Through its Energy Strategy and the UAE's Net Zero 2045 initiatives the UAE has strategic objectives of reducing dependency on oil and focusing on sustainable energy sources to meet the country's energy needs.
Ahead of COP28, which the UAE will host, the UAE has recently announced it will aim to triple its renewable energy capacity in hydrogen and other clean energy with a $54bn investment by the year 2030. It is estimated that this investment may also generate up to 50,000 new green sector jobs.
In line with these strategic objectives, Emirates Water and Electricity Company (EWEC), Abu Dhabi's main procurer of water and electricity, in September 2023 issued requests for expressions of interest to the market for the Emirate's fourth utility-scale solar photovoltaic (PV) project this year (PV4). PV4 will be located in the Al-Khazna area near Al Ain and is set to be fully operational by 2027 with a proposed design capacity of 1,500 MW.
Additionally, as reported earlier this year, EWEC aims to install a total of 16GW of solar PV capacity by 2036. This would suggest the procurement of around 1.5GW per year of solar capacity over the next ten years. This demonstrates the commitment of the UAE to its ambitious renewable energy targets.
By way of background, the first utility-scale PV project in Abu Dhabi, the Al Noor IPP (or PV1), has been operational since 2019. PV1 has a generation capacity of 935MW. Abu Dhabi's second solar IPP PV (PV2) project located in Al Dhafra was completed in June 2023 with a capacity of 1,584MW which is approximately 44% lower than the tariff set years ago on PV1 on a levelized electricity cost basis and was the world's lowest tariff for solar power when the project was initially awarded.
More recently, EWEC received bids in June 2023 for the third solar PV IPP (PV3) project which is set to have a capacity of 1,500MW. The bid evaluation process is ongoing. It has been reported that bids were received from consortia including; (i) ACWA Power (Saudi Arabia); (ii) EDF (France) / Korea Western Power Company (KOWEPO, South Korea); (iii) Jera (Japan) / Jinko Power (China); and (iv) Marubeni Corporation (Japan). The market will watch with interest for news of the preferred bidder on PV3.
The new PV projects, as well as the Barakah nuclear independent power project (with three of its four reactors commissioned), are understood to be able to meet around 30% of the UAE's peak energy demands. The Barakah nuclear IPP is the first of its kind in the region. It shows a growing trend of sustainable energy project developments in the UAE. These developments are central to helping the country meet its Energy Strategy and Net Zero initiatives by 2045.
As a firm, we are proud to have acted on many of Abu Dhabi's independent power and water projects. Since opening our Abu Dhabi office in 1993, we have assisted with the growth of the power and water sector in the region. This has provided us with a unique perspective on the life cycle of projects, from initiation, financial close, commercial operation, and proposed concession term extensions.
Over the past 30 years, the evolution of Abu Dhabi's energy mix to include large scale utility solar production has been an important achievement. Abu Dhabi continues to attract major investment in this sector, offering a solid bankable procurement model and flagship projects. We are delighted to be celebrating 30 years of working in Abu Dhabi in this dynamic sector.
