Land of the rising sun: Solar is at the forefront of a push to increase the use of renewables

“Sustaining prosperity over the long term requires wise management of exhaustible resources to ensure that future generations inherit ample means to meet their aspirations,” reads Qatar’s National Development Strategy 2011-16. It calls for improving productivity and efficiency in the energy and power sector to maximise the value derived from the country’s gas reserves. Diversifying energy production to include renewables is therefore an explicit goal. Building on this vision, Qatar has identified solar as a viable alternative energy source. The country may lie on the world’s third-largest reserves of natural gas, but the ongoing projects suggest it intends to create a comprehensive, integrated solar industry.

FUNDING ALTERNATIVES: Qatar’s 900trn cu feet of proven gas reserves have not only allowed the country to amass significant wealth through liquefied natural gas (LNG) exports, but also to develop a cheap and comprehensive power sector fuelled by this feedstock. Qatar has built its generation network completely on gas-fired power plants, and has a grid with spare capacity that should cover peak electricity demand until at least 2017.

Even without such vast reserves, gas-fired power plants are one of the cheapest means of generating power, with a cost of energy of $74 per MWh, compared to $160 per MWh for PV crystalline production and $131 per MWh for solar thin film, according to international investment bank Lazard.

However, sustainability – conserving reserves and protecting the environment – is the main driver behind solar in Qatar and in the region. Without setting specific renewables targets, as Abu Dhabi and Saudi Arabia have done, the government has embarked on a plan to make solar a substantial component of Qatar’s power generation and to develop an indigenous solar industry. According to Yasser Wehbe, the managing director of Lumatron, “Qatar is rich in oil and gas, but it is also rich in sun. The government is keen on developing this sector.”

Business intelligence unit MEED indicated that there were irradiation levels of 1858 KWh per sq metre per year in the city of Al Khor, meaning Qatar is indeed well placed to benefit from solar generation. It is currently a costly business, however, and will require significant subsidies and incentives.

According to Wael Sawan, the executive vice-president and chairman of Qatar Shell, as well as the managing director of Pearl GTL, “Solar power has been challenged by poor economics and a heavy reliance on subsidies in order to survive.”

BUCKING THE TREND: However, Qatar’s approach is somewhat different to that of the established solar markets, such as Germany. It has not set targets for solar or renewable uptake, and has backed away from creating a framework of specific incentives to encourage private providers to enter the solar market. For example, talk of a feed-in tariff that would see a long-term contract established to pay renewable operators a guaranteed amount – above the price of conventional power plants supplying to the grid – is premature. “The focus is on industry and manufacturing to meet the needs of the region. The supply-demand situation is healthy in the short to medium term, so we do not expect a feed-in tariff anytime soon,” Omran Hamad Al Kuwari, the CEO of Green Gulf, told OBG.

Instead of providing incentives, it seems the government has decided to take the lead. Qatar National Convention Centre, for example, invested in installing 750 KW of solar energy production capacity, enabling the facility to draw an estimated 12.5% of its energy needs from the sun. The Msheireb project, a downtown regeneration scheme being developed by a subsidiary of the government-owned Qatar Foundation, has made solar generation a central component of the design. Furthermore, the government has pledged to make the 2022 FIFA World Cup, in Doha and its surrounding areas, a carbon-neutral event. The project will include the construction and redevelopment of 12 stadiums powered and cooled by solar energy. As a first step, the government commissioned Arup Associates to design a model stadium. The Kier Group built a 500-seat model arena which cost $25m, nearly as much as most countries’ World Cup bids, according to The New York Times.

Under current plans, Qatar could install 4-6 GW of solar generation, compared to a global figure of 24 GW of solar PV in 2011, according to IMS Research. It seems likely that solar power is going to become a substantial component of the national energy strategy. According to Al Kuwari, “We will have to look at it from the opportunity-cost perspective and not the macro-cost of production.” As such, the government will be looking at the potential boost to be gained in export revenues by limiting the use of natural gas for power generation domestically.

