shams 1 we followed the IWPP proven to be a great success, and we are now more years. model, which includes tendering and then at the stage where solar is a very competitive creating a consortium. Our consortium in- technology. The industry has changed signifi- What should be the role of the government in cludes Masdar (60%), Total (20%) and Aben- cantly since 2008. encouraging renewable energy? goa Solar (20%); we are able to tap into the In Abu Dhabi, the model has been pro- breadth of knowledge that comes from these How do you compare CSP and PV technol- ject-based, which can have its challenges. The highly experienced companies. ogies? Which will be the obvious choice for feed-in tariff model, which has been used Construction on Shams 1 has now been com- this region? in Europe, presents more incentives for the pleted, and we will start generating electricity In 2008, CSP technologies were still cheaper companies, as it provides more guarantees. in early 2013. We almost finished recruiting than photovoltaic (PV); however, as a result In Abu Dhabi, however, the target is only the team that will run the plant, and we will of the financial crisis and large excess pro- around 1.5 GW, and with this target it may soon start training new engineers. duction capacity in China the price of PV not be necessary to go for feed-in tariffs. A dropped dramatically. Accordingly the gen- project-by-project model may continue to How significant is this plant for the Middle eration of electricity from PV became very work and may allow the government to have East and for the world? competitive, with electricity prices from PV greater control. However, in other countries Considering that the UAE has generally sification that they are so enthusiastically operating costs and increasing the quality Shams 1 will be the largest power plant in now below those of CSP. If the dispatch abil- with higher targets a feed-in tariff may pres- dismissed the option of importing coal to pursuing. Secondly, and more important- of CO2 generated. “Our project will cap- the world for a few months, and then it will ity is not that important, companies will go ent greater incentives. feed their growing demand for electricity, ly, it offers another chance for the UAE to ture CO2 at 98% purity, and we will fur- remain the largest solar thermal power plant with the cheapest technology, which at the due to environmental and energy securi- be at the forefront of energy technology, ther purify it to 99.99%, creating a premi- moment is PV. When countries begin to in- in the Middle East. When considering the Do you have a final message for our readers? ty concerns, it initially appears surprising while still maintaining their green creden- um product; we have already signed a deal significance of this plant, one must consider crease the percentage of renewable energy We built a renewable energy project because that the construction of a clean coal plant tials. for 200,000 tons per day with one of the the challenges of constructing and develop- in the system, they will need a reliable, dis- it made economic sense, and this has sur- is going ahead. The UAE has no significant The project’s success revolves around man- biggest marketers in the Middle East,” adds ing the plant in a desert: the conditions ini- patchable source of energy, and thus they will prised many investors, since the UAE is so coal reserves and, keeping with their en- aging the plant’s CO2 emissions through Menezes. tially came as a shock to the contractors and initially need to go for a mix. I would put the heavily oil-dependent. The demand for elec- vironmental consciousness, is a signatory carbon capture and storage (CCS) technol- Achieving this level of success could see we underwent an enormous learning curve. threshold at 5%. tricity will double over the medium-term, to the Kyoto protocol on CO2 emission ogy. “The technology for carbon capture is this clean coal model reproduced in other Learning opportunities included the potential and conventional sources will no longer be reduction. no problem, but it is very expensive, re- regions across the world on a bigger scale. impacts of dust; how to build foundations; How much will Shams 1 help support the enough. My message is that renewable energy This plant is being built in the emirate of duces a plant’s generation by 20% and re- Nearby Dubai has also discussed the poten- cleaning techniques, etc. Learning also took growing R&D sector? makes economic sense. • Ras al-Khaimah, by Utico in partnership quires the disposal of waste products; there tial addition of clean coal to their energy place during the construction phase, includ- A lot of learning took place on Shams 1, from with Shanghai Electric. The 270 MW plant is not a single commercially viable carbon mix. “Dubai have made clear their inten- ing on what could and could not be sourced the development to the construction stages. is set to be completed in 2015 and, al- capture and storage (CCS) project any- tion to construct a coal power plant, Bech- locally. The learning that took place on Shams We have many experts and students conduct- though yet to be confirmed, coal imports where in the world, even for enhanced oil tel has conducted some initial research and 1 will certainly help new companies in the ing research on the power plant, working on are likely to come from Indonesia. recovery” explains Richard Menezes, vice a location has been decided but the availa- future in this region, and we have been very improving design and efficiency. By investing open about exchanging information. on the R&D side we will help improving the Looking closer at the project, however, and chairman and managing director of Utico. bility of coal still creates some questions on efficiency of the plant. it soon becomes apparent that it fits very With a unique combination of technolo- how and when this will take place,” states Do you believe Shams 1 will help attract solar well into the UAE’s energy plans. Firstly, it gies Utico aim to achieve commercial vi- G.B.D Vara Prasad, operations manager at investment to the region? The lifespan of the PV plants in the region is is yet another strand in the policy of diver- ability of their CCS scheme by reducing Pöy r y. •

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INTERVIEW WITH INTERVIEW WITH Richard Jacco Menezes Jansen

MANAGING DIRECTOR EXECUTIVE VICE PRESIDENT AND MANAGING DIRECTOR UTICO NEM MIDDLE EAST

Could you provide an overview of Utico and studio. The tariff system should be based ple, Obama is against coal. Our project will How important has the Middle East become Nooter Eriksen but so far only CMI and our- Dhabi is leading the way because the ma- its operations in the UAE? upon people’s lifestyles and what they can change the world. We have met scientists for NEM Group’s global family? selves have the capability and proven track ture and privatised nature of their regulatory Utico is in its eighth year of operation. We afford, and there should be rewards for low- from the United Nations, the energy and cli- The Middle East is very important, in fact record in providing vertical HRSG’s for oil system which can allow for the subsiding started as, and remain, a water company: but er consumption. mate department of the Ministry of Foreign the majority of NEM Group’s turnover past fired power stations, which have to account of renewable energy. Our involvement in Al to make water you need power, which is in Affairs, the Carbon Capture and Storage Insti- year came from the region. We have recently for sulphur condensation and hence need a Kuraymat puts us in a favourable position to short supply. Utico therefore started selling Epitomizing the diversification of the UAE’s tute and the University of Abu Dhabi. Every secured the PP10 project in Saudi Arabia for special type of design. support the EPC companies looking to take spare power; we now have 118 MW on the power sector is your clean coal plant. What single one of them has been transformed 40 Heat Recovery Steam Generators (HRSG) on those projects. ground. Three years ago, we initiated a long- led to the decision to undertake this project? from a pessimist into an optimist on this which represents NEM Groups largest con- Speaking of oil-fired power stations, do you term strategy looking at alternative energy The diversification of generation in the UAE project. tract ever. see your sizable contract for Riyadh Power What do you see as the major trend for sources, such as solar, and combined-cycle is purely the result of a shortage of gas, and Our 270 MW plant will produce a managea- Plant 10 leading to more contracts in the re- upcoming tenders in the region and NEM generation. For a growing utility, you need the desire to sell it abroad. Other than sun- ble level of carbon dioxide. CO2 has a com- What were the key factors in choosing to gion? Group’s ability to win those tenders? a mix of fuels and technologies. Our goal light, the most abundant alternative fuel mercial value at levels of purity above 96.5%, setup a Middle East office and why did you In contrast to the UAE, Saudi Arabia has a Major trend in the region is conversion of gas is to produce between 500 and 600 MW source is coal. Unfortunately it is dirty, and which CCS projects are yet to achieve. Our choose Dubai over other cities in the Gulf? tendency to allocate more gas to industrial fired plants into combined cycle plants such by 2018, in addition to one million cubic as the UAE is a signatory to the Kyoto Proto- project will capture it at 98%, and we will Firstly to be closer to the customers from a plants for high added value products and as the Rabbigh 5 and 7 and Jazan power plant meters of water per day; up from 200,000 col we have to do something about this. We further purify it to 99.99%, creating a pre- business development and sales side but also utilize their abundant oil supplies for pow- in Saudi Arabia and the power plants in Al today. These goals are very realistic, as we are embarked on our clean coal project a while mium product; we have already signed a deal for project execution. Secondly, for fiscal rea- er generation. There are a number of new Ghail and Al Hamra in Ras Al Khaimah in the planning for a combination of organic and ago. The technology for carbon capture is no for 200,000 tons per day with one of the sons, with the tax benefits of having an entity tenders coming up for oil fired power pro- UAE. These conversions require a significant inorganic growth, searching extensively for problem, but it is very expensive, reduces a biggest marketers in the Middle East. here. Thirdly, it is the availability of highly jects in Saudi Arabia, where we would ex- investment but the energy gains are around acquisitions. plant’s generation by 20% and requires the skilled and fairly low cost staff from the sur- pect NEM Group to be in a good position as 40%. The payback times are usually around Utico provided the water, power and sewage disposal of waste products; there is not a sin- We understand DEWA is considering further rounding region, namely India, Pakistan and the Risk Avoiding nature of Saudi Electricity five or six years since combined cycle pow- for the first of the World Islands project in gle commercially viable carbon capture and plants? slightly further, from the Philippines. Dubai Company makes them unlikely to take on an er generation is still the most efficient way Dubai, was involved initiating Palm Water storage (CCS) project anywhere in the world, Dubai has hired McKinsey for a study on a is the business capital of the region provid- unproven or not yet qualified supplier as an of generating electricity. The competition is and has launched a roughly $500 million even for enhanced oil recovery. The largest 1,500 MW coal-fired plant; it projects 12% ing simplicity, support and close proximi- ‘experiment”. much the same for these conversion projects, clean coal project. We have always been a carbon capture project in Europe is in Nor- of its power being supplied by coal in the ty to our client base. The only challenge is although many facilities do not provide a pioneering company, especially in uncon- way, where it is simply used to avoid taxes. next six years. They are also expecting to use abundant competition, however as far as we NEM was involved in the pioneering Al traditional space for new elements meaning ventional investment projects. Our business Some companies have spent $100 million on carbon capture, but they still don’t know know we are the only major HSRG supplier Kuraymat hybrid solar and combined cycle the expertise of top companies with creative model is unique. No company other than R&D for CCS and not put it to any use. what to do with the CO2. to maintain a comprehensive office here in- plant in Egypt. How successful has this plant solutions such as NEM Group stand a better Utico has built water and power projects Utico has managed to find that commercial Utico is working with DEWA on some as- cluding engineering support and local pro- been and do you expect the Gulf countries to chance of gaining those tenders. without off take agreements; we are a ful- viability in its clean coal project, bringing pects of clean coal; it can benefit from our curement, which gives us a higher level of adopt this approach? ly-fledged utility with its own transmission together a unique mix of technologies to co-operation as it investigates carbon capture customer intimacy. The plant in Egypt is in full operation now Where would you like to see NEM Group and distribution networks. If any govern- reduce the operating costs. One of the tech- in its own project. Dubai’s Supreme Council and is doing well, it is one of just two hy- Middle East five years from now? ment support was available we would be a nologies came from Shanghai Electric, which of Energy and the Carbon Centre of Excel- Having been involved in the Jebal Ali Power brid solar and combined cycle facilities. The We are looking to increase our market share; much more profitable company, but we are decided to co-invest in the project around 10 lence are both involved. There are oppor- & Desalination Station L, do you anticipate a solar plant supports power generation with we are keen to position ourselves as one of still healthier than most, growing at a com- months ago. It has special scientists who have tunities for us related both to international continued trend towards such co-generation an additional 20MWe during the day using the three leading suppliers in the region in pound rate of 35% per year. been working on CCS for the last 10 years, projects and the feed-in tariffs soon to be facilities? the parabolic trough system and it reverts terms of volume. We are looking to expand and we have exclusive agreements with it for implemented here. Yes we do, combining power and water al- to a traditional combined cycle power plant our office here to 50 to 60 people allowing What is your view on the regulatory frame- future partnerships in the Middle East. lows more efficient use of steam and is there- during the night. We believe this type of hy- us to take on at least two major projects a work for the utilities sector in the UAE? If we return in five years for the next report, fore practical. Also from our standpoint the brid ISCC (Integrated Solar Combined Cycle) year. Furthermore per project we aim to pro- When you fly on an airplane, you have first, Does your plant represent a model which where will we find Utico? construction and adaptation of more com- plant has a future, currently the cost is only pose the best global sourcing scenario and business and economy class. Why is it not the could be replicated elsewhere? Utico has had four similar clean coal projects plex facilities give NEM Group an advantage justifiable with a subsidised feed in tariff but to optimise the amount of “local content” in same for water and power? People living in Current coal-fired projects around the world approved in four different countries. In five over lower cost competitors due to our high this should change as solar technology ad- the project. This not only contributes to more five bedroom villas with Jacuzzi’s are paying need to adapt to reduce their environmen- years the world will be a very different place: level of expertise. Our main competitors are vances. Saudi Arabia and Oman are looking at sustainability but also supports the growth of the same slab as those living in a one-room tal impact; in the United States, for exam- coal will be much greener. • companies like CMI, Alstom, Doosan and introducing similar systems, in the UAE Abu the local economies. •

