Middle East’s Roadmap To Embed Solar Power Into The Region Through The Lens Of Ali Akbar Ajmerwala

Early in 2019, it was agreed that Al Darah would be the site of a 2 GW solar project. The Northern Emirates have also shown interest, with plans to develop 300MWp of solar projects in Ras al-Khaimah, Sharjah, Ajman, Fujairah, and Umm al-Quwain. An additional 200 MW solar farm is proposed for the emirate of Umm Al-Quwain. To streamline all these developments, Thirty To Net Zero Magazine spoke to Ali Akbar Ajmerwala, Head Solar Engineering at Pavilion Energy. Ajmerwala’s core experience lies in the design and commissioning many solar projects of capacity over 100MWp, valued at over US$75 million spanning across 40+ sites in GCC and India. At Pavilion, he leads the Solar design team and is primarily responsible for all the design details and essentials.

Highlighting some of the key solar energy developments in Middle East region, Ajmerwala stated, “For me and this region, the last seven or eight years have been the most prosperous. I believe Dubai’s excellent net metering policy, which was introduced in 2014-15, was the first of its kind in the entire region. Sure, things got a little rough in the beginning, but by 2016-17 the solar industry took off. The Commercial & Industrial (C&I) sector is what I'm focusing on most because it was the first to see explosive growth.

The net metering policy that Dubai implemented at the outset attracted many C&I firms, thus exposing a sizable portion of the C&I market.  The firms can expect a reduction of more than 60% on their energy bills if they switch to solar considering today's market conditions.”

“Dubai became a role model not only for the other Emirates but also for other Gulf Cooperation Council (GCC) nations and the rest of the region. Bahrain released a similarly beneficial net metering regulation. That, I believe, is where things really began. Then, Dubai launched their own central energy initiative - Sheikh Mohammed bin Rashid Al Maktoum Solar Park. Developers from all over the world, including many from India, have begun relocating to the region and operate from this region serving a lot of Arab and African nations.

“Saudi Arabia has also began its emphatic journey towards renewables, with a lot of mega scale renewable energy projects taking shape in the country. The Red Sea project, which is currently under construction, will also make extensive use of solar energy, similarly Neom is also on path of powering The Line majorly of renewable energy. Moreover, recently, Saudi Arabia has launched a large number of central wind power plants of capacity upwards of 1.8GW in addition to solar power plants of 1.5GW. As a result, the shift from conventional energy to renewable energy in KSA can be marked the beginning of widespread acceptance.  Qatar’s recent 800 MWp central power plant offsetting around 50% of the 2022 FIFA World Cup emissions, clearly demonstrate the regions move towards renewable sources of energy”.

“There is a great potential for renewable energy in this region majorly in the C&I sector, as this way the energy is directly produced at the consumers premises greatly reducing the losses. While the C&I market is booming in Dubai and Bahrain, I believe there is much room for growth in theother regions. This is because many other GCC nations have not yet implemented a net metering legislation. If Saudi Arabia and other GCC regions were to adopt a fair net metering regulation, for example, the country's population would likely embrace C&I at a rapid clip,” said Ajmerwala.

Major Hurdles

“With such a high income, it seems like renewable energy might be a wise investment. However, we have noticed a few difficulties unique to this area. The first is that if you approach banks in this region to raise debt for the projects, the banks are usually hesitant to invest in the project, the high interest values makes the project less financially viable, and the high Debt Service Credit Ratio (DSCR) required makes it difficult to repay the debt. To that end, I believe there is considerable room for development in that respect,” said Ajmerwala.

The banks are required to intervene, but many of them will not even consider loan proposals for new projects in their exploratory stages. As a result, many projects never get off the ground because investors are unwilling to put up the necessary capital until construction is complete, at which point just the debt is raised. That is one difficulty developers have observed.

“There would be a dramatic rise in the solar projects, that is practical in this region if net metering policies became more possible elsewhere, such as in Saudi Arabia, which is a very large territory. In addition, many new players can enter the market. These are the few obstacles I've encountered in this country; nevertheless, I believe things are steadily changing, especially considering how challenging it was to acquire solar equipments in the region just five or six years ago due to the sheer scale of the market. A lot of good has come from it; for example, construction time for new projects have decreased dramatically, from years to months. We have come a long way and there is a lot further to go” concluded Ajmerwala.

Energy Storage Systems Still Have Long Way To Go

As it stands, the energy storage industry is best suited for use in areas without a grid or a net metering legislation. Numerous energy storage projects are now in development, with the Red Sea project serving as a prime example; if completed, it will have the world's largest energy storage capacity, complementing its extensive solar array. The solar energy storage industry is expanding rapidly due to the increasing demand for environmentally responsible and economically viable energy solutions in the industrial and commercial sectors. Additionally, the worldwide industry is trending toward the use of solar along with batteries as a means of mitigating carbon emissions and decreasing reliance on fossil fuels. High up-front expenses of installing solar energy storage systems are a barrier to entry for small and medium-sized businesses, which slows the growth of the global market. Even so, the rising need for renewable energy storage solutions would aid in producing massive investment for solar energy storage, consequently creating substantial potential opportunities for the global market.

Echoing similar sentiments, Ajmerwala opined, “The US$300-700 per kilowatt-hour value of energy storage seems excessive to me at moment. Given that the cost of storing energy for the C&I sector is currently prohibitive due to the power's exceedingly high tariffs on the grid, energy storage is currently not a viable option. Also, if you've signed a PPA for a certain price per kilowatt hour, you'll need to replace your batteries every few years or risk losing your power. It is true that energy storage is currently taking place in this area, but only on a large scale, near the power plants themselves; on a lower scale, where we are only talking about a few mega for the C&I industry, it is not yet economically viable.

Major Hurdles

“With such a high income, it seems like renewable energy might be a wise investment. However, we have noticed a few difficulties unique to this area. The first is that if you approach banks in this region to raise debt for the projects, the banks are usually hesitant to invest in the project, the high interest values makes the project less financially viable, and the high Debt Service Credit Ratio (DSCR) required makes it difficult to repay the debt. To that end, I believe there is considerable room for development in that respect,” said Ajmerwala.

The banks are required to intervene, but many of them will not even consider loan proposals for new projects in their exploratory stages. As a result, many projects never get off the ground because investors are unwilling to put up the necessary capital until construction is complete, at which point just the debt is raised. That is one difficulty developers have observed.

“There would be a dramatic rise in the solar projects, that is practical in this region if net metering policies became more possible elsewhere, such as in Saudi Arabia, which is a very large territory. In addition, many new players can enter the market. These are the few obstacles I've encountered in this country; nevertheless, I believe things are steadily changing, especially considering how challenging it was to acquire solar equipments in the region just five or six years ago due to the sheer scale of the market. A lot of good has come from it; for example, construction time for new projects have decreased dramatically, from years to months. We have come a long way and there is a lot further to go” concluded Ajmerwala.

All photos supplied by Ali Akbar Ajmerwala