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Renewable Energy in MENA


Why and How?
Hannes Reinisch
Senior Manager,
Renewable Energy and Sustainability Advisory, PwC

MEED Renewable Energy Conference


September 2012

Renewable Energy in MENA


Why and How?

1. What makes the Middle East special for Renewable Energy?


2. The big question: Renewables vs. Oil & Gas vs. Nuclear?
3. The untapped supply: larger and smarter Grids
4. Plus: A sneak preview of the UAE Solar Survey 2012
(Report to be published in October 2012 in collaboration with ESIA

PwCIL

Renewable Energy in MENA


Why and How?

1. What makes the Middle East special for Renewable Energy?


2. The big question: Renewables vs. Oil & Gas vs. Nuclear?
3. The untapped supply: larger and smarter Grids
4. Plus: A sneak preview of the UAE Solar Survey 2012
(Report to be published in October 2012 in collaboration with ESIA

PwCIL

1. What makes the Middle East Special?


A few contextual points

More Power Needed Stark Electricity Demand Growth


Cheap Electricity...is becoming more and more expensive
We have plenty of Sunshine
Each MENA country is different

PwCIL

More Power Needed

Jordan

Kuwait

Stark Electricity Demand Growth

Saudi Arabia

Dubai

Abu Dhabi

KSA

PwCIL

2020

50TWh

14GW

45GW

UAE

Oman

7-11% year on year


Today

Qatar

Egypt

2030
110TWh

=120%
23GW

=66%

65GW

=44%

121GW

=175%
5

Electricity is cheap in parts of MENA

PwCIL

MENA

Avg. Prices ($cents/KWh)

UAE lowest

0.8

Saudi Arabia

1.3

Qatar

2.2

Tunisia

Rest of
World

Avg. Prices
($cents/KWh)

4.7

Germany

up to 35

Algeria

4.8

Spain

27

UAE highest

Australia

25

Kuwait

UK

21

Bahrain

California

16

Morocco

up to 19

China

Jordan

up to 45

Slide 6

Cheap electricity is....


...becoming more and more expensive
Opportunity Cost of subsidised electricity :

( Oil/Gas Market Price, Population, Electricity Price, etc.)


Foregone
export
revenues

PwCIL

Local power
demand

OIL & GAS


EXPORTING
COUNTRIES

(un) collected
electricity
revenues

Slide 7

Cheap electricity is....


...becoming more and more expensive
Opportunity Cost of subsidised electricity :

( Oil/Gas Market Price, Population, Electricity Price, etc.)


Import
expenditure

PwCIL

Local power
demand

OIL & GAS


IMPORTING
COUNTRIES

(un) collected
electricity
revenues

Slide 8

Cheap electricity is....


...becoming more and more expensive
Opportunity Cost of subsidised electricity :

( Oil/Gas Market Price, Population, Electricity Price, etc.)

Inefficiencies
and wasteful
consumer
behaviour
PwCIL

Slide 9

We have plenty of sunshine

PwCIL

10

More sunshine means lower Levelised Cost of Electricity (LCOE)

LCOE

Technology A

Technology B

900
PwCIL

1200

1800

2500
11

Yield/Insolation

How much exactly best to measure locally

Satellite-based data vs.


measurement on the ground
Dust
Aerosols in atmosphere
Temperature
Data history
Measurement frequency
Regional monitoring station at the Masdar Institute

PwCIL

12

Yield measurement at a site

MENA

Plenty of Demand for Power


Plenty of Oil & Gas
Plenty of Renewable Energy Resources
Plenty of Carbon Emissions
PwCIL

13

Target markets for MENA solar

Source: Sunrise in the Desert Solar becomes commercially viable in MENA


Emirates Solar Industry Association White Paper by Robin Mills, January 2012, Copyright 2012. All rights reserved
PwCIL

January 2012
14

Renewable Energy in MENA


Why and How?

1. What makes the Middle East special for Renewable Energy?


2. The big question: Renewables vs. Oil & Gas vs. Nuclear?
3. The untapped supply: larger and smarter Grids
4. Plus: A sneak preview of the UAE Solar Survey 2012
(Report to be published in October 2012 in collaboration with ESIA

PwCIL

15

Renewables OR Fossil Fuels?

VS.
Oil & Gas

PwCIL

PV

CSP

Wind

Slide 16

Complements not Substitutes

OC LNG
CC LNG

CC cheap Gas
CC cheapest Gas

Generation mix with/without solar power (July)


Source: Sunrise in the Desert Solar becomes commercially viable in MENA
Emirates Solar Industry Association White Paper by Robin Mills, January 2012
Copyright 2012. All rights reserved
PwCIL

January 2012
Slide 17

Complements not Substitutes

Solar PV

OC LNG

CC LNG

CC cheap Gas
CC cheapest Gas

Generation mix with/without solar power (July)


Source: Sunrise in the Desert Solar becomes commercially viable in MENA
Emirates Solar Industry Association White Paper by Robin Mills, January 2012
Copyright 2012. All rights reserved
PwCIL

January 2012
Slide 18

Renewables OR Nuclear Energy?

