UAE Sees $192 Billion Savings in Switch to Green Power From Gas

The United Arab Emirates forecasts that savings generated by switching half its power needs to clean energy by mid century will outstrip the investment costs. 

The Gulf state plans to invest $150 billion in renewable power to 2050, weening the country from dependency on subsidized natural gas power in stages, Minister of Energy Suhail Al-Mazrouei said at a conference in Berlin. Clean energy sources will help it save $192 billion, he said.

The UAE leadership is “bullish” about achieving the goal after realizing that the nation can forgo subsidies in the switch to clean power from LNG, Al-Mazrouei said. Sticking to the strategy will “save the environment and at the same time save us lots of money,” he said.

As the costs for solar power fall rapidly, Gulf and Middle East states are reevaluating their power strategies, which currently rely subsidiaries for electricity generated with liquid natural gas. The UAE has set an “incredibly ambitious” clean power target, starting from scratch just a few years ago, according to Bloomberg New Energy Finance.

In September, Chinese panel maker JinkoSolar Holding Co. and Japanese developer Marubeni Corp. won a tender for a solar plant in Abu Dhabi with a record bid of 2.42 U.S. cents a kilowatt-hour. About $1 billion has been invested in utility-scale solar in the UAE since 2007.

Middle East states need to break their reliance on subsidized gas power, where inefficiencies are endemic in the Middle East, Al-Mazrouei said.

“We have so many open-cycle power plants it doesn’t make sense to continue with them – they’ve very low efficiency,” said the former Abu Dhabi Investment Authority executive. “The reason they are there is because gas is subsidized.”

In future, the UAE will review every proposed LNG power project as a project that’s not subsidized, he said. The government also wants to drop support for power tariffs, he said.

“Many low hanging fruits” exist as potential savings in gas-powered generation, transmission and demand-side management, the minister said.

Anheuser-Busch InBev NV, the world’s biggest beer maker, plans to get all of its electricity from renewable sources by 2025.

The move will require shifting 6 terawatt-hours of electricity from fossil-fuel plants to wind, solar and other renewable sources, the Leuven, Belgium-based company said in a statement Tuesday. That’s almost enough to power all of Spain for a month.

The company’s announcement comes the same day U.S. President Donald Trump signs an executive order to unravel rules to combat climate change, including cutting power-sector emissions. The timing was a coincidence, according to AB InBev Chief Executive Officer Carlos Alves De Brito. Fighting climate change with renewable energy is good for the bottom line, he said.

“This has no political connotations at all.” Brito said. “We just think this is good for our business and the environment.”

AB InBev plans to generate as much as 25 percent of its electricity itself, including by installing solar panels on its facilities. The company will buy the rest directly from wind and solar farms.

The plan includes an agreement to buy 490 gigawatt-hours annually from Iberdrola SA to power AB InBev’s facilities in Mexico. Iberdrola will build a 220-megawatt wind farm in the state of Puebla that will begin operations in 2019 to help supply the power.

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