In the past four years, the prices of solar PV systems in the United Arab Emirates have been dropping by more than 76%. Moreover, UAE is also one of the countries that offer the lowest tariff and PPA prices. In fact, almost every year UAE manages to hit the breaking record when it comes to lower solar purchase power agreements. The latest solar PV award in the country, The Al Dhafra project has recently announced that they will permit a tariff of $13.50 per megawatt-hour. So far, it is one of the lowest solar PPA costs across the globe.
With these solar benefits, the annual solar power growth in the country is continuously improving and is expected to gain more potential in the solar energy industry. Last 2020, the solar energy market of UAE obtained a 2.35% compound annual growth rate (CAGR) but is expected to hit more than 15% CAGR between 2020-2025 periods.
Solar Energy Market Overview 2020-2025
Between the forecast period 2020 to 2025, UAE’s solar energy market is assumed to hit a record of more than 15% compound annual growth rate. The main drivers of this growth are government policies, incentives and tax credits. Even the advocacy to achieve high power demand from renewable energy resources to minimize the country’s resiliency on fossils and to eliminate Carbon footprints also serves as one of the significant drivers to the growth of the UAE’s solar market.
In addition to that, the constant dropping of solar system costs also helps in encouraging people to switch to solar power for either residential or commercial purposes. The lower prices of solar technologies are becoming more efficient in beating fossil fuel sources. Getting additional assistance and support from different solar energy organizations all over the world is also contributing to the growth of the United Arab Emirates solar energy market. However, according to the forecast, the high cost of solar installation, equipment maintenance such as the cleaning cost of solar panels and the limited power supply may affect and restrain the solar market growth.
- The solar energy market of UAE has been showing a significant growth rate in the forecast period 2020-2025. The forecasted years may bring opportunities and milestones in UAE’s solar market.
- If the visionary of United Arab Emirates Energy Strategy 2050 will be adapted then the country is expected to make a great increase in the clean energy share by 2050, by investing in nuclear and solar energy, it may increase by 44%.
- The several upcoming huge solar projects like Noor Abu Dhabi with an expected capacity of 1200 MW, and Mohammed bin Rashid Al Maktoum Solar Park with an expected capacity of 5000 MW will make a great share of solar energy in the country.
UAE Solar PV Segment Growth
According to the Rystad Energy report, the total capacity of installed renewable resources in the United Arab Emirates in 2020 reached 2.3 gigawatts (GW) and the solar photovoltaic (PV) projects comprised 91% of the total installed renewable capacity. This huge share of solar power is expected to soar high in 2022.
Also, Rystad Energy has forecasted that by the end of 2025, the total renewable capacity of UAE will reach 9 GW, whereas solar PV capacity is expected to gain 8.5 GW by the end of 2025. This impressive increase in capacity will help in diversifying UAE’s energy mix. On the other hand, the total energy share of the United Arab Emirates in its power generation mix is expected to increase from 7% in 2020 to 21% in 2030, and to 44% by 2050.
Gaurav Metkar, senior analyst at Rystad Energy said in the report that the main priority of UAE as of the moment is to increase the growth of the country’s renewable energy. Even if the pandemic causes a negative impact on the development of ongoing solar projects, they assure that the government will a lot a reasonable amount of investment. Besides, the country already caught the attention of significant global players in the renewable energy sector, which will alleviate the growth of their solar energy market in the next coming years.
Moreover, since some of the goals and targets for the solar energy market have already been achieved in 2020, it is expected that a massive project development pipeline in 2030 is already achievable. It might be too early to assume the milestone that will be achieved by the country in the 2050 target, but the current huge growth and big potential achieved by the UAE’s renewable sector even during the pandemic will surely attract more solar investors and developers. This advantage together with the country’s lowest power purchase agreement (PPA) cost, generous government policies towards solar power generation suggests that 2050 targets are almost within reach.
Based on the UAE’s current project pipeline, its renewable capacity is expected to gain a significant CAGR of more than 31% in 2025. When it comes to renewable shares, among the seven emirates of UAE, the huge portion of the renewable activity is expected to take place in Abu Dhabi and Dubai, which when combined together will allot more than 90%, 8.2 GW of total capacity.
The major drivers of this huge growth include four solar farms, the Al Dhafra (2GW), Abu Dhabi PV3 (1500MW), MBR Phase IVa and IVb (950MW) and MBR Phase V (900MW), all of which are in various stages of development. The remaining 0.9 GW solar capacity will be generated from other solar projects in Umm Al Quwain, Ras Al Khaimah and Sharjah.
Solar Energy Growth By Region
Currently, Abu Dhabi has installed a solar capacity of 1.3 GW. The major capacity shares of the total capacity come from the Noor Abu Dhabi (Sweihan) project with 1.17 GW capacity, whereas, the Shams solar CSP project gives its fair share of 100 MW. In addition, the Abu Dhabi virtual battery also contributed 108 MW to the region’s solar capacity.
