April 2015: According to a study by the International Renewable Energy Agency (IRENA) and Masdar Institute of Science and Technology (MIST), renewable energy, in particular electricity from solar photovoltaics (PV), has been cost-competitive in the United Arab Emirates (UAE) since 2014. Prepared as part of IRENA’s REmap country study series, the report finds that increasing the share of renewable energy in the UAE’s energy mix to 10% and electricity generation mix to 25% by 2030 could generate annual net savings of at least US$1.9 billion.

The study, titled ‘Renewable Energy Prospects: United Arab Emirates’, estimates the attractiveness of different energy technologies for achieving a 10% share of renewable energy in the national energy mix by 2030, compared to a business-as-usual reference case of 0.9%. It finds that solar is the critical resource for the UAE, accounting for more than 90% of renewable energy use in 2030, and that investments in renewables, for example a capacity addition of 17.5 GW of solar PV, would “pay for themselves” at natural gas prices of US$4.5-8/million British thermal units (MMBtu), significantly lower than current marginal prices. IRENA and MIST note that the implications of this price parity level “stretch beyond the UAE,” and amount to “a clarion call for all energy producers, as well as energy importers, to closely examine their investment choices.”

According to the study, the UAE’s shifting cost dynamics are the result of a rapid decline in local installed costs for utility-scale solar PV, situated at US$1.5/watt in mid-2014, and incremental marginal natural gas costs driven by higher domestic production costs and liquefied natural gas (LNG) imports.

The study points out that the estimated economic savings from scaling up renewable energy to 10% by 2030 in the UAE do not factor in health and environmental benefits or the gains from exporting hydrocarbons liberated from domestic consumption, which include: avoided health and environmental costs at US$1-3.7 billion per year; an annual avoidance of 29 megatonnes (Mt) of carbon dioxide (CO2); and a reduction of up to 8.5% in domestic oil consumption and 15.6% in natural gas consumption.

The UAE study, sponsored by the Directorate of Energy and Climate Change of the UAE Ministry of Foreign Affairs, is part of IRENA’s REmap 2030 renewable energy roadmap project, which covers 26 countries that are expected to account for three quarters of the world’s energy demand in 2030, and provides a plan to double the share of renewable energy in the world’s energy mix between 2010 and 2030. Based on a bottom-up analysis covering technologies, financial mechanisms, policies, skills and planning, each study determines the realistic potential for scaling up renewable energy generation by 2030. The project is based on the premise that a renewable energy share of 36% in the global energy mix is affordable and possible, and will help avoid catastrophic climate change.

IRENA has previously launched REmap country reports on China, in November 2014, and the US, in January 2015. [IRENA Publication Webpage] [Publication: Renewable Energy Prospects: United Arab Emirates] [IRENA Publication Executive Summary] [IRENA REmap Portal]