VS.
Nuclear

PwCIL

PV

CSP

Wind

Slide 19

Solar PV OR Solar CSP OR Wind?

VS.
PV

PwCIL

VS.
CSP

Wind

Slide 20

...Renewables OR AND Other Energy Sources

+
Oil & Gas

+
Nuclear

+
PV

+
CSP

Wind

Complements not Substitutes (for now...)


PwCIL

Slide 21

A low(er)-carbon Energy Mix


Jordan 2020: 10%

Dubai 2030:5%
Kuwait 2020:10%

RE

Egypt 2020: 20%

KSA 2032: 16-22%

PwCIL

Abu Dhabi 2020 :7%

22

Complements not Substitutes

2032

SOLAR PV
SOLAR CSP

Hydrocarbons
Nuclear + Geothermal + Waste-to-Energy

Source: KACARE presentation at 4th Saudi Energy Forum (May 2012)


PwCIL

Slide 23

Renewable Energy in MENA


Why and How?

1. What makes the Middle East special for Renewable Energy?


2. The big question: Renewables vs. Oil & Gas vs. Nuclear?
3. The untapped supply: larger and smarter Grids
4. Plus: A sneak preview of the UAE Solar Survey 2012
(Report to be published in October 2012 in collaboration with ESIA

PwCIL

24

...Renewables OR AND Other Energy Sources

+
Oil & Gas

PwCIL

+
Nuclear

+
PV

+
CSP

Wind

Slide 25

...Renewables OR AND Other Energy Sources

+
Oil & Gas

+
Nuclear

+
PV

+
CSP

Wind

+
Trade

PwCIL

Slide 26

Supply Efficiency and Renewable shares rise


as grids become larger and smarter

UAE

KSA

GCC Interconnection
PwCIL

EU-MENA Grid Integration


27

Larger and Smarter Grids connect demand and supply


across national and international borders

LESS underutilised peaking plants

LESS storage requirements for RE

MORE harvesting of Renewable Sources for local power demand

MORE export revenues from freed-up oil & gas

MORE export revenues from exported electricity

MORE economic diversification in new generation and transmission

PwCIL

28

Renewable Energy in MENA


Why and How?

1. What makes the Middle East special for Renewable Energy?


2. The big question: Renewables vs. Oil & Gas vs. Nuclear?
3. The untapped supply: larger and smarter Grids
4. Plus: A sneak preview of the UAE Solar Survey 2012
(Report to be published in October 2012 in collaboration with ESIA

PwCIL

29

UAE Solar Survey 2012


October 2012
Initiative by ESIA and PwC in collaboration with
the UAE Federal Government
Over
100
survey
respondents
provided
commentary and insights over a period of 6
weeks.
76% were based in the UAE, the majority
considered themselves to have either expert
knowledge or good knowledge of the solar
Industry, both globally and in the UAE.
Most had 3-10 years experience in the Global
Solar Industry. A significant number of
respondents were senior executive level.
Representation
from
government,
project
engineering and solar technology developers and
Industry Consultants.
PwCIL

30

How quickly will


the market
develop?

What are the


challenges solar
in the UAE?
What sectors will
drive further
development of
solar projects?

What are the issues


in funding and
financing solar
developments?

What can the


government do to
drive growth in the
solar industry?
Which Solar
technologies are
best suited for
the UAE?

How can UAE


nationals benefit
from the current
growth in renewable
energy?

PwCIL

What are the


challenges for
research and
developing human
capital?

What is the best


incentive system
to support the
solar industry?
31

Q8: Which applications do you think will drive further development of solar
projects in the UAE?

Integration of solar into new construction

58

Installation onto existing solar rooftops

54

Heating / cooling of industrial processes

47

Replacement of diesel

46

Replacement of gas for electricity generation

41

Desalination

38

Electric vehicles and their charging stations

14

Other*

Integration into new construction

13
0

10

20

30

40

50

60

70

Example: Al Bateen School Abu Dhabi,


(Photo Courtesy of Environmena)

PwCIL

Thank you

Hannes Reinisch
Senior Manager,
Renewable Energy and Sustainability Advisory, PwC

ESIA Research and Policy Committee Member

PwCIL

Slide 33

Jordan

Kuwait

PwC Middle East Centre of Excellence for


Renewable Energy, Cleantech and Sustainability
Meet the Team

Q
a
t
a
r

Egypt
Saudi
Arabia

UAE

Oman

Hannes Reinisch
Paul Navratil

COE Coordinator

Lead Partner for Energy - Middle East


paul.navratil@ae.pwc.com

Senior Manager, Renewable Energy and


Sustainable Development
hannes.reinisch@ae.pwc.com Mobile: +971 50 9009 513

Dr. Anil Khurana

Mohammed Salem

Partner, PwCs PRTM Management Consulting


anil.khurana@ae.pwc.com

Partner, Climate Change and Sustainability


mohammed.t.salem@ae.pwc.com

Bernhard Haider

Maarten Wolfs
Director, Finance & Procuement
maarten.wolfs@ae.pwc.com

Partner Power & Utilities


Smart Grid and Renewable Energy
bernhard.haider@ps.pwc.com

Nathan Clute

Jakub Zielkiewicz
Manager, Climate Change and Carbon
jakub.zielkiewicz@ae.pwc.com

