Published by BNC for The Big 5 SolarPublication Date: October, 2017© 2004-2017 Industry Networks (FZC). All rights reserved.

Solar Power Solutions inConstruction

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Executive Summary

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Market Overview

Solar energy is becoming a significant source of power in theGCC, with many investments scheduled over the next fewyears. The GCC accounts for approximately 47% of the totalenergy generating capacity in the MENA region and anestimated USD 316 billion worth of investments are neededby 2020 to meet growing demand.¹ Much of theseinvestments will be directed at building up power generationcapacities from Solar Photovoltaic and Concentrated SolarPower installations, with some of the highest gains in the UAE(10%), Kuwait (10%), and Saudi Arabia (8%).² New projects areexpected to come up in the energy storage segment toalleviate possible power grid congestion while diversifyingpower sources.³▪

GCC countries are transitioning into low-fossil fuel economies with the adoption of clean energy solutions as policymakers recognize that fossil fuel reserves can run out in the next 50 years. The Saudi government has announced Vision 2030 and the King Salman Renewable Energy Initiative to promote clean energy solutions. Saudi Arabia plans to attract USD 109 billion of investments to build up its solar market which will provide 41 GW of power or a third of the nation’s electricity by 2032. Similarly, the UAE is expected to invest USD 150 billion in renewable energy projects by 2050 under the UAE Energy Plan 2050, which calls for a 70% reduction in carbon emissions with sizable gains coming from solar production.⁴ Other GCC countries are following

The solar energy market is growing due to large-scale project investments supporting a healthyconstruction pipeline across the GCC. Favorable growth drivers including energy diversificationstrategies, clean energy construction projects and high consumer demand will continue to support agrowing market.

similar sustainability plans, with solar technology driving much of the change.▪

The UAE is delivering exemplary renewable energy solutions through mega-developments such as Masdar City in Abu Dhabi and Sustainable City in Dubai. Masdar City is a six-million square meter mixed-use development which will serve as a global center for clean energy technology.⁵ The city is built out of eco-friendly material and provides energy needs through natural sources such as sunlight for its 50,000 inhabitants.⁶ Similarly, Sustainable City,

Renewable energy solutions are becoming increasinglyfrequent in new construction projects across the GCC.Renewable energy sources from natural sunlight willeconomically power new urban community developments.Photovoltaic cells can convert natural sunlight into electricityat the same rate or cheaper than traditional fossil fuelmethods, allowing for a wide-scale adoption of solar energyin new developments. Cost advantages are typically realizedin large-scale projects where fixed costs can be spread overhigher output levels. This report offers an overview of the GCCsolar market by looking at some of the critical factors that arestrengthening the adoption of solar energy, including cleanenergy strategies and advancements in solar technology.

Highlights from the report are:▪ The GCC governments are investing in solar production capabilities as part of a long-term energy diversification strategy.▪ The growing population in the GCC is driving the demand for energy, which has traditionally been met through locally sourced fossil fuel.▪ Improvements in technology allow for the wide- spread adoption of solar energy solutions across different sectors.▪ Photovoltaic and Concentrated Solar Power technologies are driving efficiency in energy production and have far-reaching applications in the region.

1-5 Media, Masdar

Chart 1: GCC Estimated Population Growth andEmission Savings from Renewable EnergyDeployment Plans (MTCO2 – Metric tons ofcarbon dioxide equivalent)

36-19 Masdar, The Sustainable City, Media, Irena, GRS, Market Research, ACWA Power

Technology SolutionsNew solar power stations in the UAE aim to fulfill local energy demand by offering a sustainablesource of electricity.

Research on the economic potential of solar technologystarted as early as the 1970s and 1980s at the King Abdul AzizCity for Science and Technology (KACST) in Saudi Arabia andthe Kuwait Institute for Scientific Research (KISR).¹¹ However,the cost of solar technology was far higher than the price ofdomestically sourced fossil fuel during this period.¹² Over

time, technology improvements in Photovoltaic modulesincreased the efficiency of solar production enabling thesupply of low-priced electricity. The UAE appears to offersome of the lowest energy tariffs in the region (as summarizedin the following table).

▪ Abu Dhabi Water and Electricity Authority (ADWEA) Sweihan project involves a 25-year power purchase agreement with an Asian consortium JinkoSolar and Marubeni, offering one of the lowest electricity prices in a utility-scale Photovoltaic project.¹³ The project will supply enough electricity to power 200,000 homes in Abu Dhabi.¹⁴▪ Dubai Electricity and Water Authority (DEWA) is sponsoring the construction of the third phase of the Mohammed bin Rashid Al Maktoum Solar Park, which is set to add 800 MW of solar capacity.¹⁵ The project was awarded to a Masdar-led consortium which includes the Spanish companies Gransolar

Group and Fotowatio Renewable Ventures.¹⁶▪ The second phase of the Mohammad bin Rashid Al Maktoum Solar Park in Dubai covers a land area of 4.4 million square meters.¹⁷ The project comprises of 2.3 million solar panels with enough capacity to power 30,000 homes in the city.¹⁸

