Essay on Determining the Potential of Establishing a Largescale RE Project in Fujairah-UAE

Abstract

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The United Arab Emirates (UAE) has the largest carbon footprint per capita in the world, partly due to its reliance on electricity for air conditioning, and desalination. In recent years, however, the UAE has demonstrated its strong commitment to implementing global climate change agreements by formulating pertinent plans for the introduction of renewable and alternative energy in the Middle East and North Africa (MENA) region. In 2010, the UAE government launched a series of large-scale renewable energy (RE) projects as part of achieving the MENA renewable energy agenda of 2021. The projects include the institution of the Abu Dhabi Future Energy Company in the Masdar City, the establishment of the worlds first carbon zero waste city, and the creation of energy free zones known as Dubai Green Zones. The UAE continue to show its vision for a green energy world by formulating pertinent policies such as the Dubai Clean Energy Strategy 2050, hosting the International Renewable Energy Agency (IRENA), and announcement of National Key Performance Indicators (NKPIs) in 2014. These plans are indicative that the UAE is committed to reducing carbon print by developing sustainable sources of energy for the future. However, the UAE faces a myriad of technical and financial challenges in its pursuit of green energy technology such as weather pattern changes, high costs of equipment, installation, and maintenance.

The UAE government has been slow in adopting relevant technological advancements to enable the achievement of its vision. The governments interest in renewable energy dates back to three decades down the line. However, there is a huge knowledge gap in relation to appropriate technologies and sustainable practices. Little research efforts have been put in place to help assess the RE dynamics in the UAE region and their overall impact the success of the regions RE vision (Juaidi et al., 2016). Due to the lack of relevant information on the critical success factors, it has been extreme difficult for potential stakeholders to access the viability of current and proposed RE projects.

This research proposal will focus on determining the potential of establishing a largescale RE project in Fujairah-UAE. It explores the technical and economic aspects of launching large-scale solar plants and wind farms in the region. The research outcomes are expected to identify the necessary tools and CSF needed to enable the different energy stakeholders to make the cost-effective decisions. Similarly, the research will deliver the best technical and economical implementation plans.

Keywords: Solar, Wind, Renewable energy, Hybrid, Critical Successes Factor, UAE, LEAP, Homer, and WindFarm.

Chapter One

1.0 Introduction

The UAE has the second-largest economy in the Arab region, after Saudi Arabia (The Economist, 2017). Much of its revenues come from the petroleum industry although it has also diversified its resources to increase its revenues. In recent years, the UAE government has opened itself to the outside world by encouraging foreign direct investment and engaging in various trade partnerships with various countries. The adoption of these trade strategies has played a crucial role in boosting the UAEs economy. According to IRENA (2015), the UAE is currently one of the fastest growing economies in the world because of its cordial trade strategies. As part of its diversification strategy, the UAE is transitioning to solar and wind energy projects, as a source of revenue and economic growth. The UAE Federal Electricity and Water Authority (FEWA) declared establishing solar project within the Northern Emirates (Ajman, Umm Al Qawain, Fuajriah and Ras AL Khaimah). This is one of FEWAs initiatives to accomplish UAEs vision 2021 initiatives of producing 24% of its power consumption from RE (Jamil, Ahmed, and Jeon, 2016). In the Emirate of Dubai, a $344 million solar power project is predicted to reduce the cost of power (IRENA, 2015). Fujairah has also planned for solar and wind projects since 2005 (Gulf News, 2005), however, there is no operational project yet in the region. The country has to ensure to develop a comprehensive renewable energy long-term implementation plan to ensure its successes determining to CSF to reduce experiencing the challenges that can influence Fujairahs successful change to a RE future.

1.1BackgroundThe UAE government is rapidly investing in RE projects. The initiatives to raise the RE such as (wind, solar, hydroelectric and geothermal power) share to 7% according to the NKPIs (Asif, 2016). Empirical studies suggest that investment in renewable energy influences gross domestic product (GDP), due to the increased investments associated with the deployment of renewable energy, which consequently stimulate ripple effects across the economy. Several countries notable for having a higher GDP due to higher investment include Japan (3.6%), India (2.4%), the US (1.9%), and Australia (1.8%) (IRENA, 2015). These examples, therefore, support the view that investing in RE will stimulate UAEs economy. IRENA proposes that RE investment will enable the region to inject up to $1.9 billion annually in its economy, (IRENA, 2015). In addition, such investment will enable the UAE to reduce its carbon print as well as its reliance on the depleting fossil fuel, as a major source of energy.

Compared to other sources of energy such as natural gas, renewable energy is cheap and more efficient. Natural gas investment is dependent on a wide repertoire of factors such as price, inflation, and viability of a potential gas reserve. These factors influence gas prices, causing chaos for excavators and customers. For instance, the price of imported natural gas jumped from $2 to $10 per million thermal units between the year 2010 and 2015. This increase poses an uncertainty over the viability of natural gas as a source of revenue for the UAE. Investment in RE, therefore, is a better alternative due to its modest reliance on market factors such as price, inflation, or interest rates (Google, 2013).