Tania Abu Zeid


Consultant, COE support
tania.a.zeid@ae.pwc.com

Director, Clean technology


investment & deployment strategies
nathan.clute@ae.pwc.com

Emily Manuel
Assistant Manager, Renewables & Power
emily.manuel@ae.pwc.com

Global Members of ME COE

Gus Schellekens
Director, Renewable Energy Expert
PwCIL

gus.schellekens@uk.pwc.com

Andrew Thurley
Director, Director - Public Sector
Sustainability

andrew.thurley@uk.pwc.com

PwC Middle East Centre of Excellence


for Renewable Energy, Cleantech and Sustainability

We recognize a growing pace of change in the Middle East

Launched this Centre of Excellence in December 2010.

Based in Abu Dhabi and linked with experts across the region and our wider global network.

While covering the entire ME region, current focus countries are


UAE, KSA, Qatar, Kuwait, Oman, Jordan and Egypt.

Our Advisory services cover Strategy, Policy, Technology and Financing for

Climate Change Mitigation and Adaptation

Green Growth and Sustainable Development

Energy Diversification and Renewable Energy (Focus: Solar)

Energy Efficiency and Demand Side Management

Smart Grid and Smart Metering

Corporate Sustainability (Economic, Social, Environmental)

Green Supply Chain

PwCIL

Jordan

Kuwait

Qatar

Egypt

Saudi Arabia

UAE

Oman

35

PwC - Introduction
163,000 people in 163 countries across our network
share their thinking, experience and solutions to develop fresh
perspectives and practical advice.
providing industry-focused assurance, tax and advisory
services
We are independent from manufacturers or integrators

Our Global Power & Utilities


Centre of Excellence
Smart Grids and Smart Meters
Renewable and cleaner energy
Nuclear energy
Deals
Capital projects & infrastructure
Asset management & performance
improvement
Industry regulation
Financial reporting and assurance
Energy trading & risk management

PwC in the Middle Easy


Established for over 40 years
Over 2,500 people
Offices in:

Bahrain,
Egypt,
Iraq
Jordan
Kuwait
Lebanon

Libya
Oman
Palestine
Qatar,
Saudi Arabia
United Arab Emirates

36

About ESIA
The Emirates Solar Industry Association (ESIA) is a non-profit, non-governmental organization that brings together the regions solar industry. Our goal is to
transform the Middle Easts vast solar potential into a commercially and environmentally viable solution for the regions growing electricity demand.
ESIA provides its members with services such as educational workshops, networking functions and special reports on breakthrough solar innovations. We also
provide assistance to international companies seeking to expand their solar operations in the Middle East. The association is currently working on initiatives that
bring together leaders from the policy sector, academia, and the private sector. The monthly ESIA newsletter goes out to over 1,200 readers in the Middle East
renewable energy space the largest of its kind.
About The Author
Robin Mills is the Head of Consulting at Manaar, the Dubai-based energy consultancy providing business advice and operations management consulting services
for private and government energy companies in the Middle East. Until October 2011, he was the Petroleum Economics Manager at Emirates National Oil
Company. From 2006-2008, he was Senior Evaluation Manager at Dubai Energy and before that, had a variety of economic and geological roles during his eight
years with Shell. Robin has published two books, "The Myth of the Oil Crisis: Overcoming the Challenges of Depletion, Geopolitics and Global Warming" (Praeger
Publishers, 2008) and Capturing Carbon (Columbia, 2011), and features widely in MENA and international media on energy and environmental issues. He holds
an MS in Geological Sciences from Cambridge University.
About PwC
PwC firms help organisations and individuals create the value theyre looking for. Were a network of firms in 158 countries with close to 169,000 people who are
committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
Established in the Middle East for 40 years, there are PwC firms in Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, the Palestinian territories, Qatar,
Saudi Arabia and the United Arab Emirates, with around 2,500 people. (www.pwc.com/middle-east) 2012 PricewaterhouseCoopers. All rights reserved.
"PwC" is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form
the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any
services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional
judgment or bind them in any way.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the
information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, the authors and distributors do not accept or assume
any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this
publication or for any decision based on it.
Copyright 2012. All rights reserved.
PwC refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the
PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to
clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind
them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member
firms professional judgment or bind another member firm or PwCIL in any way.
"ESIA" refers to the Emirates Solar Industry Association, non-profit industry group based in the UAE.