42 Global Business Reports // UAE POWER 2013 Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 43 Global Business Reports Global Business Reports ARTICLE Industry Explorations Industry Explorations INTERVIEW

INTERVIEW WITH Conventional G.B.D. Vara Energy Prasad

Making use of the UAE's resource OPERATIONS MANAGER PÖYRY, DUBAI

While the commitment the UAE has shown How important has the region Middle East fee, which is what we offer. The climate is ideal for solar but the main to increasing its renewable energy portfolio is become for Pöyry? issue with the solar industry is the initial in- admirable in its environmental awareness and Operations in Middle East started more than Looking specifically at gas power generation vestment required and the expected ROI. At impressive in its scope, there is nonetheless a 30 years before and specifically in UAE, we what trends have you seen developing? this stage, getting clarity on these through well-known challenge for renewable power: started in 1996 before Pöyry’s takeover with Although there is some activity in the UAE a legally binding regulatory framework and the instability of supply. Even with the rarely approximately eight employees. During the gas fired generation sector, the majority of clear feed-in-tariffs (FIT) is important. The cloudy skies of Dubai, the sun does not always boom times, 2007 to 2008, we had up to activity for this sector is occurring in Saudi same goes for wind energy, both these sectors shine, yet electricity consumption goes on re- 110 employees, which again reduced due to Arabia. The requirement for both water and are in their infancy in the region and they gardless. the global economic crisis but we have be- power is driving this trend in both countries will take some time to develop. Pöyry is ac- For this reason, any country investing heavily gun to grow again recently. The Dubai office but the scale of expansion is significantly tively engaged in developing and promoting in renewables must have a back-up plan. Or, works as the hub in the region. In addition greater in Saudi Arabia. The expansion of nu- the sector, and has extensive experience and to put it in the more eloquent words of Lars- we have offices in Abu Dhabi, Oman and Sau- clear and solar power will lessen the expan- capabilities from the development in Europe Åke Kjell, regional director of power plants di Arabia. We have high hopes for the UAE sion of gas fired generation projects but we ranging from management consulting to for Wärtsilä: “To account for the fluctuations specifically, particularly in the Transmission & will have to see the success and cost effec- EPCM. We have also been involved in devel- of renewable energy, you need plants which Distribution market and the nuclear market. tiveness of this diversification trend in a few oping the KSA’s renewable energy strategy. can start quickly. The peaks in the load system Last year our management consultancy prac- years from now. should be handled more efficiently than they tice opened a regional office in Dubai after a Pöyry is known for its expertise in Transmis- are today”. long history of serving the region from Eu- How is Pöyry preparing for the establishment sion and Distribution systems, are there many The UAE is in the privileged position of hav- rope. of a nuclear programme in the UAE? opportunities in this seemingly competitive ing ample supplies of natural gas, which can We have a good relationship with ENEC industry? provide this fall-back source of generation. How have you seen the development of de- and have a framework agreement for nu- There are many opportunities arising through Combined cycle gas turbines (CCGTs) have mand in the northern emirates? clear services with them. Our management T&D but the market is highly competitive. We the advantage of being able to ramp up gen- costs. Components will have to be replaced We have seen demand in the northern emir- consulting practice has recently finished a consider this to be our main market within eration quickly, to account for variations in and maintained more frequently. ates. We have also executed a couple of pro- ground-breaking strategy study in the inter- the power sector here in the UAE. On the output for other sources, in a way that other However, this impact could be mitigated jects. We have seen more activity in Ras Al action of nuclear generation and water pro- EPCM side of T&D sector, it may not be so energy sources, such as nuclear, cannot. through more sophisticated and smarter life- Khaimah and Fujairah. In Ras Al Khaimah duction for ENEC. In addition, ENEC is a key lucrative for us due to the competitiveness in However, they are not free from problems. time management processes. this tends to be with private clients serving client for our engineering business. We have the market, however in the power generation CCGTs usually operate at an efficiency level ADWEA and DEWA should be planning for the the power generation needs of the industrial the flexibility to take on a number of roles side we see less competition. Therefore with of about 55%, with the efficiency dropping as additional costs on conventional power plants sector. given the breadth of expertise Pöyry offers in T&D we have found it more profitable to fo- low as 35% when its load is reduced to 50% used in a flexible manner, perhaps with capac- the nuclear sector. cus on the consultancy side. or less of the full power output. The paradox ity remuneration mechanisms such as those How competitive do you find the UAE for Do you see opportunities in the emerging of environmentally-friendly solar energy is seen in more mature diversified markets. Ma- your services? clean coal sector? Where would you like to see Pöyry in five that it can often lead to conventional thermal jor engineering and manufacturing firms ac- It has certainly become more competitive Dubai has made clear their intention to con- years from now? units being run at part-load, varying their tive in the UAE are well aware of the issue, due to new companies entering the market struct a coal power plant. Bechtel has con- There were about 20 new projects that we output according to solar production. They with such as GE’s FlexEfficiency portfolio or predominantly in engineering but also in ducted some initial research and a location have or are bidding for this year, from those are then penalized by the laws of thermody- Wartsila’s gas engines utilising their Flexicy- management consultancy. Many of these new has been recommended but the availability of only four or five have been awarded to date. namics: they become less efficient and more cle technology aimed at reducing the impact. companies are smaller and try to compete coal still creates some questions on how and We are receiving many more enquiries this polluting. Power plants that run unevenly GE’s general manager for thermal products mainly through pricing, where our strategy when this will take place. If and when a coal year in comparison to last year. The prospects through the year have higher costs compared and power generation, Mohammed Mohais- is to focus on the quality of our work. This power plant emerges Pöyry would be looking were good, so 2013 should be a good year to similar plants that are run around the clock, en, adds: “This is an oil-rich region but it is strategy has resulted in establishing strong re- at it from a consultancy point of view. for Pöyry. Within 5 years we are looking to all year long. So increasing the flexibility re- short of natural gas, the most valuable source lationship and repeated business with our ex- grow from the current staff of 60 to at least quirements for the conventional plants will of power generation. This is driving the need isting clients. Many companies want the best How do you assess the development of the 100 in the UAE alone, conducting a variety result in higher operation and maintenance for efficiency and diversification.” • combination of both quality and competitive UAE’s solar power sector? of detail design and consultancy projects. • Courtesy of NEM

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INTERVIEW WITH Seppo Hautajoki & Lars-Åke Kjell

MANAGING DIRECTOR & VICE PRESIDENT SERVICES complete one. Until this happens, solar and is paid to the highest loads, whilst the fluc- You are more specialized than your compet- REGIONAL DIRECTOR OF POWER PLANTS wind power can never guarantee to react to tuations and responsiveness is being ignored, itors in the gas engine sector. Does this give WÄRTSILÄ the demand. When people discuss peak loads which in the end will save on fuel costs. Maybe you an advantage for those tenders? they normally compare summer to winter, but there should be differences in the pricing of LAK: We aim to change the mindset of the often they overlook the fact that there is a 30% tariffs for peak and base load plants. Although utility companies and get our technology difference between max and mean daily pow- fifth in the world for delivering power, Wärt- approved for tenders in this region. With the How important has this region become for LAK: Not much is going on in the Emirates. er usage, which cannot be easily managed by silä is small compared to its competitors: we private sectors through IPPs like in Ras Al Wärtsilä. Which countries and services do you They have been focusing very much on big solar or wind. deliver 3-4 GW per year, compared to 50 to Khaimah, we have no problems. cover from this office? power plants. Unfortunately they selected 60 GW totally on a global basis. However, we LAK: This region has always had a certain im- open cycle gas turbines for the daily peaking How competitive is the market for these flexi- are not playing exactly the same game as GE or Where would you like to see Wärtsilä UAE’s portance to Wärtsilä. From here, we cover 14 power load fluctuations which our engines ble power generation systems? Siemens with their CCGT installations. While power plant division in five to ten years? countries from Pakistan to the Red Sea. It is would have been able to handle much better. LAK: The challenge is that when there is a ten- CCGT is the most efficient producer of elec- LAK: Power plants between 100 MW and 400 one of the few regions in the world still usung Our engines produce an efficiency of 42%, der, it is evaluated on a power plant basis. We tricity when it comes to base load, our tech- MW are very suitable for our combustion en- heavy fuel oil for power. Whereas in the UAE while these turbines on part loads are in the are saying it should rather be based on how it nology is world-leading when talking about gines, and this is where we would like to see the conventional gas power plants are often range of 20% and 25%, with similar initial improves the grid system. Too much attention handling quick load changes in a grid system. our technology. • using light fuel oil in peak times, which is investment costs. The mindset is slightly dif- little known by the general population. This ferent here from the West: it takes longer to creates opportunities for Wärtsilä. convince people of new technologies, even SH: The legal entity here is Wärtsilä Gulf. Reg- after they have proved successful elsewhere. ulations specify we must have local partners, with whom we have established various LLC As renewable energy becomes more important companies. From this office, we cover all of in the UAE, will you see the demand for your Wärtsilä’s business areas. We also have branch smart power generation technology grow? offices in Jordan, Yemen, Syria and a Qatar LAK: Under our smart power generation operation set up in November 2012. We have umbrella, we talk about flexible power and been in Abu Dhabi since 1992, under the cur- flexible operation. To account for the fluctu- rent name since 1997, and have made vari- ations of renewable energy, you need plants ous acquisitions. The company started really that can start quickly. The peaks in the load growing about 10 years ago, mainly due to system should be handled more efficiently the expansion of the service business, which than they are today: this is Wärtsilä’s window now employs 90% of our 370 staff. to assist with costs and carbon footprint re- duction. Starting gas turbines up and then The power plant you have supplied in Ras Al turning them off means higher service and Khaimah is soon to come into operation. Can maintenance costs, so there should be a move you give us an update on the project? towards more agile generation. The type of LAK: Ras Al Khaimah is a 40-MW power mindset shift we need is already happening in plant, which, according to our Customer UTI- Jordan, which is building a 600MW dual fuel CO, will be extended in future. Wärtsilä is the power plant, with 350 base load and the rest equipment supplier and delivered the equip- for peak time, reflecting the desire for flexibil- ment quite a long time ago. The power plant ity. As the region moves into an era of smart would commence operation in March or April transmission and smart distribution, some next year. It will be the first plant in the UAE countries would benefit of using responsive using gas engines. We are looking forward to generation or smart power generation. see it up and running, as it will then act as showpiece not only for our customer but also Do the new heat storage capabilities of solar for Wärtsilä. plants mean a reduction in these fluctuations? LAK: The biggest problem today in the en- Do you have other power plant projects lined ergy world is the storage of electricity. There up in the UAE? are many possible solutions, but not yet a

