3 minute read
Interview with Daniel Zywietz, CEO of Enerwhere
The Middle East energy market has been exponentially growing during the past few years. An exclusive interview was conducted with Daniel Zywietz, CEO of Enerwhere, to shed light on the region’s journey towards a clean energy future.
What do you think is the position of the Middle East in driving clean energy in the future?
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The Middle East has played a pivotal role in the global energy sector for over 80 years, based on its dominant share of global oil & gas resources. Its future position in clean energy will have to be built on the foundation of its near-limitless solar and wind-resources, and proven capabilities to build, finance, and operate billion-dolar energy projects. However, despite these advantages, the transition will not be an easy one. Other world regions have pushed ahead with ambitions clean energy targets and policies that are driving adoption of clean energy much more rapidly than many were expecting. Few would have predicted a decade ago that Germany, a major industrialised nation, would be powered by more than 50% renewable energy on its grid in 2020, or that another European country would cross the 50% market share threshold for electric vehicles in the same year.
So how can the Middle East energy sector stay relevant and thrive in this new world, where demand for its current main exports will stagnate and eventually fall?
By accelerating the roll-out of its own clean energy policies, and putting in the infrastructure to go after export markets around the world. Governments in the region, including in the UAE, Oman and Saudi Arabia, have grasped this and are pushing ahead with a rapid expansion of renewable energy capacity at the grid level. That is an important first step to maintain the region’s position at the global stage, but while itself will not be enough to maintain market share across global energy markets, which requires a way to get the clean energy to end consumers around the world. So while we celebrate the rapid expansion of the clean energy sector in the region, let’s put in place the foundations to export this bounty via pipelines, ships, long-distance grid connections, or in the form of energy-intensive goods like aluminium and steel. This will require long-term planning and extensive cooperation among what are sometimes seen as rivals for the same set of markets and resources. That’s never an easy task but the size of the price (and the cost of failure) should make it worth everyone’s while.
What is currently driving clean energy in the region, other than policies?
The obvious answer here is “Economics”. The truth is that when one looks at the Middle East today, renewable energy (and solar PV in particular) is dramatically cheaper than fossil fuels, including coal, oil, and even natural gas. This is being dramatically demonstrated by ever cheaper bids for utility-scale solar PV projects with recent PPA tariffs in the GCC falling below 1.5 UScents/kWh, or less than half of the cost of a new coal or gas-fired power plant. One might argue that these tariffs are only applicable in a very narrow set of circumstances (decades-long utility-scale contracts for intermittent daytime power with government off-takers), and hence not applicable for other energy markets. This is partially true – but they are nevertheless a good indication of a general cost trend, keeping in mind that similarly structured tariffs 10 years ago were still around 30 times higher. The speed of the conversion is also remarkable, with much of the daytime load curve in the UAE being filled up by solar PV long before 2030. Looking forward, the question is then: when will renewables break out of the “easy” day-time only utility-scale “niche” and start building market share in all of the other energy markets that aren’t as easily conquered? However, with battery costs falling rapidly on the back of surging global EV production, this day is closer than most people think, with solar-battery plants likely to compete with conventional power by 2025. Similarly, we will still soon hit a point where solar-(wind)-hybrid plants will start to compete with grid extensions for many remote loads, essentially making it cheaper to run stand-alone mini-grids than to connect to a far-away grids. This will come as a great relief to many commercial and industrial energy users who have been paying for expensive diesel-fuelled generators while waiting for the arrival of cleaner and cheaper solutions.
These are exciting and hopeful times in the energy sector – and we are glad to be part of the sector at this time!
