The installed renewable capacity of the United Arab Emirates, which until recently was nearly non-existent, concluded 2020 at 2.3 gigawatts (GW), around 91% of which comprises of solar PV projects, a Rystad Energy analysis shows. Solar PV additions are going to pile up, especially from 2022, and drive the country’s total renewable capacity to an impressive 9 GW by the end of 2025.
Rystad Energy, evaluating activity in the country, expects solar PV capacity to reach 8.5 GW in the UAE by the end of 2025, being by far the technology that will contribute the most to diversifying its energy mix. The share of renewable energy in the UAE’s power generation mix is set to increase from 7% in 2020 to 21% in 2030, and to 44% by 2050.
Previous targets for 2020 have already been achieved, and a robust project development pipeline suggests that the 2030 target is within reach. It is too early to predict the achievability of the country’s 2050 target, but the resilience and determination shown by the UAE’s renewable sector amid Covid-19 will surely make it attractive for investors and developers alike. This, together with some of the world’s lowest power purchase agreement (PPA) prices, suggests that 2050 targets are well within reach.
Given the country’s current project pipeline, UAE’s renewable capacity is on track for an impressive compound annual growth rate (CAGR) of more than 31% towards 2025. Among the seven emirates that make up the UAE, the majority of renewable activity is concentrated in Abu Dhabi and Dubai, which together account for over 90% (8.2 GW) of total capacity in 2025.
Major projects expected to drive this growth include four solar farms, the Al Dhafra (2GW), Abu Dhabi PV3 (1500MW), MBR Phase IVa and IVb (950MW) and MBR Phase V (900MW), all of which are in various stages of development. The remaining 0.9 GW of capacity will come from projects in other emirates, such as Umm Al Quwain, Ras Al Khaimah and Sharjah.
Learn more in Rystad Energy’s RenewableCube.
Dubai currently has more than 1 GW of installed capacity, all of which comes from the MBR solar park’s three phases. Thanks to the MBR solar park, Dubai exceeded its 2020 target in June, increasing the share of renewable energy in the emirate’s energy mix to nearly 9%.
Abu Dhabi, the capital of UAE, has set itself a target of 5.6 GW of solar PV capacity by 2026. Abu Dhabi’s currently installed capacity stands at 1.3 GW, the majority of which comes from the 1.17 GW Noor Abu Dhabi (Sweihan) project, in addition to the Abu Dhabi virtual battery (108 MW) and the Shams solar CSP project (100 MW).
UAE is home to one of the lowest tariff prices in the world, with prices declining by more than 76% in the past four years. The country has gotten into a habit of breaking the world record for the lowest PPA prices and has set records nearly every time recent auction results have been announced. The Al Dhafra project, the latest solar PV award in UAE, recently agreed upon a tariff of $13.50 per megawatt-hour (MWh) – among the lowest solar PPA prices in the world.
“Renewable energy seems to be a top priority in the UAE. Despite the Covid-19 shock, the government has provided a reasonable amount of investment to continue ongoing projects. UAE has already attracted big international players in the renewable sector – a healthy sign for future business,“ says Gaurav Metkar, senior analyst at Rystad Energy.
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