46 Global Business Reports // UAE POWER 2013 Industry Explorations Global Business Reports Global Business Reports FROM THE GBROUNDUP Industry Explorations Industry Explorations EXPERT OPINION

Diversification of Energy Utility Tariffs in the Middle East: Resources in the Middle East Rewarding Responsibility

The Emergence of a Green Sukuk Richard Menezes, Managing Director Utico

The Middle East and North Africa (MENA) re- co and Algeria are also following the trend and cash flows of financial activities to the assets In the Middle East, planning and setting util- and luxury; with the dwelling type setting in- CO2 for enhanced oil recovery. gion is the richest region in the world in terms have launched cleaner energy agendas, which purchased. This means that a sukuk can only be ity tariffs is never a simple act. Every decision tent of supply. All consumers must be offered Changing the tariff system to present more of natural resources, holding more than 60% of combined amount to $25 billion to $45 bil- raised to finance identifiable assets because they made leads to multiple cascading ripple ef- a luxury high-use, high-tariff model with an options for consumer choice will still have global proven oil reserves (mostly in the Gulf) lion in long-term investments that will finance represent undivided ownership shares of a tan- fects. In truth, however, tariff setting should equivalent rebate model, as well as an ordinary multiple ripple effects. In this case, however, and almost half of gas reserves. This is not nec- “green energy sources” such as wind, solar and gible asset, project or investment activity. Since be based upon a simple principle: a consumers model that offers low-price, low-consumption they will be beneficial. In providing a stim- essarily a blessing. Substantial literature on eco- nuclear energy. These projects are predicted to the first sukuk was issued in Malaysia in 2000, right to choose. It should not be based upon limits but also a rebate for being below limits. ulus to clean coal and carbon capture it has nomics, combined with an unfortunate plethora power 10% to 20% of their respective energy the popularity and availability of sukuks has in- the amount a consumer can pay, but on what The idea that water and power are basic servic- the potential to generate between 200 and of real-world examples, has proven the down- portfolios by 2020. creased and governments and the private sector they choose as a lifestyle. es, and as such somehow distinct from other 350 direct jobs per site (150 MW and above) sides for resource-rich countries; the infamous In countries where oil and gas resources are use it as a source of alternative finance to fund Elements of this may sound absurd, given that service offerings such as telephone, internet, and thousands of indirect jobs through its “Dutch Disease” where dependence on one nat- abundant, distortions in prices are high and long-term projects. it represents a fundamental change from the transport, diesel and so on (all of which of- support of new industries both downstream ural resource may cause inability to diversify an recovery costs in electricity are low, which al- current reality of tariffs in the Middle East. fer consumers such a choice), is rapidly be- and upstream. The production of fertilizer as economy and, as oil accounts for 80% to 85% lows for high and inefficient energy intensity in Green Sukuk: Yet the current reality is unsustainable. An coming obsolete. A modern professional is no a by-product of these plants it stands to create of exports from the region, a vulnerability of its energy use, increasing environmental problems acceptance of a consumer choice-based tariff more able to live without their mobile phone, an agricultural revolution in the Middle East. countries to being affected by volatile commod- and in some cases putting pressure on govern- Nasser H. Saidi, Chairman of the Clean Ener- structure will lead to a more sustainable utility internet and car than they can without water It will also help in Demand planning since ity prices. ment finances. The benefits of diversification are gy Business Council, has stated that the MENA model. This may result in a lower, or even zero, and power. It is time to differentiate between Suppliers will know the High users from Low Aware of this danger, several countries have cho- clear: lower risks of dependence, environmental region has enormous potential for renewable subsidy for consumers, yet it will also lead to our utility offerings in the same way we differ- users clearly by their package. sen to diversify their energy sources. An excel- sustainability, efficiency in domestic consump- projects and stressed the need to put in place better quality of service, a greener environ- entiate between our offerings in any other ser- In today’s world austerity stands out, from the lent example of this is the UAE, which in 2009 tion and higher revenue from fossil fuel exports. policies and a regulatory framework that enables ment and higher economic growth. vice… and it is time to stop being indifferent. stagnant economy of the US to the debt crisis signed a $20 billion contract with Korean firms Higher oil prices have also encouraged the oil and facilitates these projects. There is currently The present system of tariffs, in the UAE and Why is this important? Because it will shift the in Europe. People are realizing that the state to build a nuclear reactor. The Korea Econom- giants to build a renewables industry in the no institution that specializes in clean energy throughout the region, is based upon indiffer- focus of the current utility market from the cannot indefinitely sustain the provision of ic Institute called this investment “strategic” as region to avoid burning cheap oil domestical- finance, although the Clean Energy Business ence: it helps those who are irresponsible in supplier to the entire value chain. It is only by “free” support without its citizens providing demand for nuclear technology and energy is ly and benefiting by selling more in the inter- Council and The Gulf Bond and Sukuk Associ- their water and electricity use rather than ben- doing this that we can make any progress to- equally important support by reducing waste, expected to rise in the future, with several of national market. In order to allow companies, ation have launched a green sukuk working efiting those who are responsible. It is based wards a greener society. “Going Green” starts improving efficiency and promoting disci- the world’s nuclear reactors soon to retire. Abu entrepreneurs and even governments to finance group that aims to provide expertise to develop upon the acceptance of energy waste as a from the consumer being more energy effi- pline and accountability. The Middle East, and Dhabi’s move to diversify resources away from these colossal and expensive projects, Sharia (Is- best practices and the promotion of sakk to fi- norm. It does not offer the consumer a choice, cient (reducing, reusing and recycling), not its utilities sector, is no exception. The remov- natural resources could not have come at a bet- lamic law) compliant financial instruments are nance renewable energy projects. Issuing green but rather brackets them in classes. from simply using more renewable technol- al of subsidies may initially be unattractive to ter time. needed. sukuk will support the region’s green energy What is the easiest way to offer a choice to ogies in power generation. Even today, solar consumers, but the rebate will actually provide The UAE is often associated with spear heading trend and developing strategies by expanding consumers? I would put forward that tariff and wind electricity generation remains very them a new source of revenue, conversely it modernization in the Middle East. In its Eco- currently available financial instruments. nomic Vision 2030 the country explains its aim Islamic Finance 101: A green sukuk will establish a connection be- slabs should be based on dwelling type. Util- capital intensive and land intensive compared will lead to a drop in utility costs as also saved to expand growth and reduce its oil share of Bonds, in a nutshell, are financial instruments of tween Sharia compliant investors and environ- ities are, essentially, a service to a dwelling to conventional fossil fuel-based generation. utility capacity can be used to serve more con- GDP to less than 40% by stimulating new sec- indebtedness. By using a bond the issuer owes mentally focused investors. The sukuk market rather than an individual. The dwelling of an A change in tariff structure and the presenta- sumers. tors such as renewable energy, technology and the holder a debt that accrues interest depending is suited to mobilize funds from a vast pool individual, to a large extent, determines their tion of more choice to consumers will, in Austerity in power and water is an investment, aerospace. By launching the multibillion-dollar on the terms and maturity of the bond. In short, of Sharia compliant capital to fund renewable consumption and lifestyle. They are also easily addition, focus generation on what works. and like any investment it pays a rate of re- Masdar initiative it is establishing itself as the bonds are loans. Sukuk is an Islamic financial and sustainable energy projects and The Clean identified: all dwellings in the UAE are munic- Conventional power, for example, can great- turn. The Regulation and Supervision Bureau regional leader in green technology and innova- certificate that is Sharia compliant and, unlike Energy Business Council estimates the value of ipal build permit-registered and hence records ly reduce emissions and build efficiencies by should register those who want to participate tion. Other MENA countries are adopting their Western bonds, the payment of interest or riba green sukuk issuances to be at $10 billion to $15 exist. installing carbon capture. In coal generation, in utilities austerity and reward them for con- own diversification programs: Saudi Arabia is is not allowed. When issuing a sukuk the issuer billion if even just a fraction of the projects in Just as airlines offer a choice of economy class, carbon capture can reduce costs of electrici- tinued participation. A consumer cutting his planning to invest $109 billion in clean ener- sells a certificate to an investor group who then MENA were to be financed by sukuk. Launching business class or first class, and telecoms offers ty and water production by 25%, as well as utilities use by 10% per day continously and gy to supply a third of its total domestic power rents it to the issuer for a rental fee by making a green sukuk to finance green energy projects its customers different levels of plans differ- reducing the carbon footprint of a coal-fired setting his peak limits set point lower could generation; Kuwait has target to generate 10% of an additional contractual “promise” to buy back will attract investments from private equity in- entiated by value-added services, a person’s plant to lower than that of a natural gas-fired earn year-end rate of return benefits of 10% to its electricity using sustainable energy; and Qatar the sukuk at par value in the future. The nature vestors looking to diversify their investment utility tariffs should be differentiated in the plant. In addition, it generates 50% more em- 15% per annum. And the reduced cost to the announced plans to build a $1 billion polysili- of the sukuk is to avoid indebted trading, which portfolios in countries that are looking to diver- same manner. Dwellings should be divided ployment, produces high-quality high-yield state and the environment means that every- con manufacturing plant. Jordan, Egypt, Moroc- is banned under Sharia, and to link returns and sify their own energy portfolios. • into classes; for example, economy, ordinary nitrogen fixating fertilizer and high-quality body benefits. •

48 Global Business Reports // UAE POWER 2013 Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 49 Complementing Production: Transmission and Efficiency in the United Arab Emirates

“The power needs here are ever increasing, and the UAE has understood that they need to play the green card to remain competitive, so they are looking into renewables and nuclear. A challenge for the region is to build up modern trans- mission and distribution network with high intelligence and latest state of the art efficiency… The challenges that transmission faces include high temperatures in summer and the high load. People here are also not very conscious of energy usage: they leave the lights on and constantly run air conditioners.”

