A company based in the world’s largest oil exporting nation, Saudi Arabia, has become the new owner of Australia’s second-largest solar plant – the under-construction 72MW Moree PV project – after buying Spanish solar developer Fotowatio Renewable Ventures (FRV) and its 3.8GW global development pipeline.
Abdul Latif Jameel Energy and Environmental Services – a conglomerate that also has a base in the United Arab Emirates – announced its purchase of FRV on Wednesday, describing it as a major development of its energy business, and part of its on-going strategy to be the Gulf’s largest solar power plant developer.
This means it will also be the owner of the 24MW operational plant in Royalla and the 72MW Moree PV plant, which will be the nation’s second largest and the biggest with solar tracking devices when it enters operation later this year, as well as a pipeline of more than 1,000MW of solar projects in Australia.
“Our strategy is to focus on renewable energies such as solar, wind, waste-to-energy, hydro power and environmental services such as waste management,” said Abdul Latif Jameel chairman Mohammed Abdul Latif Jameel in a statement on Wednesday.
“The acquisition of FRV is tangible evidence of the progress we are making towards establishing ourselves in the global energy sector.”
As if to confirm this strategy, the news of the FRV purchase has coincided with the release of a new report predicting that solar and wind energy could now be the cheapest sources of new energy supply in the world’s fourth largest oil exporting nation, the United Arab Emirates.
The eye-opening report, released on Wednesday by the UAE government, International Renewable Energy Agency (IRENA) and Masdar Institute of Science and Technology, estimates that the Emirates could save $US1.9 billion (AED 7 billion) a year by boosting its share of renewables to 10 per cent of its total energy supply, and almost 25 per cent of its power sector, by 2030.
And it confirms – as noted by Dr Thani Ahmad Al Zeyoudi, the UAE’s permanent representative to IRENA and its director of energy and climate change – that “there is now a clear financial case for renewables, even before we consider benefits like energy security, emissions, and job creation.”
“The UAE made an early bet on energy diversification,” said Dr Al Zeyoudi. “We are investing broadly and letting technologies compete to produce the optimal supply mix.”
According to the report, sharp declines in renewable energy costs in the region, as well as rising costs for natural gas as domestic production declines and the country turns to more expensive imported sources, are the key drivers for renewable energy’s increasing economic attractiveness in the region.
Solar PV costs in the region have fallen by 80 per cent since 2008, the report notes, while the cost of new gas supplies in the UAE has grown from under $2.5/MMBtu in 2010 to $6-8/MMBtu for domestic production and $10-18/MMBtu for imports today – even after the recent decline of oil and LNG prices.
The report estimates that solar, wind, and waste-to-energy are preferable for power generation when new gas is above $8/MMBtu – making them immediately competitive in the UAE, where natural gas supplies almost 100 per cent of power.
This echoes the findings by the National Bak of Abu Dhabi earlier this year, following the record-breaking solar deal achieved by another major Saudi power developer, ACWA Power. That put the price of solar PV at below 6c/kWh. The bank said that even at prices of $10/barrel, oil could not compete with solar that cheap. One third of Saudi generation comes from oil.
Certainly, this is the path Latif Jameel appears to be taking.
“Our strategy is to focus on renewable energies such as solar, wind, waste-to-energy, hydro power and environmental services such as waste management. The acquisition of FRV is tangible evidence of the progress we are making towards establishing ourselves in the global energy sector,” he said on Wednesday.
And it is this strategy of innovation and diversification that, according to IRENA Director-General Adnan Z. Amin, has placed UAE “at the fulcrum of the massive transformation of the global energy landscape” that is already underway.
“Renewables have decisively emerged from a niche technology to a major component of the energy mix and have been the majority of global power capacity additions for the last three years,” said Amin.
“The dramatic technology cost declines we are mapping present a real possibility to move to a sustainable energy future even in the hydrocarbon producers in the MENA region.”
The UAE report – the first of three country analyses under IRENA’s REmap 2030 project, which evaluates how the world can meet the UN goal of doubling the global share of renewables by 2030 – also predicts that solar costs will decrease even further.
As evidence, it cites the January tender for the second phase of Mohammed bin Rashid Solar Park in Dubai, which – at under six cents per kilowatt hour for a 25-year fixed contract – achieved the lowest solar price ever, worldwide.
In Australia, meanwhile, FRV Australian country manager Andrea Fontana said the acquisition by ALJ was indicative of the world-leading project pipeline FRV had developed, including in Australia, but stressed the importance of a stable renewables policy to future big solar development in the country.
“Of course regulatory environments that encourage the emergence of competitive large scale PV projects are essential,” Fontana said in a statement on Thursday, “and we are confident that both major political parties in Australia recognise the importance of large-scale solar as part of the future energy mix in ensuring global competitiveness of Australian industries.”