There has been an extensive adoption of energy solutionsacross industries including utility-scale solar power plants,solar desalination plants, and solar manufacturing facilities.¹⁹According to the International Renewable Energy Agency(IRENA), utility-scale solar applications are apparent on large-scale grids which offer favorable rates of deployment due to

covering 464,500 square meters of land, will produce net-zero-energy, receiving all of its needs from solar-paneled roofs to power 500 townhouses.⁷ Both Abu Dhabi and Dubai are investing billions of dollars in solar projects while bringing in new capital, technology and ideas to build up their solar power capabilities.⁸▪

The GCC population reached approximately 53.5 million people at the beginning of 2017 and is expected to grow by nearly 15% between 2020 and 2030.⁹ Saudi Arabia accounts for about 60% of the

region’s population followed by the UAE at 17%.¹⁰ An increasing population will gradually put a strain on a country’s energy resources, whereas renewable alternatives such as solar energy provide a limitless supply of power. Despite a growing population, the deployment of solar projects is expected to yield emission savings under region’s long-term renewable energy plans. The following chart illustrates the net outcome of carbon emission savings by lowering fossil fuel production, while local energy requirements increase over time.

Project Capacity Developers Location

PV Complex in Sweihan 1,177 MW/YearMarubeni Corporation (Abu Dhabi)and Jinko Solar Holding of China

Abu Dhabi

Mohammad Bin Rashid Al Maktoum SolarPark (Phase 3)

800 MW/Year Masdar-led consortium Dubai

Mohammad Bin Rashid Al Maktoum SolarPark (Phase 2)

200 MW/Year DEWA Dubai

Table 1: Record-Low Tariffs in the UAE

420-29 Irena, Govt. of Saudi Arabia

Construction (EPC) model.²³ For example, the first phase ofthe Shagaya Renewable Energy Park in Kuwaiti was tenderedon an EPC contract, but later stages are expected to bedeployed under a purchase power agreement based on anIndependent Power Producer (IPP) model.²⁴ IRENA notes thatthe shift from EPC to IPP tends to happen once a betterunderstanding of procurement, financing, development, andoperation developments are gained.²⁵

economies of scale.²⁰ Moreover, Solar Photovoltaic modulescost three quarters less today than in 2009 and will continueto decrease.²¹ Saudi Arabia launched its first competitivetender for utility-scale solar power projects earlier this year asthe country heads toward a sustainable path of production.²²The GCC countries are moving to an auction mechanism forbigger construction projects, which were traditionallyimplemented under an Engineering Procurement and

Project Value in USD Stage Location

1,177 MW Solar Photovoltaic (PV) – Sweihan $ 872 Million Under Construction Abu Dhabi

Makkah Solar Power Plant $ 640 Million Tender Makkah

Miraah Solar Thermal Facility - Al Amal $ 600 Million Completed Muscat

50 MW Solar Power Plant - Shagaya Power Plant (Phase 1) $ 385 Million Under Construction Kuwait City

200 MW Power Plant - Mohammad Bin Rashid Al MaktoumSolar Park (Phase 2)

$ 272 Million Completed Dubai

Solar Power Plant - Sino-Oman Industrial City- Phase 1 $ 94 Million Design Duqm

Solar Energy Power Plant - Phase 1 $ 30 Million On Hold Doha

10 MW Solar Power Plant - Shagaya Power Plant (Phase 1) $ 19 Million Completed Kuwait City

Kuwait Solar Power Station $ 16 Million Under Construction Kuwait City

Construction ProjectsLarge-scale renewable energy projects are currently underway and will strengthen the region’s solarenergy production capabilities once complete. These projects support national efforts in reducingeconomic dependency on locally sourced fossil fuel.

facilities as well as mixed-use developments.²⁸ ConcentratedSolar Power technology transforms solar radiation intothermal energy through the use of turbines, which is morefrequent in desalination and industrial projects.²⁹ Thefollowing table lists some of the high-value solar energyprojects worth USD 100 million or more that are active atdifferent stages of the construction lifecycle.

New solar technologies can withstand high temperatures anddust accumulation, which could cause performancedegradation.²⁶ The two common forms of solar technology inconstruction projects are Photovoltaic and ConcentratedSolar Power.²⁷ Photovoltaic technology uses solar panels toconvert sunlight directly into electricity, which is typical inurban construction projects such as residential andcommercial properties, hospitality buildings and education

Table 2: Sample List of High-Value Solar Energy Projects in the GCC

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The GCC solar energy market is growing with a broaderapplication of energy solutions. Several key factors arestrengthening the adoption of clean energy technology. GCCgovernments are pursuing energy diversification strategies byinvesting in solar capabilities to fulfill energy needssustainably. Solar technology is bringing down the cost ofenergy production and installation, and thus increasing

market penetration across a broad range of industries. Large-scale projects allow economies of scale which drive down thecost of production by spreading fixed costs over higheroutput levels. Solar projects in the construction pipeline aimat increasing local energy generation capacities to meet thegrowing needs of the region.

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