- Hendrik Cosemans, GENERAL MANAGER, NYNAS AB MIDDLE EAST Global Business Reports Global Business Reports ARTICLE Industry Explorations Industry Explorations ARTICLE

Residential and Industrial Electrical Prices in Arab Countries (2008)

Source: EIA Grids in US C/KWH Residential Industrial 14 the Desert 12 Transmission systems in the UAE 10

8

6

The current electricity grid in the United The transmission and distribution market is solely a key issue for the UAE, however: they 4 Arab Emirates is slightly fragmented, being becoming very competitive in the build up are themes that run through the entirety of 2 operated by state-led entities in each of the to these necessary developments. However as the Gulf Cooperation Council (GCC) and the seven emirates. Although it is certainly not an Pradip Kumar Das, general manager of Gulf Middle East regions. In line with this, the re- MoroccoTunisia Jordan UAE Algeria Lebanon Oman Yemen Qatar Egypt Libya S. Arabia Iraq Bahrain Syria Kuwait inefficient system, neither is it as efficient as Jyoti International explains: “Most of the gion is now planning for an unprecedented it could be. Yet the UAE is nothing if not am- projects in the country set prequalification level of cross-border power interconnection. bitious and it is arguably in this area of trans- conditions; utility companies want to award The GCC’s Interconnection Project (GCCIP) The UAE’s Global Competitiveness Rankings (2012/2013) Ownership Structure of the GCC mission and distribution that the country the contracts to experienced contractors. Our is an undertaking of unprecedented scale Interconnection Grid (Phases I & III) Source: Bloomberg shows the most potential to be on the cutting challenge at the moment is our experience, linking the electricity grid in six Middle East edge of global power technology. and five years will give us enough time to states (Bahrain, Kuwait, Oman, Qatar, Saudi

th th P H Within the UAE the transmission and distri- build this experience and become the num- Arabia, and the UAE). It was conceived 30 A S E bution network substantial progress is being ber one player in the region,” says Kumar Das. years ago, received the official go-ahead in I made to integrate the seven individual au- All the major players in the power sector are 1999, and the third and final phase was com- thorities into a more efficient national grid; now present in the region and newer com- pleted in early 2012, although there is specu- essential to allowing the UAE’s grid to keep panies are flooding in year after year. “Abu lation that the grid may be further expanded. pace with the growth and development of the Dhabi is mainly focused on capital expend- Although physical connection is essentially sector. With the increasing diversification of iture investment for new projects, Dubai on complete, issues of economics and sovereign- Quality of Overall Infrastructure Quality of Electricity Supply the power generation sources, many of them operating expenditure to improve existing ty are very much still in the discussion phase with the intermittent output characteristic systems. Dubai has also taken the initiative at the GCC Interconnection Authority (GC- Source: World Economic Forum of renewables, the country is also investing in solar power, while Abu Dhabi needs more CIA). “The GCCIA’s ambition is to bridge all heavily into the concept of the smart grid. property developments to make it attractive of the different regulatory regimes and create The role of smart grids is central to balanc- to migrants. The UAE is very challenging in a commercial basis for moving and trading Estimated Annual Electricity Consumption Growth Rates (1999-2009)

ing demand and supply in a diversified pow- terms of competition; the market is crowded power. In addition, there could be the poten- Source: EIA, Oxford University PHASE I PHASES I & II

er sector. “Investments in distribution and with traditional companies as well as new- tial for exporting power outside the GCC,” % Kuwait 33.8% 26.7% generation must be synchronized and linked comers from the Asia-Pacific region,” says says Kenneth McKellar, Middle East energy 12 Saudi Arabia 40% 31.6% to the existing grid, with a focus on issues Goktug Gur, country president of Schneider and resources leader at Deloitte & Touche. Bahrain 11.4% 9% such as load-shedding,” explains Goktug Gur, Electric. Long-term intentions are even further reach- Qatar 14.8% 11.7% country president of Schneider Electric. Issues of both usage and generation are not ing, says Floris Schulze, MD of CESI, who are 10 UAE - 15.4% involved in establishing plans for a power Electricity Consumption and Installed Capacity (1980-2008) trading market in the MENA region. “Part of Oman - 5.6%

Source: EIA what makes the project exciting is that the 8

PH A S INSTALLED CAPACITY (MW) Gulf has the potential to be the powerhouse E ANNUAL CONSUMPTION (TWH) S I &

1980 1990 2000 2008 for the whole system, and potentially even for II Europe and the Asia-Pacific, especially if it can 6 Bahrain 1.45 3.04 5.36 10.48 2,777 make renewables more viable,” says Schulze. Kuwait 8.10 18.13 27.33 42.58 10,944 The amount of work being done and the stat- Oman 0.80 3.70 7.03 13.25 3,991 ed ambitions of the government ensures that 4 Qatar 2.03 4.28 7.95 18.79 3,164 there will be a continuous stream of new pro- jects across the power sector for companies Saudi Arabia 29.10 60.91 109.49 174.48 39,242 with the necessary expertise and technolog- 2 UAE 5.46 14.52 36.20 70.58 18,474 ical capacity. Nonetheless, the competition TOTAL GCC 36.93 104.57 193.35 330.15 78592.00 will remain fierce for some time in such a Average Growth per Decade - 183.2% 84.9% 70.07% - congested market. • Bahrain Kuwait Oman Qatar Saudi Arabia UAE

52 Global Business Reports // UAE POWER 2013 Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 53 TEHRAN

Global Business Reports Global Business Reports MAP Industry Explorations Industry Explorations MAP

Gulf Cooperation Council Interconnection Project United Arab Emirates Electricity Grid

Source: GCCIA Source: EU-GCC Clean Energy Network

LEGEND LEGEND GCC power grid 220 kV Lines UAE system (ENG) 400 kV Lines Control Centre 100km Power Stations 100km Substations Power and Desalination Plants HYDC converter Sub-station

IRAQ

KUWAIT IRAN

7 8 6 Al Zour

5

Abu Dhabi 1 2 4

Al Fadhili

3

BAHRAIN

Jasra

Persian Gulf Ghunan OMAN QATAR Doha

Salwa 1 Shuweihat 1 IWPP Abu Dhabi Electricity (MW): 1,615 6 Water (1,000 cm/d): 459 4 Jebel Ali Umm al-Nar IWPP Electricity (MW): 6,888 M’hadah Shuweihat 2 IWPP Electricity (MW): 2,430 Water (1,000 cm/d): 1,819 Silaa Electricity (MW): 1,627 Water (1,000 cm/d): 659 Al Fouhah Water (1,000 cm/d): 459 UNITED ARAB 7 SAUDI ARABIA 5 EMIRATES Shuweihat 3 IPP Al-Awir Electricity (MW): 1,647 Taweelah A1 IWPP Electricity (MW): 1,834 Electricity (MW): 1,671 Water (1,000 cm/d): 386 2 8 Mirfa Taweelah A2 IWPP Fujairah 1 IWPP OMAN Water (1,000 cm/d): 177 Electricity (MW): 760 Electricity (MW): 861 Water (1,000 cm/d): 232 Water (1,000 cm/d): 454

3 Taweelah A3 IWPP Fujairah 2 IWPP Shams 1 solar IPP Electricity (MW): 2,220 Electricity (MW): 2,114 Electricity (MW): 100 Water (1,000 cm/d): 732 Water (1,000 cm/d): 600

