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Edward Bell - Senior Director, Market Economics
Published Date: 04 July 2023
The UAE has approved an updated national energy strategy which will triple the “contribution” of renewable energy by 2030 with the aim of spending between AED 150-200bn (USD 40-54bn) during that period. At the same time, the UAE has approved a National Hydrogen Strategy which will enhance the country’s hydrogen production and export capability over the next eight years, while a National Electric Vehicles Policy has also been approved that aims to build out a network of charging stations and encourage take up of lower emission vehicles.
The new energy strategy is notable in several aspects. It doesn’t make a reference to “clean energy,” an unclear definition which the preceding UAE Energy Strategy 2050 included. The prior strategy was based on a mix of clean energy (44%), natural gas (38%), clean coal (12%) and nuclear (6%). Coal no longer appears to be a component of the UAE’s energy plans with the Hassyan power plant, which had originally been built to be fuelled by natural gas and coal, now to only use natural gas.
Source: DEWA, EWEC, Emirates NBD Research
Tripling the contribution of renewables by 2030 will require a substantial investment into expanding the country’s solar capacity. Between Dubai and Abu Dhabi, there is 3,072 MW of installed solar capacity, both as PV and concentrated solar power (CSP). The Mohammed bin Rashid al Maktoum Solar Park is located in Dubai and has planned capacity of 5,000 MW by 2030 while the Noor Abu Dhabi solar plant has an installed capacity of nearly 1 GW (1,000 MW).
While the growth in renewables capacity has been rapid, a tripling of the contribution to the country’s power mix will require a substantial investment in generating capacity and expansion of the grid to satisfy still rapid energy demand. A greater take up of electric vehicles, particularly in the commercial sector, would put even more demand on the country’s power generation if sectors like transport and logistics are targeted as priorities for getting to the UAE’s net zero emissions target of 2050. The UAE is well positioned to expand its solar generating capacity thanks to the strong solar irradiance in the country along with an electricity sector that is structured so that it doesn’t need an underlying marginal cost of fuel to set prices. Much of the planned investment may fall into expanding the logistics (grids and transmission).
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