UAEs economy get it highest share of revenues from the petroleum industry. Though, the country depends on huge economic diversification drivers to increase the generation of its revenue sources. The government applied open economic strategies to foster trade with countries around the world in international base. Accordingly, UAE is ranked one of the fastest growing economy in the world due to annual trade surplus (International Renewable Energy/ IRENA, 2015). Earlier, fossil fuel products controlled the revenue in the foreign exchange. But, UAE is promptly transitioning to the RE sources, particularly solar and wind power. UAE needs to consider provision of the RE infrastructures to guarantee sustainable 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, 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.
The 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). Remarkably, investing in RE will enable the country to save USD1.9 billion annually as it is cheaper compared to electricity, which requires high transmission costs (IRENA, 2015). In the meanwhile the dependence on the fossil fuel consumption will be reduced by introducing RE which are considered as being environmentally friendly energy sources as well as sustainable, thereby leading to better-quality air and health.
Since the generation of electricity, as well as reliance of natural gas for energy purpose in the UAE is affected by the continuous fluctuations of economic and climatic conditions, RE is becoming more cost-efficient. Hayaraman et al., (2015), stated that the imported natural gas cost increased between 2010 to 2015 from $2 to $10 per million British thermal units (MBtu). Though, the production of 1 MBtu costs about $8. Taking in consideration for UAE the extra expenditures in shipping the oil such as foreign exchange costs, the non-renewable source cost-effectiveness is progressively decreasing.
Alternatively, RE costs especially solar and wind energy costs have dropped by about 75% since 2008 (Jauidi et al., 2016). The nation has amplified research and development (R&D) in RE technologies that has promising outcomes. Studies show that solar power is spread wide among other sources of the power supplies and that is depends on the location and conditions (International Renewable Energy Agency, IRENA, 2015). Its indicated in previous studies the wind energy investments can deliver promising economic profits like diversification, job opportunities and infrastructural expansions (IRENA, 2015; Kazim, 2007; Lee et a., 2010; El Chaar and Lamont, 2010).
Fujairah developed strategies aimed to establish RE power projects that is expected to build a RE power generation plant with a capacity in the range of 130-200 MW. The project involved specialists from a Spanish based Wind Energy Company and local institutions such as Fujairah Industry and Economics department and the UAE University on 2005. The data collection and analysis for the economic feasibility study took over 18 months (Gulf News, 2005; Kazim, 2007; Mokri, Ali, Emziane, 2013). The outcomes of the studies show encouraging results as Fujairah is looking for several projects on the mountains such as Habhab, Jareef, Tawain and Al Halat and other locations near Dhadnah, Masafi and Fujairah city ( Wasmi, 2015). IRENA established the WIND ATLAS, which is a comprehensive database that was conducted from field survey within the area (IRENA, 2015). Though, detailed studies and further investigation must be conducted to grantee the developments success. The failure of previous wind and solar projects was attributed to the huge maintenance costs, as well as inadequate forecasting of climatic patterns (Bhutto et al., 2014).
Statement of the problem
UAE is an oil dependent country but UAE 2021 vision has taken into account various initiatives aimed at reducing the gross domestic product growth throughout discovering RE source. Like misconception complements to the technical and economic barriers that reduce the nation returns on investment, (ROI) in RE investments for example selecting the feasible locations. Previous studies specify that stakeholders confidence shortages in the RE reliability which consider to be one of the barriers in endorsing RE. Khondaker et al., (2016) stated that UAE positions one of the highest per capita carbon footprints worldwide. This is a result of the high depends on the fossil fuel which increase greenhouse gasses (GHG). Fujairah has revealed interests in exposing these potential environmental issues by funding R&D in RE sectors.
Still, the quickly growing economy is expanding the energy consumption charges. Latest surveys discovered that most end-user choose for hydro-electricity than other RE sources (Price and Zwickel, 2015). Moreover hydro-electricity availability, make it more dependable than the solar and wind energy which also rest on the main climate conditions. Successfully hydro-electric energy plants allow the government to provide the consumer with power at subsidized charges.
Alternatively, the solar and wind energy 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.
In spite of the technical and economic limitations, demand for RE is crucial to UAEs vision 2021s initiatives accomplishments. The research will identify the technical and economic aspects for in promoting and supplying RE to all the Fujairah end-user. 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.
Still, a lot of challenges, such as massive RE capital costs and shortages of suitable access to reasonable credit, are faced in RE industries, which can result in less return on investment (ROI) if they are not dealt with. Alternatively, most of RE plants are massive capital cost projects that needs the purchase of expensive equipments, programs and in some cases imported manpower. It is crucial for all the RE stakeholders such as supplying experts as well as production companies to initiate technical and economic plans, strategies for establishing the RE technologies. The government has to explore alternative economic strategies to boost local stakeholders to capitalize in the projects.
Rational of the study
The viability of the project in Fujairah is determined from the technical aspects as cost effective in the long term. UAE is pursuing many alternative energy programs, in addition to that its planning to establish solar, wind and geothermal power projects. A public private partnerships (PPP) are required from the public authorities, financial agencies, the private sector and the end-user (Harder and Gibson, 2011; Toledo et al., 2010; Wustenhagen and Menichetti, 2012). The Dubai Clean Energy Strategy 2050 was lunched on 2015, targeted to increase clean energy in Dubai to reach 75% by 2050, partly, through the promotion of RE. This research will focus only in large scale and hybrid renewable energy power generation size in order to give more self-sufficiency for Fujairah Emirates in terms of power generation and electricity requirements. Since Fujairah Emirates depends currently on Federal Electricity and Water Authority (FEWA) which provides power to the Northern Emirates (Fujairah Emirate, Ras Al Khaimah Emirate, Ajman Emirate & Umm Al Quwain Emirate) and its gross generated electricity in the 2007-2013 statistic was 1% compared to the consumed electricity which was 10% on 2013 and this difference where covered by the Emirates National Grid (IRENA, 2015). The above percentage is represent that the fast trend of growth, also awareness programs were started to educate the public since they are taking a main r...
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