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What are some of GJI’s main service lines and business areas? Can you give us an overview of CESI’s oper- to lead as the energy expert and collaborate Pradip K. GJI was established to do business in the MENA region, focusing on EPC Floris ations in the UAE? with other key stakeholders outside of reg- work and supply: we have one of the most modern factories in the world, While we have numerous pipeline opportu- ulators and energy companies, such as aca- and having annual production capacity around 50,000 tonnes of gal- nities in the UAE and have been involved in demic institutions. Das vanized steel structures for transmission lines and substation structures. Schulze interconnection projects in the UAE in the past, we do currently don’t have any that on- What role do you see yourselves playing in Has GJI been primarily focused on the MENA region or do you also seek going. We would like to participate in the transmission and distribution? GENERAL MANAGER contracts outside the region? MANAGING DIRECTOR ongoing developments on solar energy in in We have very specific HVDC knowledge, GULF JYOTI INTERNATIONAL We have had contracts across Tunisia, Algeria, Libya, Qatar, and Turkmen- CESI MIDDLE EAST the UAE initiated by DEWA and Masdar City which is being applied in Saudi Arabia, to istan, to name a few apart from DEWA, Dubai. Although we primarily and, looking at our state of the art expertise gain extra capacity and secure emergency work in the MENA region, we also examine projects outside of the region and references, would like to take part in the supply. Our long-term role will relate to the on a case-by-case basis. For example, JSL acquired a contract with the San development of Smart Grids and Smart me- integration of renewable energy, which also Diego Gas Electric Company, which we were involved in. The main chal- tering strategies for Abu Dhabi and Dubai. requires specific expertise. Solar energy will Could you begin by providing our readers with an overview of the lenge that we face is the slowing down of the MENA market; the market How important is this region becoming for The overall awarding process of projects in take time, but the grids should be prepared corporate structure of Gulf Jyoti International (GJI)? is not flourishing at the moment. Due to the Arab Spring, things are slow CESI globally? the region take longer than in Europe, but in advance. The last task will be connecting Gulf Jyoti International (GJI) is a company jointly owned by Gulf in certain MENA countries. We are however looking forward to doing CESI Middle East officially launched in Jan. the future of the Middle East looks very the entire GCC, North Africa, the Mediter- Investment Corporation (GIC) in Kuwait and Jyoti Structures Lim- business in Iraq in the future. 2012 because we believe that the MENA re- bright as the energy sector is still being de- ranean area and northern parts of Europe, ited (JSL), India. GIC is a financial institution owned by the gov- gion, and more specifically, the GCC region veloped. which is the goal of our Renewable Energy ernments of the six GCC countries, while JSL is a company that has What is the importance of certifications to the company, and how do they will play a significant role as a powerhouse Sources for the Mediterranean or RES4MED been a pioneer in the field of transmission and distribution for the provide you with a competitive advantage? energy source with the capability to fulfill CESI is also one of the top three suppliers of research. Through a collaborative effort last 35 years, and has implemented projects in over 40 countries Certifications are essential for operating in the region. We were recently the world’s future energy demands. high efficiency solar cells in the world. Will alongside leading global energy players, CESI across the globe. The GIC has a mandate to invest in infrastructure awarded the ‘Green Award’ by the Government of Dubai. GJI is an ISO From an R&D and investment perspective, these come into the Middle East market in aims to promote renewable energy sources projects across the MENA region, but it needed a technical partner, 9001:2008, ISO 14001:2004 & OHSAS 18001:2007 certified company. the Middle East is a strategic hub for CESI and the long term? and to analyze the conditions for integrated so it partnered with JSL India. This was how GJI was founded in Companies need to be ISO certified to do business here. This was a chal- will become increasingly important over the CESI has a dual presence in solar power. We electricity markets that will support the en- 2005, and we began production in July/August 2008. I joined JSL lenge for us in the beginning, but with our dedicated team we overcame next five years as the need for advanced elec- consult on the integration of renewable en- ergy demands of the anticipated 10 billion 24 years ago and took charge of GJI in June 2009. this challenge. We have also been inspected, audited and approved by trical grids to support the growing popula- ergy into the grid – quite a specific task – and population in the above regions in 2050. American and Canadian utility companies. tion and industrial needs grows. The Middle are also developing our own high-efficiency East embraces innovative technologies and its solar cells, which we hope to introduce into In partnership with Ramboll, CESI has been What advantages has the GIC partnership provided you with? Has it given recent developments are a perfect example of the Middle East market in the medium term. tasked to help realise an energy trading solu- you increased credibility with authorities such as DEWA? this – just look what Saudi Arabia is doing I expect, with our R&D and the investments tion for the Arab countries. Can you tell us In order to obtain contracts we have to go through the competitive bid- with the development of a national strategy of other key players in the region, there will more about this? ding process, so credibility is not really an advantage. That said, the GIC for smart grids and smart metering. It’s likely come a time when the large-scale use of re- Our Arab Fund energy-trading project is not does help us receive support from the banking and administrative sectors, that some of these GCC countries will soon newables becomes economically viable here. only interesting but also prestigious. CESI’s as well as in receiving duty exemptions. become a world leader in the energy sector. Such alternatives would be an advantage for goal is to undertake feasibility studies to Arab countries, allowing them to use their create a single-energy source across 20 Arab We have seen a stark difference in the structure of the power sector in CESI has been active here for some time. oil and gas for other purposes. countries. A true pan-Arab socio-economic each different Emirate. Can you comment on this? How has the new office helped? initiative the League of Arab States is really Companies need to go through a separate registration process to start CESI established a local presence to help Tell us about your work with Masdar. How committed to making this project a suc- doing business in each. In Abu Dhabi, for example, it is not enough to be build relationships, enhancing effectiveness do you view the environment for foreign in- cess. As the world observes, there is much registered in Dubai. We have registered as a local company in Abu Dhabi, and responsiveness of regional operations, vestment in what is becoming a very crowd- at stake for individual participating coun- and have submitted the dossier to be registered as an EPC supplier. Abu tailor-made solutions and daily communica- ed solar market? tries, including trade opportunities and en- Dhabi has a great potential for growth. tion with clients. Our Dubai office, support- Our involvement with Masdar City has not ergy security. We are looking at gas as well ing by CESI’s global footprint, represents a yet been finalized – at this time, it’s just an as electricity trading, from both economic What challenges does diversification in the power generation supply long-term commitment to this region. One opportunity we have been offered. No deci- and technical points of view, and are also bring for transmission and distribution? month after launching our Middle East of- sions have been made yet. CESI is not a full evaluating regulation. There is still much to We are fortunate to be in the T&D sector, because no matter the energy fice, we were awarded a prestigious project scale contracting company that builds solar accomplish, but we are pleasured with the source (thermal, solar, hydropower, gas, etc) transmission lines are re- by the Arab Fund, to carry out a feasibility plants, so our services will be consultative results attained so far. Part of what makes the quired. Recently we were invited to become DEWA’s exclusive partner study for developing a single energy market in nature and the sales of high efficiency so- project exciting is that the Middle East re- in conducting all of their maintenance work and doing emergency res- between 20 Arab countries, the development lar cells. However we are willing to invest gion has the potential to be the powerhouse toration jobs; we recently finalized our MoU and by the end of January of a national strategy on smart grid and smart in new technology developments and pilot for the whole system, and potentially even 2013 we should be signing the contract. In Dubai there is a huge network metering for The Kingdom of Saudi Arabia studies. Like Saudi Arabia, the UAE is try- for Europe and the Asia-Pacific, especially if of transmission lines that requires regular maintenance and emergency by the Electricity & Cogeneration Regulatory ing to develop solar technologies alongside it can make renewables more viable. The rep- restoration work. • Authority and the development of a highly companies like CESI; this is great because utation and contacts we will gain from being specialized HVDC interconnection link be- rather than just buying solar cells, the coun- part of these developments will cement our tween Central and Western Region (Riyadh try wants to invest in an energy knowledge long-term business partnerships for CESI in and Mecca) by Saudi Electricity Company. domain. For us, it is the ideal opportunity the Middle East. •

Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 57 Global Business Reports INTERVIEW Industry Explorations ARTICLE

INTERVIEW WITH Cor Commitments to the Corbeek Environment

GENERAL MANAGER Promoting efficiency in a power-hungry EMERSON PROCESS MANAGEMENT - MIDDLE EAST AND AFRICA market

Could you please provide a brief overview of with most of the federal power companies: volvement in these projects solar plants will Emerson Process Management? FEWA, SEWA, DEWA and ADWEA. We are also be with EPCs, rather than the authorities, and Emerson Process Management is an American working with the upcoming nuclear plant. will feature collaboration with our sister com- company of about 130 years old. Headquar- There is no one standout project, because we panies, Emerson Network Power and Emerson tered in St. Louis, with factories and offices in are involved everywhere. New gas plants will Industrial Automation, which have equipment around 130 countries, we are currently worth mean new opportunities for Emerson Process and solutions specifically for renewable ener- $24 billion. The group employs 130,000 peo- Management, but at the same time we are gies, such as AC/DC inverters. ple. In the Middle East, our headquarters are in working with Masdar on their projects Jebel Ali; our office in Abu Dhabi supports the Along with reducing gas dependence, CCS can UAE specifically, as well as Oman and Egypt. Does Emerson Process Management have a also reduce CO2 emissions into the atmos- We continue to invest in our manufacturing role to play in the drive for gas efficiency an- phere. Tell us more about your carbon capture hub for the region, located next to the Du- ticipated here? Has the government prepared storage solutions? bai headquarters, with current plans for an- adequately for it? The carbon capture storage project is a good other $33 million expansion. We have other Emerson Process Management has solutions to opportunity for us, offering involvement regional offices throughout the Middle East help customers improve efficiency, reducing across the value chain as the gas is produced, and Africa. losses and costly shutdowns; our equipment is cleaned, collected, transferred and re-injected. instilled with the intelligence to predict where Initially there will be only a few places where You cover a number of industries, but how things will go wrong. The government has carbon is collected, but ultimately it will important is power to your operations in the created an adequate framework. It has moved spread throughout the region. It could help UAE? towards IPP plants, which put the onus on the the UAE reduce its gas dependency. Like other Power is very important to our UAE oper- private sector to make generation efficient. Masdar projects, however, it has been scaled ations: it links into all our business sectors. down somewhat since its introduction. Energy demands are increasing, and the Abu Ambitious solar targets have been set but Dhabi government also needs the gas to as yet there are few projects on the ground. Where would you like to see Emerson Process re-inject into oil reservoirs. There are great When do you expect to see the market boom? Management in this market three to five years opportunities for Emerson Process Manage- The government is serious about solar power from now? ment both from new gas exploration and the and alternative energies but delays have taken We embrace healthy competition, and it Seasonal fluctuations in the UAE’s electricity construction of new and more efficient pow- place. Abu Dhabi has its 2030 vision laid out, is very tough here with all our major rivals consumption see significant disparity. Resi- er plants; we play a role in everything from the investments will happen so the boom will present. Our current expansions, scheduled dential and commercial power demands expe- measuring to control, optimization and effi- have to come. Perhaps there was a slight un- for completion within two years, will make rience huge increases during the hot summer ciency. Environmental awareness in the coun- derestimation of how big these projects really Dubai even more of a hub for our Middle East months, as companies and families stave off try is growing, creating additional opportuni- are, and how many can be executed concur- and Africa operations, and will perhaps even the 40°-plus heat with liberal use of air condi- ties in such areas as the analysis and reduction rently. The global downturn has not helped: make us a global exporter. In this timeframe, tioning systems. The challenge of maintaining of gas emissions. Abu Dhabi lost a lot of money, and has be- we expect there to be more downstream pet- a ski slope or ice rink, both of which are con- come a little more cautious. The Emirates’ re- rochemical projects in Abu Dhabi. • tained within Dubai’s many malls, becomes all How important is this region becoming for newable targets might be possible, however; the more energy consuming when July tem- Emerson Process Management globally? What they have the resources available if someone peratures can reach close to 50°. have been some of your key projects so far in can take the initiative. Nick Carter, director general of Abu Dhabi’s the power industry? Emerson Process Management is taking a Regulation and Supervision Bureau, explains The Middle East, and the UAE specifically, is somewhat opportunistic approach to the al- the challenges this causes: “Electricity demand seen as a big growth area for Emerson Process ternative energy sector here. We are working was 10 GW at its peak this year, but for many Management. This is why the group continues on carbon capture storage (CCS) projects, and months it falls as low as 4 GW, creating ineffi- to invest and add new people. We are working are bidding for solar plants in Oman. Our in- ciencies with idle assets.”

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Creating a power sector to account for these the highest levels of water consumption in the ty,” explains Ahmed Sfar infrastructure business vast fluctuations is a great challenge for the world,” states Tonjes Cerovsky, senior VP of sales VP at Schneider Electric. UAE power authorities. Recent policies re- in the Middle East and Africa region for KSB. The Gulf Region sits on the cusp of a power Michael volve around incentivising off-peak usage. Inefficient use of electricity is also an issue of revolution, with investments in the sector es- “Everything comes under the caption of ‘nega- great concern for these two largest emirates. timated at over $250 billion in the next five Krämer watts’: we can, in effect, pay people not to use “The UAE can no longer continue on this path years. The plans and success of the UAE with watts by giving them very cheap energy out- where they are among the highest water per regards the application of new energy sources, side peak hours,” adds Carter. capita consumers, emissions per capita pro- the balancing of a diversified power sector and The emirates of Abu Dhabi and Dubai have ducers, kilowatt hour consumers and so on,” perhaps most crucially the style of financial and SENIOR ASSOCIATE some of the world’s highest levels of electricity claims Paul Navratil, Middle East energy, utili- regulatory regimes are arguably leading the re- TAYLOR WESSING use per capita. Much of this can be attributed ties and mining leader for PwC. In the case of gion in this revolution. With the next five to to the fact that 98% of water comes from de- Abu Dhabi, waste has been almost promoted 10 years crucial in shaping not only the UAE salination; a highly energy-intensive process by the low cost of electricity to consumers. power sector, but the GCC and the wider Mid- exacerbating both residential and industrial The need for Dubai to reduce its consumption, dle East region, we should hope that Dubai and electricity use. “Air conditioning and water however, is more pressing. “In Dubai, they have Abu Dhabi concentrate as much on reducing What measures do you believe are needed Qatar can now potentially export it at higher familiar with the technology first; if such a are power-intensive, and at an outrageous 560 no alternative but to push for energy efficiency consumption and promoting efficiency as they to encourage the solar industry in the UAE, prices. Hence, the UAE will have to diver- scheme works for five years, the cap can be liters per person per day, here we see one of of consumption; they are buying their electrici- do on creating new generation. • whether a reduction in subsidies to gas or sify its energy mix sooner rather than later, removed and we can incentivize production an implementation in subsidies for solar en- so why not make use of solar as an energy going into the grid, but we need to build ergy? source that is available in the UAE in abun- confidence first. Climate of Dubai (the need for air conditioning) It is difficult to answer the question of wheth- dance?

