Investment To Flow Into Solar Powered Desalination
BMI View: The UAE's push to introduce renewable energy-powered desalination facilities across the country makes both economic and environmental sense. In exploiting its vast solar potential in order to power the energy-intensive process of desalination, the UAE can both conserve oil for export purposes, and tackle its deep-rooted water scarcity issues in an environmentally and economically sustainable manner. This technology will grow in prominence across the GCC region as the majority of Gulf States face pressing water scarcity issues and have abundant solar resources.
It was announced in May 2014 that Masdar, a subsidiary of Abu Dhabi's state-owned Mubadala Development Company, has called for four companies ( Abengoa, Degrémont, Sidem/Veolia and Trevi Systems) to develop prototype renewable-energy powered desalination plants for the Emirate. The pilot plants, set to be built in Ghantoot in Abu Dhabi, will reportedly provide roughly 1,500 cubic meters of water per day and the companies have 18 months to develop the facilities. Masdar's long-term aim is to have a plant operating on a commercial scale by 2020 - and then roll-out the technology across the UAE and wider Gulf Cooperation Council (GCC).
We believe that solar is the most likely renewable energy technology to be adopted, given the vast solar potential in the UAE and the fact that this is not the first time this type of technology has been mooted. In fact, in November 2013, UAE-based utility Utico Middle East announced that it was planning on building a 20 megawatt (MW) solar power facility in the emirate of Ras Al Khaimah, with the power generated from the plant used to fuel a seawater, reverse osmosis (RO) desalination plant ( see 'Outlook Bright For Solar-Powered Desalination', November 26 2013).
Practical and Potentially Lucrative Solution
In our opinion, the UAE's continued push to introduce renewable energy-powered desalination facilities makes both economic and environmental sense. Water scarcity is a deep-rooted and highly politicised issue in the UAE, and the wider Gulf region; in fact, the UAE, Bahrain and Qatar all rank joint first in the World Resources Institute's 'Water Stress' index.
Economic growth and a rising population will drive water demand over the coming decade, and as such, the need for desalination plants will be pressing. However, the process of desalination and the transportation of the seawater to urban areas is expensive and extremely energy intensive; typically powered by hydrocarbons, notably oil. By exploiting its abundant renewable energy potential to power the process - in this case solar - it would help to conserve greater volumes of oil for export.
|Switching Oil For Solar|
|UAE Solar Generation & Capacity, 2013-2023 (LHS) and UAE Oil Production, Consumption & Trade, 2013-2020 (RHS)|
Despite efforts to diversify its economy towards non-hydrocarbon segments, the oil sector still accounts for roughly 40% of the UAE's economy. As a consequence, maintaining high export levels will support the country's economic growth trajectory. The UAE has a target of increasing oil production to 3.6mn barrels per day (b/d) by 2019 - an aim that could be threatened if oil-fired desalination increases significantly. As such, we expect the push towards energy efficiency and the expansion of renewable energy - particularly for energy-intensive industries such as seawater desalination, to continue ( see 'Dubai's Solar Plant To Set A Precedent', October 25 2013).
We maintain our view that this technology will grow in prominence across the GCC region as the majority of Gulf States face significant water scarcity issues, rely massively on desalination and have vast solar resources.