Tapping the sun

December 09, 2018

undefinedHow would you describe the solar PV market in the Middle East right now? Have we reached the tipping point yet?

We have seen a lot of positive initiatives and policies to encourage the adoption of solar energy. The transition is accelerating and we are seeing good momentum. However to date, the market hasn’t reach maturity yet and there are a lot of opportunities.

GCC countries have some of the highest solar exposures in the world so the potential to be unlocked is huge. In fact, renewable energy deployment and investment is expected to reach $16bn in 2020, according to a study by Strategy & Middle East. The study also shows that the region’s share of global investment is still little compared to other countries, hence the importance to continue creating a supportive, coherent framework to facilitate renewables investment.

Is rooftop solar gaining momentum in Dubai and why?

Solar rooftop has definitely gained momentum in Dubai in recent years. The emirate has been putting a lot of efforts to have all rooftops fitted with PV panels. For instance, according to DEWA, Dubai has achieved 55MW (as of July 2018) of installed capacity connected to the grid, with a growing interest estimated to be over 400MW to date.

The momentum can also be explained by the different reasons: regulation (solar electricity is utilized when required, with any surplus being exported to the grid and credited back to the user), applicable utility tariff (electricity from solar rooftop systems can today be sold at significant discounts to the utility rate), cost (rapid declines in the cost of technology ensure relatively rapid payback and the ability to out-compete conventional energy sources), and climatic conditions (Dubai averages over 10 hours of sunlight per day and roughly 350 sunny days per year).

What is the potential for rooftop solar in Dubai?

The addressable rooftop solar market is of 1-1.5 GW in Dubai alone, according to Taqati. This market will be addressed over the next 5-10 years, starting with the commercial and industrial sectors first. The residential market will be another large market for solar rooftop.

Is financing readily available for large rooftop solar projects in Dubai?

Financing is available and does not constitute the main challenge to grow the market. For instance, we have the Green Fund, a key driver of Dubai’s clean energy, which was launched in November 2015 to accelerate funding for green projects and programmes.

Investing in solar distributed generation assets is attractive to investors because it generates long term, stable cash flows, while offering capital gains at exit. As such, numerous local and international banks have developed sound policies to become “greener” and provide green funding. At the same time, financial products are being structured to be offered to broad pool of local and international investors.

On the other hand, private initiatives such as what we do at SirajPower with our financing capabilities (offering leasing solutions with no up-front cost but lower tariff to our customers) will help the market to grow rapidly.

Does the cost of building rooftop solar projects have much further to fall?

The cost of building solar rooftops is mostly driven by the cost of technology, i.e. the solar modules. Price of solar modules has dropped significantly over the last two years mostly driven by supply and demand dynamics. However, it is unlikely that the cost will further decrease over the next years and no disruptive technology is expected to change the fundamentals of our business model either. For the rest of the costs, this is already optimum.

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