Majority of respondents see government as key driver for solar power growth in the UAE

The results of a jointly developed national solar power survey, conducted by the Emirates Solar Industry Association (ESIA) and PwC, published in November, offer a number of insights into the UAE solar industry. A joint news release revealed that a majority of the participants view government as the key driver for the growth of solar power in the UAE.

Commenting on this in an interview with Climate Control Middle East, Hannes Reinisch, Senior Manager, PwC, said: “The government sector can itself pioneer solar rooftop projects on its own buildings, like ministry and emirate-level institution buildings, which can be a valuable accelerator for solar power in the UAE.” Then, government policies and regulations can set a clear framework within which solar projects can be developed for largescale utility plants, large industrial rooftops and even small residential units, which all show attractive potential in the UAE, Reinisch said.

On the flip side, the absence of a feed-in tariff incentive scheme is seen as the industry’s greatest challenge, the survey results revealed.

“The results of the survey acknowledge the fact that the industry could be developing faster with a feed-in tariff scheme in place, and the UAE policy-makers have already been studying this option for the last several months,” said Reinisch, when asked about the challenge. “At the moment, without a feed-in tariff scheme, the price paid for solar electricity is determined on a projectby- project basis, that is, every project’s tariff is negotiable instead of having one tariff scheme that guarantees a set tariff level for each system size and for many years to come. Because of this, projects happen slower, and it is more difficult to encourage foreign solar technologies and investors to come to the UAE.”

Another challenge that was noted was the difficulty in obtaining bank financing for solar projects. “Banks do not generally decline or refuse solar financing,” Reinisch said. “They are interested and willing to finance solar projects and realise the growth of this sector. But compared to financing other conventional power projects, solar financing is still more difficult in the UAE.”

Reinisch attributed this difficulty to the lack of knowledge of the banks about such projects, owing to the absence of notable solar projects in the region to date, which otherwise could have provided a frame of reference. “Banks are looking to better understand the risk profiles of these projects,” Reinisch elaborated. “They do not have as much information and experience with solar projects to understand the risks and returns of such projects as they have for gas or diesel-fired projects in the region.” The survey initiated by ESIA and PwC, with the support of the UAE Government, collected insights from over 170 solar industry professionals, with more than 60% UAE-based participants ensuring strong local knowledge.

The participants were drawn from the government sector, solar project engineering and technology manufacturers and expert advisers, thus ensuring that both public and private sector perspectives were incorporated in the analysis, ESIA and PwC claimed.

The President of ESIA, Vahid Fotuhi, welcoming the survey results, said: “This survey clearly outlines the barriers for large-scale investment in the UAE solar power market. It will serve as a helpful reference for local and federal policymakers. I am confident that by addressing the collective concerns highlighted in this survey, we will be able to transform the UAE into a regional hub for solar energy.”