Why is Abu Dhabi spending $600m on expensive solar power?
Posted on 10 June 2010 with no comments from readers
The $17 billion commitment to cheap nuclear power stations is perhaps understandable, but why is Abu Dhabi now spending $600 million on a 100MW solar power station whose electricity will be much more expensive?
The Masdar Initiative announced a joint venture with France’s Total and Abengoa Solar from Spain yesterday. Masdar will take a 60 per cent stake and the partners 20 per cent each in the project to be built in 24 months some 120 kilometres southwest of Abu Dhabi.
Renewable energy ambitions
Coming online in the third quarter of 2012, Shams-1 will contribute towards the UAE capital’s target of achieving seven per cent of power generation from renewable sources by 2020. It also carries the prestige of being the world’s largest solar power station.
Why are more solar power stations not built? Because they are totally uneconomic and produce very expensive power. Government subsidies are required that divert resources from other areas of the economy to pay for one that cannot pay for itself.
Is this justified? You can always argue that in developing a technology a certain level of loss-making investment is required. The silicon chip came from the hundred billion dollars blown on the moonshot, for example.
Abu Dhabi’s investment might produce a similar jewel from the desert. There is certainly plenty of sunshine in the Abu Dhabi desert to maximize solar output, whatever the cost of that power.
Official justification
Masdar CEO Dr Sultan Al Jaber gave his justification for the project yesterday: ‘It will create jobs for UAE nationals, diversify our energy portfolio and offset 170,000 tonnes of carbon dioxide annually’.
Yet you could make exactly the same argument for nuclear power that will produce energy far more cheaply. Indeed, this power source is so efficient that Abu Dhabi is buying four nuclear power stations instead of investing in more oil-fueled stations, at least in part because it reckons the oil will be worth more for export than for burning in a power station.
But it is doubtful whether an investment of $600 million in a 100MW solar power station will prove a good investment, given the present state of technology for solar power. Could it be a good investment for the future of humanity rather than the UAE? Perhaps.