The UAE stands to reap many benefits from RE investments. To start with, RE investment is a viable source of revenue for the region, which will spur economic growth and expansion (Lee et a., 2010). In addition, the investment will attract investors, which will not only lead to higher GDP growth but as well enhance infrastructural expansions. RE investment will also open job opportunities within the region, which will in turn spur economic growth and improve the welfare of UAE citizens (Kazim et al., 2007). Furthermore, the investment will enable the region to reduce its alarming carbon footprint, thereby reducing the effect of climate change and promoting a better environment for the future (El Chaar & Lamont, 2010).

Fujairah, one of the seven emirates of the UAE, has developed strategies aimed at establishing renewable energy power plants although it still does not have an operational plant yet. However, there are efforts to establish projects on viable areas such as on the mountains such as Habhab, Jareef, Tawain and Al Halat and other locations near Dhadnah, Masafi and Fujairah city (Wasmi, 2015). The UAE established the WIND ATLAS, which is a comprehensive database that was conducted from field survey within the area (Research Center for Renewable Energy, 2017). The current situation of Fujairah reflects the regions reluctance to commit to the UAE sustainable energy policy. Persistent problems such as huge maintenance costs and adverse weather changes hinder the success of proposed projects (Bhutto et al., 2014). There is, therefore, a need for a further study to help understand the technical and financial issues that influence the success of RE investment.

1.2 Statement of the problem

As aforementioned, the UAE has shown its commitment to a green energy future by formulating several renewable energy projects. Renewable energy is not a mainstream source of energy that will support the regions economy but will also stimulate innovation and create more jobs. In addition, investment in RE will enable the country to reduce its carbon footprint, thereby reducing climate change while giving the region a positive image (Khondaker et al., 2016). However, in order to reap these benefits, the UAE needs to overcome the technical and financial challenges that hinder the successful implementation of RE projects. These challenges include issues such as high costs in acquisition, installation, and maintenance of RE projects. It also includes adverse weather changes, which may cause damage to equipment. Resolving these challenges will attract investors to the UAE because they will be in a better position to assess the viability of RE projects in the region.

Solar and wind energy are viable alternative sources of energy that can be implemented the UAE. However, these productions may be interrupted depending on the rate of the wind speed and solar radiation in certain periods of the year, thus obliging the end-user to sustain extra charges in obtaining power from RE such as storage if not connected to the grid. In addition to that, the underestimated production in plants that does not reach its maximum capacity. Phylip-Jones and Fischer (2015) claim that full potential of wind farms are reachable only in a third of the time. Though, RE projects require high initial costs because they are intensive capital investments. Furthermore, obstacles such as governmental policies and fiscal regulations can affect the investment growth. For instance, a penalties are imposed the suppliers in western countries if the energy supplied fluctuates by over 5% from the planned quantities (Lacerda and van den Bergh, 2014; Sgroi, et al., 2014). In Fujairah Emirates for investing in setting up RE plants are expected to absorb the concealed technicalities like huge transmission prices.

The current study is, therefore, relevant to UAEs vision for a sustainable source of energy because it will identify the technical and the economic aspects influencing successful RE projects. Focusing on the delivering a cost-effective and sustainable RE supply, the research will discover the technical and economic requirements, gains, policies and regulation to guarantee the self-sufficiency for Fujairah Emirates in power supply throughout establishing solar and wind power generation plants. Most importantly, an in-depth analysis of the potential technical and financial issues affecting the viability of RE projects will provide a sufficient ground, on which the UAE government will take an appropriate strategic course of action.

Rational of the studyAs noted, Fujairah is setting up RE projects in as part of the renewable energy plan. The current research, thus, focuses on the large-scale and hybrid renewable energy power generation in the region. Currently, Fujairah Emirates depends currently on Federal Electricity and Water Authority (FEWA), which provides power to the Northern Emirates (Fujairah Emirate et al., 2012). In 2007-2013, it generated an average 1% of the national grid compared to its 10% consumption (IAEA, 2015). This percentage indicates the high demand for electricity in the region and the need to implement alternative sources of energy to meet this demand.

In their studies, Vanhoucke, (2012) Kerzner (2013) and Lock (2014) and suggest that each project has to accomplish essential principles like motivation and supportive environment for it to accomplish targeted aims. The critical motivation areas embrace economics, technology, and consensus. In this regard, Fujairah is investigating a reliable approach to avoid the uncertainties elaborated in establishing solar and wind energy plants (Abdmouleh, Alammari & Gastli, 2015). Examining how the potential technical and f...