Major challenges facing Middle East’s power community

By Ali Neyzi, VP Managing Director in Turkey and the Middle East

1. What are some of the major challenges faced by the Middle East's power community, and how do your solutions help address some of these requirements?

In a global scenario where we have 40 years of reserve of oil left, the Gulf Region (GCC countries) suffers scarcity of suitable gas for power generation in Kuwait, Oman, United Arab Emirates and Saudi Arabia.

Another challenge for the oil producing countries is that much of the available gas has been increasingly diverted for use in subsidized power generation, instead of exporting the gas at a profit in the global market. For the most part, governments in the region have had little option but to charge a fraction of power generation costs to business and power consumers, leaving state budgets at increasing strains from subsidized energy costs.

Vestas, as the world leader in the wind energy market, can help address the energy security issue by supporting wind energy as a readily available free source of power and providing wind energy solutions to these countries. Considering that oil and gas prices will most likely be on a volatile and upwards trend and more resources are more diverted, wind power can provide a cost-effective energy solution. And above all, Vestas can assist developing the necessary regulatory framework to plan a smooth transition towards renewable energy and particularly towards wind power.

2. As the Middle East looks to become a world leader in sustainable development, new technologies – everything from renewable energy sources to smart grids – are being integrated into the region's megaproject developments in order to lower carbon footprints and increase energy efficiency. What opportunities are presented by implementing such cutting-edge technologies into the region's infrastructure developments?

The approach in the Middle East has changed recently due to their commitment to the Kyoto Protocol. At present, we can classify the opportunities as clear in the countries where there is a right mix of economic background, energy security concerns, and coherent government focus. For example, Turkey, Egypt, Morocco, Tunisia, and Jordan are beginning to implement important renewable energy strategies and private sector incentives. In addition, we are seeing a trend in Iran, Syria and Lebanon to begin developing a framework for renewable energy investment.

There are also opportunities for renewable energy in the oil-rich countries (UAE, Oman, Saudi Arabia, Qatar and Kuwait) as a way to reduce carbon emissions and to take part of the social responsibility. Governments, businesses and the general public begin to consider the inevitability of raising climate change issues to the top of the list for social and economic development. Besides, some renewable investments seem to be the best solution in these countries for certain areas which are remote or isolated and traditional power is out of reach.

3. What appetite is there for concepts such as energy efficiency and renewable energy in the Middle East? How committed are the oil-rich states of the region to going green?

Some countries such as the United Arab Emirates (UAE), which is hosting the future International Renewable Energy Agency (IRENA), have dedicated great amounts of resources to ensure energy efficiency. Over $10 billion have been spent on water and power projects since the Emirate of Abu Dhabi embarked on its privatisation in 1998. With the demand of power increasing 9% per year, the UAE is planning to expand over 50% its 9.500 MW installed capacity during the next decade, which requires an investment of $8 billion¹. Abu Dhabi in particular has established an enormous investment platform, Masdar, committed to renewable and sustainable energy that benefits the emirate and the region. It is clear that the UAE wants to ensure they remain the hub of cutting edge-technology.

Oman as well recognizes the need for sustainable energy and benefits from suitable wind conditions. Therefore, a framework has been outlined in the region for the development of solar thermal plants and wind power. The rest of the Gulf seems to be more active recently, with solar initiatives which have seen a recent increase in activity in Saudi Arabia. This country is looking to turn into an exporter of renewable energy. The Saudi oil minister Ibrahim Al Naimi stated last year that the country was planning to turn solar energy into an important pillar of the national energy mix². In addition, there are some groups in the Gulf interested in investing in green projects overseas, for example in Europe and Turkey.

In the Levant countries of Syria, Jordan, and Lebanon, the need for sustainable and local power supply is clear and governments are beginning to take these issues as a part of their political agenda.

4. To what extent are you working with urban planners, developers and local authorities in the region to increase awareness and drive the adoption of such solutions?

One of our main tasks is to increase awareness of the finite resources, climate change responsibility and the rise of energy demand. Most importantly, we will be working closely with private developers and public sector authorities to drive renewable energy focus and its viability in comparison to traditional fossil-fuel power generation. Vestas is open to a dialogue with governments and the private sector, as they play a key role in stimulating the development of the region's wind market. Undoubtedly, the wind industry needs the appropriate governmental support in order to expand in new markets, because governments, together with the industry players hold a crucial role in creating confidence and business case certainty for the investors.

5. In terms of the pioneering nature of its recent construction and engineering work, the Middle East ranks as one of the most innovative regions on the planet. Is there a similar desire for innovative solutions in the energy industry? And what does this mean for you from an R&D perspective?

The Middle East has benefited recently from a can-do approach to technology as their countries are displaying a growing interest in renewable projects. A benchmark of how technology will be developing in the region is Masdar City in Abu Dhabi, UAE. Masdar City is a project headed by Abu Dhabi Energy Company (ADFEC) and several global companies. The $22bn project comprises a solar power plant, geothermal, wind energy and hydrogen power³.

As some countries are spending significant sums in renewable energy and green-tech, we should focus on giving them solutions that meet the specific needs of the region. For instance, our focus will be to provide them with the latest know-how in wind technology and the technology capable of withstanding hot desert climate and difficult terrain conditions in order to adapt our systems to their landscape, with large deserts and high summer temperatures.

Vestas, as No. 1 in Modern Energy, is ready to offer the most innovative and competitive energy solutions. Based on 25 years of experience, Vestas has integrated Technology R&D as an independent business unit loaded with innovation power. We have seven R&D centres worldwide with over 1,400 employees devoted to research and testing. Also, we offer active knowledge sharing with innovative universities and key partners around the world. Thanks to these resources, we have the most advanced technology in the market to enhance wind power development at a local level.

For references and further information please contact Communications, Vestas Mediterranean:

T: +34 93 241 9800
E: mjvvi@vestas.com
www.vestas.com

Link to article on Wind Magazine:

http://www.vestas.com/en/media/magazines/article-display.aspx?action=3&NewsID=1325

Footnotes:
1 Power-Gen Middle East 2009
2 IPS News 2008
3 http://www.masdaruae.com/en/Menu/index.aspx?MenuID=42&CatID=12&mnu=Cat