Source: World Bank er the UAE government should increase sub- The UAE has a largely transient population,

JAN FEB MAR APR MAY JUNJUL AUG SEP OCT NOV DEC sidies to solar or decrease subsidies to gas. With the rapid growth in the demand for would this issue affect the scheme? AVERAGE HIGH ºC 24.0 25.4 28.2 32.9 37.6 39.5 40.8 41.3 38.9 35.4 30.5 26.2 The real cost of electricity in the UAE is not power in the UAE, is the attention on large- That demographic issue is certainly one of AVERAGE LOW ºC 14.3 15.4 17.6 20.8 24.6 27.2 29.9 30.2 27.5 23.9 19.9 16.3 openly disclosed and would require agree- scale power generation projects rather than the limiting factors. Investments in solar are ment on which costs have to be factored in to small, as in renewables? only really sustainable to homeowners that such cost anyway. At present, electricity in the From the government’s point of view, it is plan to live in their homes for a few years, Electric Power Consumption per capita CO2 Emissions per capita UAE is mainly produced by gas power plants, much easier to maintain a centralized power which means that the system would have to Source: World Bank Source: World Bank which are fed with natural gas from Qatar. generation system. It is a bit more daring to be adapted to mobility. One solution could KWH PER CAPITA METRIC TONS PER CAPITA Qatar supplies the UAE with such natural gas let private investors generate their own elec- be that landowners install the systems and 2000 70 at very low prices. This is what solar energy tricity. However, the government need not charge additional amounts from their ten- 60 generation has to compete with. That being make a choice between small or large-scale ants (which would save by being supplied said, for the time being I believe the payment projects, it can focus on large-scale power by “free” electricity in return”). The scheme 1500 50 of incentives for private investors will be re- generation projects, while at the same time can start with a certain percentage of the quired, but the result will be less dependen- opening up the market to private, small scale population, particularly long-time residents 40 cy on Qatar. Such complete dependency on investors. After all, real capacity building is and business owners, but including a larger 1000 30 Qatar is not a good situation for the UAE to done by private investors in small to medium fraction of the population will require some be in to start with and solar technologies are scale installations, not by the few investments additional thought. 20 ideally suited to complement the energy mix, in utility scale sized plants. Currently, gener- 500 particularly in countries with as much sun ating electricity from solar is more expensive Is there a reasonable timeframe for the payoff 10 as the UAE. than what individuals are accustomed to for the initial investment? 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 paying to DEWA. Thus, private solar invest- The UAE has radiation levels that are about UAE World Saudi Arabia Oman Bahrain Kuwait Qatar If we assume that Qatar will continue to sup- ments will require an incentive scheme. I double those in Germany, so they can run the Net Energy Imports GDP per unit of energy use ply low cost gas to the UAE in the future, have suggested an incentive scheme where- installations and receive double the output. If Source: World Bank Source: World Bank how will this impact the viability of renew- by the self-consumption of self-generated we make certain assumptions about installed

% OF ENERGY USE CONSTANT 2005 PPP $ PER KG OF OIL EQUIVALENT able energy? electricity is being incentivised. No tariff is costs of 2,000 euros per kilowatt peak, an- 0 8 The reason why Qatar supplies such low cost being paid for energy being fed into the grid nual outputs of 1,650 kilowatt hours, and gas to the UAE is somewhat unclear. Qatar instead of it being self-consumed where it is ignore any costs of financing, we have a -100 7 could easily sell the gas at much higher pric- being produced. This scheme would create a graph plotting feed-in tariffs in fills against -200 es to other countries. The supply agreement natural ceiling, keeping solar investments at a the number of years it would require to pay- 6 between the two countries should end in the certain level, bearing in mind that the energy off. If we are working with about 60 fills, we -300 foreseeable future, and the question will be: consumption in the UAE is about ten times are working with about six to seven years of 5 -400 what is the incentive for Qatar to renew this higher than in Europe anyway. The advantage return on investment. • agreement? At the time of the initial agree- is that the utility companies do not have to -500 4 ment, Qatar did not have the facilities to liq- worry about the grid, the system requires -600 3 uefy natural gas in order to export it to other much less infrastructure. Some have asked regions such as China or Japan. However, why we would want to restrict solar energy -700 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 the liquefying facilities are now in place and production. My answer is that we need to get

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and we have agents in Kuwait and Bahrain. Saudi Arabia has its own large Tonjes KSB entity. Kiomars

How important is this region to KSB as a global organization? Cerovsky KSB’s strongest region is Europe, which is not growing. The important Dabbagh emerging markets today are in the Middle East, Asia and South America. KSB’s Middle East and Africa division, which I manage, expanded by almost SENIOR VICE PRESIDENT SALES – REGION MEA 11% last year, even though Libya, Egypt and Syria are in turmoil. Good MANAGING DIRECTOR KSB ME FZE – DUBAI growth is found here, in Saudi Arabia and Turkey. Abu Dhabi has always SCHOTT MIDDLE EAST been busy, while Dubai is slowly picking up again; Qatar is going down again but Oman is coming back up. Of course, the UAE has just 7 million people, so we cannot compare the size of the market against, say, Russia or Turkey. Could you provide an overview of KSB’s operations in the UAE? Could we begin with a brief overview of is the market and technology leader when it uted to the feed-in tariffs and tax incentives KSB came to the UAE in the early 1970s with an agent selling You cover a number of industries here. How important is power? Schott’s operations in the UAE? comes to the receiver tubes that are used in we have seen. This is clearly an area in which pumps in Abu Dhabi. We grew quickly through the power and Abu Dhabi, Dubai, Fujairah and the other Emirates could not live without Schott has been present in the UAE since parabolic trough power plants. Our CSP ex- the UAE still has some catching up to do, for desalination business. Eventually it became necessary to build an desalination; they simply need combined power and desalination plants.. 2006. Our goal is to generate sales for the pertise makes us an ideal growth partner for instance by accelerating the introduction of after-sales unit; our service workshop Mussafah employs 45 tech- Power consumption is related to the number of people in a region, so Schott Group across the Middle East region in the UAE’s solar power industry. governmental programs and showing greater nicians. We also realized a presence in Dubai was important, so we Dubai’s fluctuating population (down from two million to 1.4 million, the power and solar industries. With respect commitment in general. rented a small place on the old side of the free-zone. A year and a and now back to 1.7 million) affects demand. Air conditioning and water to the regions, we focus on key markets like Do you find the solar market very competitive Today, however, we are seeing a change in this half ago we moved into this Jebal Ali facility, which has 40 people. are power-intensive, and at an outrageous 560 liters per person per day, Saudi Arabia, Oman, Kuwait, and Egypt, ex- in the UAE? trend, particularly in the fast growing and There are sales offices in Abu Dhabi, Qatar and Oman too. In total here we see one of the highest levels of water consumption in the world. cluding the Maghreb. We do not take a coun- The CSP market is not necessarily more or less energy-hungry economies of Saudi Arabia, KSB has roughly hundred people on the ground here, selling, ser- The power industry is obviously very important here, and we are lucky try-specific approach, but instead pursue a competitive in the UAE than in the rest of the Oman and the UAE. vicing and repairing our equipment. This is still not enough, and enough to have a very high market share. In the old Umm Al Nar plant more regional strategy in order to utilize the world. Of course, there are regional differenc- this year we will be opening a 4,000 m2 service facility in KIZAD. the majority of the pumps are KSB; only the latest stage used one of our synergies that exist within our sales team. The es, and there were certainly a few topics that Is the answer to reduce gas power subsidies or This office covers mainly the Emirates, as well as Oman and Qatar; competitors; and Taweelah features ours exclusively. You will see fewer KSB MENA region is of vital importance to Schott’s we had to take into consideration in the UAE, implement subsidies on the renewables side? pumps in Dubai, because we were not represented there when the plants solar thermal technology, by the way, because for instance insolation or dispersion issues, The vast majority of people in the UAE de- were being built. of the immense potential it offers for inno- etc. pend heavily on subsidized electricity, so I vation. would not favor eliminating subsidies, but There is a global trend toward efficiency improvements in conventional You are heavily involved in the Emirates Solar rather transferring them to solar. Currently, plants. How can your products help? What solar projects has Schott been involved Industry Association. What is the role of this Saudi Arabia and Oman are the most realistic Our products can improve efficiency greatly. High consumption in power in so far in the UAE? association? countries in making a strong move towards plants comes in the form of boiler feed pumps with huge motors, which I think it is important to point out that the Our main goal is to promote solar as a via- renewables. Saudi Arabia is well aware of the need to be efficient to offset their high costs. ADWEA, in particular, is look- solar business is really only just getting started ble source of energy both today and for the fact that its oil resources are depleting and that ing closely at these issues: their employees are well educated, and the con- in the UAE, therefore Schott is prepared to set future. Our activities address the key play- all of the oil produced in the Kingdom will sultants they use are almost exclusively European or American. Because accents from the very start. We already have ers in the power sector in the UAE, and we have to be used to generate electricity inside they know what they are talking about, it is easy for KSB to convince them a few initial success stories to share, howev- clearly serve as a valuable resource for Dubai this country by 2050 unless they quickly de- of our products’ worth. The UAE is a very modern country, always the er. For instance, we recently delivered several Supreme Council of Energy (DSCE), Dubai cide to change their strategy. driver of technological change in the Middle East. Demand for high quality thousand receivers for a large CSP project in Electricity and Water Authority (DEWA), Abu valves and pumps is certainly increasing, especially in the power sector Abu Dhabi and are extremely pleased with Dhabi Water and Electricity Authority (AD- Do you see a system of feed-in tariffs for pri- where buyers are well educated on the need for energy efficiency how the government has helped to develop a WEA) and other regulatory bodies. On the vate solar investment working in the UAE? financing model. This has since been joined by other hand, our members come from all over The European model of feed-in tariffs would You have a great solar product portfolio, especially in CSP. Do you expect several smaller photovoltaic and small off-grid the Middle East and beyond. Therefore, our as- be difficult to apply to the UAE for many CSP to be more popular in the region than PV? projects, so we have plenty of work to do at sociation clearly reflects the global diversity of different reasons, cultural differences, for in- CSP is better for us than PV, which does not involve much pumping. There the moment. its membership and the countries we live in. stance. In Europe, for example, paybacks on should, however, be space for both in the UAE; each technology is good, We strive to bring various players together so investments in the seven to 10 year range and people who talk about the front-end investment cost advantages of PV With regard to the Shams project, there will that common standards can be set and more are commonly accepted, while people in the are taking too simplistic a view. What you should do is calculate costs across likely be Shams 2, 3, and 4. What other po- networking can go on that benefits the entire Middle East generally reject investments if the the 20 to 25 year life cycle of a power plant. tential do you see for Schott’s solar activities solar energy sector. payback period takes longer than 24 months. Although it is still running 98% on oil and gas, this country is taking in the UAE? I could easily imagine a more organized, pro- good steps toward renewable energy, which will perhaps contribute 10% From our point of view, parabolic trough tech- Solar creates significant media interest al- fessional private sector being established here in future. It should do more. The sun shines 360 days a year here, and it nology offers the UAE significant advantages though the estimates for power generation in in the solar industry, rather than depending on does so for free. • due to its long-term proven performance and the UAE are still quite modest. Why this di- homeowners. • the fact that it is dispatchable. By that, I mean chotomy? that this power can be stored and fed into the Much of the success in the development of grid when it is actually needed. Schott Solar solar energy around the world can be attrib-

Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 63 Global Business Reports Global Business Reports INTERVIEW Industry Explorations Industry Explorations

INTERVIEW WITH expectations in Qatar make it a promising market for international companies. Oman is Goktug Gur & a very stable and solid country, where Schnei- der Electric would like to increase its presence. Pakistan has huge potential, with its high pop- Ahmed Sfar ulation and electricity demands; we have 400 people there, and would like to increase this number. COUNTRY PRESIDENT - UAE, OMAN & PAKISTAN INFRASTRUCTURE BUSINESS VICE PRESIDENT There has been much talk about the impact SCHNEIDER ELECTRIC of fluctuating renewable energy sources on transmission and distribution. What is your view on this? GG: For Schneider Electric, renewable energy How important has this region become for Electricity is used very inefficiently in the UAE provides an opportunity. Investments in distri- Schneider Electric? at the moment. Do you see signs of a strong bution and generation must be synchronized Goktug Gur (GG): Schneider Electric has political will to improve efficiency? and linked to the existing grid, with a focus been in the region for more than 30 years. We AS: In Dubai, they have no alternative but to on issues like load-shedding. Telvent, which have acquired Cimac FZCO, a system integrat- push for energy efficiency of consumption; has been acquired by Schneider Electric, has ed industrial company, and have manufactur- they are buying their electricity, so it is a mat- unique smart grid software. ing plants in Pakistan and Sharjah. In the UAE ter of survival (pls delete). This creates great Schneider Electric has an execution center, and opportunities for Schneider Electric, which What impact has the acquisition of Areva Dis- we are well represented with sales offices in specializes in the area. We want to continue tribution had in the UAE? Do you envisage Oman, Pakistan, Qatar, Kuwait, Bahrain, Abu our strategic partnership with Masdar, and ex- more acquisitions in future? Dhabi, Dubai and Sharjah. Our total head- pand our ‘smart’ concept, to make the region GG: All of Areva Distribution’s installations, count in Gulf & Pakistan amounts to more more clean and green. like transformers and switchgears, now be- than 1,200 people representing us in the areas long to Schneider Electric. As we did not of Lifespace, Buildings, IT, Power, Industry & How does the business environment compare have high-range transformers, this creates big Infrastructure. Our infrastructure and energy between Abu Dhabi and Dubai? Is it in your advantages for us in oil and gas, and energy headquarters are in Abu Dhabi, where Schnei- favor to deal with just one body for all the dif- generation. I cannot comment on any new ac- der Electric’s oil and gas competency center is ferent processes in Dubai? quisitions, other than to say what Schneider also based. We are targeting increased market AS: Dealing with one body helps, but our Electric did in the past is a good predictor of share in the region, and our growth expecta- main business remains distribution rather what it will do in future. Any company related tions are huge. than transmission. Whereas Dubai is focusing to energy management, services or solution mainly on increasing efficiency, the focus in provision is of potential interest to Schneider What are your core products and services for Abu Dhabi is still on increasing generation to Electric. the power sector and how have you felt the meet demand growth. development of demand for those services? GG: Abu Dhabi is mainly focused on cap-ex Where would you like to see Schneider Elec- Ahmed Sfar (AS): The most dominant busi- investment for new projects, Dubai on op-ex tric in the UAE five years from now? ness in the UAE is the energy sector, with oil to improve existing systems. Dubai has also AS: We will do everything to strengthen our and gas on one side, and utilities and infra- taken the initiative in solar power, while Abu power sector position in the next five years, structure on the other. This is an important Dhabi needs more property developments using our own capabilities and those from re- market for us parallel to our historical resi- to make it attractive to migrants. The UAE is cently acquired companies. The need is there; dential business market, in which we are also very challenging in terms of competition; the and as long as oil and gas is doing well, so will present here. Our strength in oil and gas and market is crowded with traditional companies be the funding. utilities comes partly from the acquisitions of as well as newcomers from the Asia-Pacific GG: Schneider Electric continues to increase companies like GUTOR and Areva Distribu- region. recruitment in the GCC region. It is our aim tion. UAE is a country with a growing econ- to hire more local people, who can speak the omy and population, so demand is rising for This office is responsible for business in the language and more easily partner with local our services. We are confident of growth and northern Emirates and the wider region. What firms (*pls delete). Big projects are not easy now we need to position ourselves to make trends are you seeing develop? to execute, so we are increasing our back-of- the most of the opportunities. GG: We are expecting more investment in fice engineering competencies; in five years’ GG: Services are also an important area for tourism, logistics and finance in the north- time, I would like to have merged all our com- Schneider Electric due to our huge install ern Emirates, developments that will lead to petency centers in the Gulf countries, Saudi base. We have a large team, covering services, higher power demand. Turkey has seen good Arabia and Turkey. Today we are very strong in from system modernization and renovation to economic trends in the last five years; Saudi installed-base services, but we would like to maintenance and so on. Arabia has perhaps done even better. Growth improve our performance services. •

64 Global Business Reports // UAE POWER 2013 Industry Explorations Industry Explorations Into the Future: Final Thoughts, Company Guide, and Index

“It is a very exciting future, because the UAE has the capital to invest in new capacity, but it currently lacks some of the technology, the human capital and the regulatory framework to achieve this. The UAE is going to be one of the most vibrant and exciting countries in the world. You can see all around you that Du- bai in particular is strongly recovering from the global financial crisis, and this is going to be a critical place to invest in future of the power industry.”

- Kenneth McKellar, MIDDLE EAST ENERGY & RESOURCES LEADER, DELOITTE & TOUCHE (M.E.) Global Business Reports Global Business Reports FINAL THOUGHTS Industry Explorations Industry Explorations FINAL THOUGHTS

"The great thing about Abu Dhabi is that it understands the needs of the "Nuclear power will only contribute 5.6 GWe of the UAE’s significant meg- market, and the impact of global events. It does not simply continue to awatt capacity; it will really fit into the base load scheme. The UAE needs apply one model. You can expect the financing options offered by the to build more new power plants, and indeed projects are in pipeline. Nu- authorities to continue to evolve. Abu Dhabi wants to entice international clear energy will contribute to the growth of the UAE will safe and reliable investors by offering conditions that meet their requirements in a difficult electricity. It will also improve energy security, by diversifying the energy world economy." portfolio and will help to achieve better rates of sustainability by saving 12 million tons of greenhouse gas emissions."

- Mobin Khan, Partner and MENA Power & Utilities Market Leader, Ernst & Young - Mohammed Al Hammadi, CEO, Emirates Nuclear Energy Corporation

"As advisors we are trying to elevate the understanding and appreciation for the imminence of the issue by creating econometric studies for exam- ple – by understanding the power efficiency for the state. Last year Dubai increased their tariffs on residential electricity which although upsetting many residents meant they bought less LNG saving the government "We believe the Middle East has the potential to be one of the most impor- hundreds of millions. On the other side of the story is asking if we being tant solar markets in the world. We expect significant company growth to responsible in the way we fundamentally use energy, both as companies come from the Middle East over the next five years. Projects are coming and as individuals. It is ultimately up to the authorities to encourage this up in Kuwait, possibly in Oman or Qatar, and in large North African mar- type of positive behaviour through policy, regulation and so on. We are kets such as Egypt and Morocco." working with the UAE government to build a green growth plan, focusing on how green initiative can be used not just for the environment but for growth, without the presumed sacrifices." - Christopher Burghardt, Vice President Business Development EAME, First Solar

- Mr. Paul Navratil, Middle East Energy, Utilities & Mining Leader, PwC

"In my view, none of the Gulf countries are likely to charge cost-reflective tariffs in the residential segment for the next decade or two, though higher "The power needs here are ever increasing, and the UAE has understood rates may be introduced for commercial and industrial customers. It is that they need to play the green card to remain competitive, so they are the same with fossil fuels: raising the price to market rates, as economists looking into renewables and nuclear. A challenge for the region is to build suggest, could potentially lead to significant social unrest, as it would up modern transmission and distribution network with high intelligence result in higher prices for many consumer goods and services. I think and latest state of the art efficiency… The challenges that transmission subsidies for renewables are the answer, as they have been shown to be faces include high temperatures in summer and the high load. People very effective in countries like Spain. I would also encourage much more here are also not very conscious of energy usage: they leave the lights on R&D in the area of renewables to help bring prices down further to more and constantly run air conditioners." affordable levels for residential electricity users."

- Hendrik Cosemans, - Robert M. Bryniak, General Manager, Nynas AB Middle East CEO of Golden Sands Management Consultancy

"Climate change has forced us to look into ways to control the rising temperatures of the planet of which the consequences will be irreversible. Development of renewables is important but not enough, therefore CCS "Enpark is developing hand-in-hand with the growth of the UAE’s renewa- has to be part of the answer. Masdar has recognised the importance of ble industry. Sustainability – waste reduction, recycling, renewable power this technology but there is still more work to be done by Masdar, the and green building technologies – is set to become increasingly important UAE and globally in improving the technology and lowering the cost. This in our daily lives, and we envisage ourselves being a major stakeholder in cannot be done without spending time on R&D but also there is a need for it. We are currently in talks with government entities over green economic early stage projects on the ground." partnerships."

- Bader Al Lamki, - Saeed Ghubash, Director of Clean Energy at Masdar Director, Enpark

68 Global Business Reports // UAE POWER 2013 Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 69 Global Business Reports Global Business Reports INDEX AND COMPANY GUIDE Industry Explorations Industry Explorations INDEX AND COMPANY GUIDE

