Benefit from the sun. It’s here to stay

Najib Saab/The Daily Star

In his inaugural speech at the last World Future Energy Summit in Abu Dhabi, Sultan Al-Jaber, a minister of state in the United Arab Emirates and chairman of Masdar, the architecture and ecology, or “arcology,” project, said: “Renewable energy is a critical component for building a sustainable future and has today changed from an expensive alternative to a competitive technology of choice.” On the day of his speech the price of oil dropped to $40 per barrel, after declining from $120/barrel a few months earlier, and a record of $143/barrel in August 2008. When a minister in a key oil-producing state takes such a stance at such a particularly crucial time, it must express a radical shift in energy markets. Renewable energies have become an indispensable component of the energy mix, irrespective of fluctuations in oil prices.

While I was listening to Jaber’s speech, I recalled a report I wrote in 1978 about harnessing solar energy, at the beginning of my work for the United Nations Environment Program. During a mission toSaudi Arabia and Kuwait then, my task was to discuss the use of solar energy in water desalination through small-size plants. At the time, climate change wasn’t on the international agenda. Solar energy was simply promoted as a renewable energy that could be endlessly exploited by the Arab world, compared to depletable fossil fuels, which should be conserved and efficiently used, not only in producing energy but also countless other useful products.

Since then, some Arab countries launched research programs in solar energy, but in most cases those remained experimental because it was cheaper and easier to produce energy from domestically available oil. However, serious threats emanating from climate change in the form of carbon-dioxide emissions gave renewable energies, especially solar and wind, a major boost in the last two decades. In the last five years some Arab countries started to produce power from solar energy at large commercial scale, especially in Morocco, the UAE, Saudi Arabia and Egypt.

Nevertheless, investments in renewable energies traditionally increased with increasing oil prices because renewable energies have become economically feasible, and vice versa. This affected the position of renewable energy in the stock markets, as demonstrated by the plummeting shares of renewable energy companies when oil prices fell in 2008. Ironically, the recent dramatic drop in oil prices didn’t have a negative impact on the commitment to renewable energy. This development heralds a new era, characterized by replacing the term “alternative energy” by “renewable energy,” transforming it from “replacement” to part of a balanced mix of energies, which takes into consideration environmental, economic and social concerns.

This new reality was underscored by the fifth session of the International Renewable Energy Agency, which was held in Abu Dhabi with 150 states participating. IRENA’s annual report noted that the cost of generating power from renewable energy sources had already dropped below the cost of fossil fuels in many parts of the world.

Solar photovoltaics are leading the cost decline, with solar photovoltaic costs falling 50 percent between 2010 and 2014. This has allowed for higher production vis-à-vis investments, which have reached unprecedented levels in many countries. China said it invested more than $56 billion in renewable energy in 2013, out of a total of $214 billion invested worldwide in the sector that year. Renewable energy productivity introduced by China that year surpassed that of the country’s new fossil and nuclear energy projects combined.

In 2014, renewables were the world’s energy source with the fastest growth rate, as they garnered $310 billion in investments. This growth reflected business opportunities provided by renewable energies, alongside higher worldwide demand on power. Today, 22 percent of China’s energy mix is attributable to power generated from renewable sources. The country aims to reach 32 percent within the next 10 years. In Mexico, power generated by renewable energy currently amounts to 15 percent of the total, with a target of 35 percent in 2024.

Many success stories were recounted at IRENA’s meeting, including some from the Arab region. Dubai Electricity and Water Authorityreported that it had reached an agreement with Saudi Arabia’sACWA Power to build a 200-megawatt solar power plant, which will operate on purely commercial terms, with no subsidies. In addition, the plant will sell power for less than 6 cents per kilowatts-hour. In comparison, the production cost of electricity in plants operating with traditional fuels in Arab countries is double that figure. In Lebanon it costs 19 cents to produce one kilowatt-hour.

Asked if the company feared collapse because of the Dubai project in light of the spectacular fall of oil prices, ACWA Power’s CEOPaddy Padmanathan said: “We promise to continue to build stations that sell solar energy for lower prices year after year.” The Water Desalination Corporation in Saudi Arabia announced that it had signed an agreement to build a water desalination plant run by solar power, with daily output of 60,000 cubic meters, to be followed by others. The president of the Saudi Corporation said that “full reliance on oil in desalination is equal to suicide.”

IKEA, the international furniture and home appliances corporation, announced before the IRENA assembly that by 2020 power supply to all of its facilities, including showrooms and warehouses, would come from rooftop solar panels. It will sell ready to install solar power systems for rooftops in its stores worldwide, which can be installed with the same ease that consumers today assemble beds or tables from IKEA. In recent decades, IKEA has changed the game rules in furniture sales by bringing furniture to all people with good quality and affordable prices. Today, many people expect IKEA to play a key role in changing the game rules of renewable energy, by bringing plug-and-play solar solutions to the masses.

Participants in Masdar and IRENA’s meetings concluded with the conviction that renewable energy has become a fact and a necessary economic choice. No matter how oil prices rise or fall, investments in renewable energy are stable and their returns will not be affected by market volatility.