Abu Dhabi, the capital of UAE, is expecting to hit its 5.6 GW solar PV capacity target by the end of 2026. In 2020, the Al Dhafra Solar project generated a 2 GW capacity according to Abu Dhabi Electricity and Water Authority. Whereas, EDF in France and Jinko Solar is planning to build the 20 square kilometres (7.7 sq mi) PV plant in the Al Dhafra Region, which is about 35km south away from Abu Dhabi City. This solar plant will deploy bifacial (dual-sided) crystalline solar technology. The solar project will be commissioned in 2022 and is bound to offer the lowest solar energy tariff—AED4.97 fils/kWh (US1.35 cents/kWh) all over the world.
As of now, Dubai managed to achieve an installed capacity of more than 1 GW, most of which comes from Phase I, II, and III of MBR solar park. In 2020, Dubai exceed its target solar capacity, significantly increasing the region’s share of renewable energy in the total energy mix of the country. All thanks to the MBR solar park, the energy mix gained nearly 9% share. According to Globaldata reports, Saudi Arabia increased its renewable energy target for next year, 2023 from generated renewable energy capacity of 9.5 GW to 27.3 GW, with solar power offering its big share—raised from 5.9 GW to 20 GW. Moreover, the forecast also said that as part of the objective, the region is expected to hit 58.7 GW of renewable energy capacity this decade, which equates to nearly 14% of the region’s renewable energy generation in 2030.
Ras Al Khaimah
Ras Al Khaimah, the country’s northernmost emirate, targets to increase its renewable energy capacity to nearly 1.2 Gigawatts using its grid by 2040. In addition to that, the region already conducted a qualification test for 80 solar company candidates and 20 of them managed to pass the qualification. The qualification is conducted for Ras Al Khaimah’s distributed solar initiative plan targeting a capacity of 15 megawatts peak (MWp).
Milestones and Upcoming Solar Projects 2021
- United Arab Emirates Energy Strategy 2050 was implemented by the government’s green energy sector to achieve the target electricity generation of 44% from renewable energy. Following the plan, is the construction and planning phases of various solar projects with large capacity, which is set to achieve by the end of 2050.
- In July 2019, Noor Abu Dhabi—the largest solar power plant across the globe, with a capacity of 1,177 MW managed to generate power to over 90,000 people in the country.
- In 2020, the third phase of UAE’s one of the significant solar projects—Mohamad bin Rashid Solar Park, with an estimated investment of USD 13.6 billion, was completed its third phase and supplied power to more than 1.3 million homes in the country. This solar plant is expected to minimize carbon emissions by 6.5 million tons, annually. By the end of 2030, it is expected to generate a solar capacity of 5 GW.
- In February 2020, the installation of the first floating solar farm near Nurai Island, Abu Dhabi, with an 80 KW solar capacity, provides more potential and opportunities to UAE’s solar energy market.
- In December 2020, the Abu Dhabi National Energy Company (TAQA) made a closed deal regarding the funding for the construction of the Al Dhafra Solar Photovoltaic (PV) Independent Power Producer (IPP) solar project. It is expected to take over other Dubai solar projects and it will be recognized as the largest single-site solar power plant in the world. The new solar plant with approximately four million solar PV panels installed is expected to generate power for roughly 160,000 homes across the country.
Leading Solar Manufacturers in UAE
The solar market concentration of the United Arab Emirates in 2021 is interpreted as partially fragmented. Whereas, the top solar companies that supply the country with solar equipment and products include First Solar Inc., Enerwhere Sustainable Energy DMCC, Masdar Abu Dhabi, Alsa Solar Systems LLC, Dubai Electricity and Water Authority, and others
Future of Rooftop Solar PV in UAE
Since the past decades, United Arab Emirates has put off high targets in terms of renewable energy sources. By 2050, UAE’s goal for its power supply generation is to produce nearly 75% of its energy from renewable sources such as solar energy. Whilst, the Dubai Clean Energy Strategy 2050 set the targets of solar power by 7% in 2020, and 25% by 2030.
Also, the Shams Dubai solar program implemented by the Dubai Electricity & Water Authority (DEWA) in early 2015 still continues its advocacy. The said program permits DEWA end-consumers to freely install solar photovoltaic panels on their property, either on their residential or commercial properties, wherein the generated solar power from the solar panels can reduce their monthly electricity bill. In October 2019, Dubai managed to deploy 1,354 solar PV, when combined it will equate to a total of 125megawatts (MW) solar capacity. The region aims to reach 5,000 megawatts by the end of 2030.
In addition to these solar energy targets, UAE has set up initiatives to start deploying solar photovoltaic (PV) panels on numerous residential properties including public facilities, commercial and private properties. By the end of 2030, HH Sheikh Mohammed bin Rashid Al Maktoum—Vice President and Prime Minister of the UAE, Ruler of Dubai made his announcement regarding the installations of solar PV panels on every residential property in Dubai.
Besides, UAE also declared that by the end of 2050, the entire nation will achieve zero carbon emissions and the production of solar energy in the country will surely dominate the clean energy market.
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