Renewables can weather any oil price changes: BNEF Summit

Renewable energy costs have fallen so far, so fast that they can rival oil-fuelled generation in the Middle East – even after the cost of crude dropped by more than 50 per cent; even if it continues its slide.

That’s the feeling among the OPEC nations, according to the chief of Abu Dhabi-based clean energy developer Masdar, Ahmad Belhoul.

“To me the real story is not to be too fixated on how low oil prices will go,” Belhoul said in an interview Monday at a conference hosted by Bloomberg New Energy Finance in New York. “The real story is the reduction in energy costs” for renewables.

“Renewable energy has reached a point where it can weather any changes in oil prices,” Belhoul said. “Being in the Middle East, it makes sense for us to look in the region. We’ve seen targets being set, so there is appetite for renewables.”

This appetite was illustrated last week by the purchase of Spanish big solar developer Fotowatio Renewable Ventures by Saudia Arabia-based conglomerate, Abdul Latif Jameel Energy and Environmental Services.

“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.”

Masdar’s estimates suggest oil is an inefficient fuel for making electricity and can compete with solar only when the price of a barrel is below $30.

According to Bloomberg, current estimates the global benchmark for Brent crude to average $54 a barrel this year, while the West Texas Intermediate, the benchmark in the US, is expected to average $46 in 2015, down from a high of more than $107 in June.

Still, nations like the United Arab Emirates and Saudi Arabia – for which oil-fuelled energy features higher in the generation mix than for the rest of the world – have expressed interest in developing more renewables in order to save more oil for export.

For Masdar, which specialises in building clean energy plants in the UAE, the opportunity for renewable energy developers in the world’s fourth-largest oil exporting nation has never been better – with similar markets also unfolding in Egypt, Morocco, Jordan and Oman.

Indeed, a new report released last week by the UAE government, International Renewable Energy Agency (IRENA) and Masdar Institute of Science and Technology, has predicting that solar and wind energy could now be the region’s cheapest sources of new energy.

The report 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.