COMPANY NAME WEBSITE PAGE COMPANY NAME WEBSITE PAGE Government, Organizations and Associations Engineering, Construction and Project Managment Abu Dhabi Water and Electricity Authority (ADWEA) www.adwec.ae 10, 11, 12, 16, 44, 58, 62, 63, 72, 73 ABB www.abb.com 38 Amcham www.amchamabudhabi.org Aecom www.aecom.com Australian Business Council Dubai www.abcduae.com 74 AEG Power Solutions www.aegps.com Clean Energy Business Council www.cleanenergybusinesscouncil.com 48 Aggreko www.aggreko.com Dubai Chamber www.dubaichamber.com Amec www.amec.com Dubai Electricity and Water Authority (DEWA) www.dewa.gov.ae 10,11,12,14, 16, 31, 36, 42, 44, 56, 57, 58, 63, 72, 73, 74 Atlas Copco www.atlascopco.com Dubai Silicon Oasis Authority www.dsoa.ae Baker Hughes www.bakerhughes.com Emirates National Grid eng.ae 18 Bechtel www.bechtel.com 41, 45 Federal Authority for Nuclear Regulation www.fanr.gov.ae 28 Black & Veatch International bv.com Federal Electricity and Water Authority (FEWA) www.fewa.gov.ae CH2MHill www.ch2m.com International Renewable Energy Agency (IRENA) www.irena.org 31, 58, 72, 73 Descon www.desconllc.com 28 Investment Corporation of Dubai icd.gov.ae DNV KEMA www.kema.com 6 Masdar www.masdar.ae 12, 20, 22, 24, 25, 26, 31, 32, 34, 36, 38, 39, 40, 48, 57, 58, 64, 68 Emerson Process Managment www.emersonprocess.com 58 Ministry of Energy www.moenr.gov.ae 34 Green Oasis www.goc.ae RAK Investment Authority www.rak-ia.com Habtoor Leighton Group www.hlgroup.com Regulation and Supervision Bureau www.rsb.gov.ae 11, 18, 19, 59 Hatch www.hatch.ca 22, 31 Sharjah Electricity and Water Authority (SEWA) www.sewa.gov.ae Hitachi www.hitachi.com 28 The German Emirati Joint Council for Industry & Commerce (AHK) www.ahkuae.com 31, 58, 72 Honeywell honeywell.com ITOCHU Corporation www.itochu.co.jp Conventional Energy and Clean Coal Jacobs www.jacobs.com Abu Dhabi National Energy Company (TAQA) www.taqa.ae 14, 16 Kalkitech www.kalkitech.com Abu Dhabi National Oil Company (ADNOC) www.adnoc.ae Laing O'Rourke www.laingorourke.com AES Oasis Energy www.aes.com Luthardt & Experts www.luthardt-experts.com Al Mirfa Power Company www.ampc.ae McConnell Dowell www.macdow.com Alstom www.alstom.com 43 McDermott www.mcdermott.com Arabian Power Company www.arabianpower.ae Mitsubishi Electric www.mitsubishielectric.ae Dolphin Energy Limited www.dolphinenergy.com Odebrecht www.odebrecht.com Dusup www.dusup.ae Pacific Controls www.pacificcontrols.net Emirates CMS Power Company www.taqa.ae PESCO Energy Field Services & Contracting www.pescotnd.com Fujairah Asia Power Company www.fapco.ae Schneider Electric www.schneider-electric.ae 52, 60, 64, 65 Gulf Total Tractebel Power Company www.tractebel-engineering-gdfsuez.com Shaw Group www.shawgrp.com International Petroleum Investment Company www.ipic.ae SNC Lavalin www.snclavalin.com Kahrabel GDF SUEZ www.gdfsuez.com Sojitz Middle East www.sojitz.com NEM Energy www.nem-group.com 43 Sterling and Wilson www.sterlingwilson.ae Nynas AB Middle East www.nynas.com 50, 69 Wärtsilä www.wartsila.com 44, 46, 47 Pöyry Energy www.poyry.com 41, 45 Worley Parsons www.worleyparsons.com SembCorp Industries www.emsembcorp.com Yokogawa www.yokogawa.com Shuweihat Asia Power Company www.sapco.ae Sumitomo www.sumitomocorp.co.jp 31 Equipment and Technology Taweelah Asia Power Company www.tapco.ae Advanced Technology & Power Industries www.atpiuae.ae Utico www.uticome.com 41, 42, 46 Al Masaood www.masaood.com Al Mazroui Advanced Technology almazroui-me.com Nuclear, Solar, Wind and Other Renewables Al Nasser Industrial Enterprises www.anieuae.com Abengoa Solar www.abengoa.com 32, 40 Al Qaswaa Engineering www.alqaswaa.ae Activ Solar www.activsolar.com Alpha Wire www.alphawire.com Apex Power Concepts www.apexpowerconcepts.com Arabian Calibration www.arabcal.com Areva www.areva.com 27, 28, 64 Beckhoffwww.beckhoff.ae Belectric Middle East www.belectric.com Caltrols Middle East www.caltrols.com Conergy www.conergy.com DUCAB www.ducab.ae CSEM-uae csem-uae.com 32, 38 Eaton Electric www.eaton.com EDF www.edf.fr 28 ELTEK www.eltek.com Emirates Nuclear Energy Corporation www.enec.gov.ae 12, 19, 28, 31, 45 Endress+Hauser www.endress.com Emirates Solar Industry Association www.emiratessolar.com 35, 74 Energsys www.enersys-emea.com Energy Solutions www.energysolutions.com Grundfos www.grundfos.com Enpark enpark.ae 34, 69 Kirloskar www.kirloskar.com Enviromena Power Systems www.enviromena.com Klein Tools www.kleintools.com Envitech Middle East www.envitech.ae KSB www.ksb.com 32, 60, 62 First Solar www.firstsolar.com 32, 36, 37, 69 Northbridge Middle East www.northbridge-me.com Fortune CP www.fortunecp.com Phoenix Contact www.phoenixcontact.com GE www.ge.com 26 Power Plus Cable www.powerpluscable.com Green Energy www.greenenergy-uae.com RAS Power Distribution www.ras-group.net Kanne Energies www.kanne-group.com Rittal Middle East www.rittal-middle-east.com Pentair Technical Products http://www.pentairtechnicalproducts.com/ Roxtec Middle East www.roxtec.com Power One www.power-one.com Safe Line Electrical & Mechanical www.safelinegc.com Ralos Kharafi National Limited www.ralos-kharafinational.com SES Group www.ses-uae.com Rensus www.rensus-uae.com SPX www.spx.com SCHOTT www.schott.com 63 Technical Hands www.technicalhands.com Shams Power Company www.shamspower.ae 32, 40 Ultimate Power Solution www.upsgenerator.com Siemenswww.siemens.ae 32, 35, 38, 47, Union Copper Rod www.unioncopper.ae SMA Solar Technology www.sma.de Victor Industrial & Trading victoruae.com Solar Technology Center www.solartechnologycentre.co.uk Viessmann www.viessmann.co.uk Sole www.sole.gr Vista Automation www.vista-automation-me.com Solesa www.solesa.eu Weidmueller Middle East www.weidmueller.com Solite Elctro Technology www.solitepower.com STV investment www.stvinvestment.com Consultancy, Financial and Auditing SunEdison www.sunedisonemea.com Abdulla Nasser & Associates (ANA) www.ana-uae.com Sunpower www.sunpower.ae Apco Worldwide www.apcoworldwide.com The Change Initiative www.thechangeinitiative.com Apricum Group apricum-group.com The Change Initiative www.thechangeinitiative.com BDO www.bdo.ae Deloitte www.deloitte.com 10, 52, 66 Transmission and Distribution Dubai Carbon Center of Excellence www.dcce.ae Abu Dhabi Distribution Company www.addc.ae Ernst & Young www.ey.com 11, 16, 68. Abu Dhabi Transmission and Despatch Company www.transco.ae 16 Frost & Sullivan www.frost.com Al Ain Distribution Company www.aadc.ae 16 Golden Sands Management Consultancy goldensandsmc.com 14, 68 CESI www.cesi.it 52, 57 Gulf Musanada www.gulfmusanada.com Dale Power Solutions www.dalepowersolutions.com KPMG www.kpmg.com Gulf Jyoti International www.gulfjyoti.com 16, 52, 57 Manaar Consulting www.manaarco.com Hager www.hager.ae PwC www.pwc.com 12, 60, 68

70 Global Business Reports // UAE POWER 2013 Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 71 Global Business Reports Global Business Reports DATA OVERVIEW Industry Explorations Industry Explorations DATA OVERVIEW

) ( 1 - 2 :2 ) ( 1 - 2 :1 Table 2: Consumed Electricity by Authority, 2007- 2011 (GWh) Table 1: Gross Generated Electricity by Authority, 2007-2011 (GWh) ) ( 1 - 2 :1

Table 1: Gross Generated Electricity by Authority, 2007-2011 (GWh) 2007 2008 2009 2010 2011 Authority 2007 2008 2009 2010 2011 Authority

Abu Dhabi Water & Electricity Authority Abu Dhabi Water & Electricity Authority 38.592 38.546 43.644 49.942 56.576 1 29.342 31.478 34.716 39.17343.245 2007 2008 2009 2010 2011 (ADWEA) Authority (ADWEA) 1 Dubai Electricity & Water Authority 26.030 29.089 31.013 33.742 34.606 Abu Dhabi Water & Electricity Authority Dubai Electricity & Water Authority 38.592 38.546 43.644 49.942 56.576 (DEWA) 24.756 27.931 30.056 32.55133.498 (ADWEA) (DEWA) Sharjah Electricity & Water Authority 8.968 9.614 9.805 10.254 10.420 Dubai Electricity & Water Authority Sharjah Electricity & Water Authority 26.030 29.089 31.013 33.742 34.606 (SEWA) 7.682 8.301 8.269 8.644 8.915 (DEWA) (SEWA) Federal Electricity & Water Authority 1 5.171 4.735 3.730 3.401 2.540 Sharjah Electricity & Water Authority 4 3 2 Federal Electricity & Water Authority 8.968 9.614 9.805 10.254 10.420 (FEWA) 1 8.134 10.168 11,363 9.219 9,850 4 (SEWA) (FEWA)

78.761 81.984 88.192 97.339 104.142TFederal Electricity &otal Wa ter Authority 1 5.171 4.735 3.730 3.401 2.540 69.914 77.878 84.404 89.587 95.508 Total (FEWA) 1 : : Source: Ministry of Energy: Annual Statistical Report Electricity and Water 2012. Source: Ministry of Energy: Annual Statistical Report Electricity and Water 2012. 78.761 81.984 88.192 97.339 104.142Total 1- Prelimenary Data. 1- Electricity Consumed in Abu Dhabi Emirate . : Source: Ministry of Energy: Annual Statistical Report Electricity and Water 2012. 2- FEWA was Supplied with 7208 GWh from ADWEA. 1- Prelimenary Data. 3- Estimated Value.

4- Prelimenary Data.

72 Global Business Reports // UAE POWER 2013 Industry Explorations Industry Explorations Global Business Reports // UAE POWER 2013 73 Global Business Reports CREDITS Industry Explorations

EDITORIAL TEAM

Project Coordinator: Katya Koryakovtseva ([email protected]) Senior Journalist: Ramzy Bamieh ([email protected]) Research Assistants: Alice Pascoletti and Diego Carillo

Graphic Designer: Gonzalo Da Cunha ([email protected]) Regional Director: Sharon Saylor ([email protected]) General Manager: Agostina Da Cunha ([email protected]) Executive Editor: Barnaby Fletcher ([email protected])

For more information about GBR, please email [email protected]. For updated industry news from our on-the-ground teams around the world, please follow us on Twitter @GBReports or subscribe to our newsletter at gbroundup.wordpress.com.

THANK YOU

GBR would like to thank the following associations for their help in the research of this project:

American Business Council Dubai and Northern Emirates www.abcdubai.com

Australian Business Council Dubai www.abcduae.com

Dubai Electricity and Water Authority (DEWA) www.dewa.gov.ae

Emirates Solar Industry Association www.emiratessolar.com

German Emirati Joint Council for Industry & Commerce (AHK) vae.ahk.de

International Renewable Energy Agency (IRENA) www.irena.org

Regulation & Supervision Bureau www.rsb.gov.ae

We would also like to sincerely thank all the companies, associations and individuals that took the time to give their insights on the market, with a special mention to Dr. Michael Krämer of Taylor Wessing (Middle East) LLC and Richard Menezes of Utico for taking the time to contribute expert opinion articles to this publication.

74 Global Business Reports // UAE POWER 2013 Industry Explorations