The United Arab Emirates forecasts that savings from switching half its energy needs from subsidised gas to solar by mid-century will outstrip investment costs by $42 billion.
The UAE plans to invest $150 billion in renewable power up to 2050, weening the country from dependency on subsidized gas power in stages, according to Minister of Energy Suhail Al-Mazrouei. That compares to savings of $192 billion in LNG subsidies and gas costs, he said. The country has ample high intensity solar, and plenty of cheap land on which to put panels.
Al-Mazrouei said Middle Eastern states needed to break their reliance on subsidized gas power, where inefficiencies are endemic. “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. Recent solar project awards have fallen as low as 2.42 U.S. cents a kilowatt-hour, although flow varies with the hour of the day – which means the cost of storage must be added for a night time price, improving gas’ competitive position.
The government also wants to drop support for power tariffs, he said.