76 J. KRANE
low-cost financing, and high rates of debt to equity, all of which combine
to achieve an LCOE in the UAE of 2.85 US cents, where a comparable
US plant’s LCOE would only reach 7.38 cents per kWh (including a 10%
return for the developer). 58 It bears mentioning that LCOE estimates
typically do not encompass the full costs of solar generation, including
paying for backup generation to cover demand when solar is unavailable,
along with required reinforcements to transmission networks.
Regardless, these cost advantages allowed the UAE’s installed capacity
to reach 2.1 GW by December 2019, meaning that 7% of the country’s
roughly 30 GW of installed capacity was renewable. However, given the
lower capacity factor for intermittent renewables versus thermal generation, 2.1 GW of solar can be expected to produce around 2–3% of the
UAE’s electricity output.
Solar’s unaccounted-for costs are balanced by off-books benefits in the
form of reduced political risk. Once generating, solar plants produce electricity at zero variable cost, because the fuel (solar energy) is free. Solar
‘fuel’ is also not subject to embargo or trade risk, which provides an
advantage over gas, coal, and nuclear, which involve fuel imports.
The Dash for Coal---To Replace Gas
The first-ever coal-fired power plant in the GCC was in the late stages
of construction in late 2020. The first 2.4 GW phase of Dubai’s Hassyan
plant is scheduled to open in 2020 or 2021. If the Hassyan plant reaches
its full 3.6 GW capacity as planned, it would be larger than the 2.8 GW
Afsin-Elbistan Power Station in Turkey, currently the largest coal plant in
the Middle East.
The nearby emirate of Ras al-Khaimah has also announced a pair of
coal-fired plants, as has neighboring Oman. Neither had reached final
investment decision.
The Dubai coal plant represents a contrarian watershed in Persian Gulf
energy policy. The project leverages the only fossil fuel not found on
the Arabian Peninsula to mitigate dependence on natural gas, a fuel so
plentiful in the surrounding region that it is estimated to hold 40% of
the world’s proven reserves. 59 Dubai’s power sector diversification will
shift it away from the cleanest of the fossil fuels toward the dirtiest. In so
doing, Dubai effectively reverses the ‘dash for gas’ pursued by the United
Kingdom, United States and elsewhere that have achieved carbon and
pollution benefits by replacing coal with gas.
low-cost financing, and high rates of debt to equity, all of which combine
to achieve an LCOE in the UAE of 2.85 US cents, where a comparable
US plant’s LCOE would only reach 7.38 cents per kWh (including a 10%
return for the developer). 58 It bears mentioning that LCOE estimates
typically do not encompass the full costs of solar generation, including
paying for backup generation to cover demand when solar is unavailable,
along with required reinforcements to transmission networks.
Regardless, these cost advantages allowed the UAE’s installed capacity
to reach 2.1 GW by December 2019, meaning that 7% of the country’s
roughly 30 GW of installed capacity was renewable. However, given the
lower capacity factor for intermittent renewables versus thermal generation, 2.1 GW of solar can be expected to produce around 2–3% of the
UAE’s electricity output.
Solar’s unaccounted-for costs are balanced by off-books benefits in the
form of reduced political risk. Once generating, solar plants produce electricity at zero variable cost, because the fuel (solar energy) is free. Solar
‘fuel’ is also not subject to embargo or trade risk, which provides an
advantage over gas, coal, and nuclear, which involve fuel imports.
The Dash for Coal---To Replace Gas
The first-ever coal-fired power plant in the GCC was in the late stages
of construction in late 2020. The first 2.4 GW phase of Dubai’s Hassyan
plant is scheduled to open in 2020 or 2021. If the Hassyan plant reaches
its full 3.6 GW capacity as planned, it would be larger than the 2.8 GW
Afsin-Elbistan Power Station in Turkey, currently the largest coal plant in
the Middle East.
The nearby emirate of Ras al-Khaimah has also announced a pair of
coal-fired plants, as has neighboring Oman. Neither had reached final
investment decision.
The Dubai coal plant represents a contrarian watershed in Persian Gulf
energy policy. The project leverages the only fossil fuel not found on
the Arabian Peninsula to mitigate dependence on natural gas, a fuel so
plentiful in the surrounding region that it is estimated to hold 40% of
the world’s proven reserves. 59 Dubai’s power sector diversification will
shift it away from the cleanest of the fossil fuels toward the dirtiest. In so
doing, Dubai effectively reverses the ‘dash for gas’ pursued by the United
Kingdom, United States and elsewhere that have achieved carbon and
pollution benefits by replacing coal with gas.