SPURRING PROGRESS: The government has already begun researching how to appropriate and install solar technologies, with the Qatar Environment and Energy Research Institute (QEERI), a member of Qatar Foundation, working on a number of projects. One of the main priorities is mapping solar potential and looking at specific sites. According to Rabi Mohtar, the executive director of QEERI, “We are looking at the impact of the air-quality index. Being close to high-traffic areas does not provide ideal conditions, but in areas where there are no people, they will not need energy. It becomes an issue of transmission.”

As QEERI engages such challenges, plenty of opportunities will arise in the sector, but the government’s plans seem to go beyond a basic desire to boost solar power use in future building projects.

Under the auspices of Qatar Foundation, the government is looking to develop an indigenous solar power industry. The country’s success in developing a comprehensive LNG industry, starting at a point when there was little international consensus that the technology and fuel source had a leading role to play in the global energy mix, has given the government the confidence to take the lead on other new or marginal power sources. Several of the leading figures in Qatar Foundation began their careers in the hydrocarbons industry.

POLYSILICON: Qatar Solar Technologies (QST ec), a joint venture between Qatar Foundation’s Qatar Solar, Germany’s Solarworld and Qatar Development Bank is currently building a $1.1bn plant to produce polysilicon. The plant will have an estimated capacity of 8000 tonnes under the first phase, with the potential to upgrade to 45,000 tonnes.

The first phase of construction is expected to be complete in 2013. QST ec is planning to develop capabilities in all segments of the production chain, from producing polysilicon to manufacturing ingots, wafers, cells and modules, eventually on to installations and applications, and potentially back upstream into the production of metallurgical-grade silicon.

According to Khalid Klefeekh Al Hajri, the chairman and CEO of QSTec, “QST ec is in the process of building a new industry in Qatar. There is growing demand in the country for solar technologies and applications that are sustainable, reliable and will bring a lasting benefit to the region and the world.”

In addition to the environmental benefits, Al Hajri points to the economic potential of building expertise in the field, noting that the development of the industry brings tremendous opportunities. “We anticipate increasing demand in the region for solar modules and technologies within the next decade,” he told OBG. “Already in Qatar we are seeing growth in the industry, with a number of new projects coming on-line or being announced. Across the region solar is being used for generation on buildings and for desalination, and being looked at for cooling and other uses. We want to utilise the local private sector, and will look to maximise local participation.”

ACROSS SECTORS: Water desalination, which accounts for more than half of the water supplied in Qatar, is one potential application for the solar energy plans. Desalination is an expensive process due to the amount of energy the technology uses. The cost of this dependence is not trivial: Booz & Company estimates that desalination accounts for 10-25% of energy consumption in GCC countries.

The Qatar National Food Security Programme has been exploring solar desalination solutions since 2008 in partnership with DLR, the German Aerospace Centre. The two are working together under a broader memorandum of understanding (MoU) between the Ministry of Energy and Industry and Germany’s Ministry of Economy and Technology. They are developing a “Solar Resource Assessment” to gather and analyse data on Qatar’s potential. The project seeks to use satellite-based solar resource-mapping technologies to identify potential sites for power plants. Qatar Solar Technologies and Qatar Electricity and Water Company, one of the largest utility companies in the region, also signed an MoU in May 2012 to jointly develop solar technology applications in water production. This would have regional and global relevance as other countries increasingly turn to desalination for their water supplies. Both firms are developing these solutions with an eye to business opportunities in the region.

TESTING: QST ec is not the only company looking to establish a foothold in the local solar market. GreenGulf, a private Qatari firm, continues to operate in the region and, with Chevron, is establishing a 35, 000-sq-metre solar testing facility at Qatar Science and Technology Park. The first phase, which is expected to be complete by the end of 2012, will test PV technologies. The second phase will carry out research on concentrated solar power and solar thermal technologies. GreenGulf and Chevron hope that this applied research will help them deliver projects that are optimised for the regional market.

“Knowing the relative efficiency of various photovoltaic technologies in this climate gives us a competitive advantage,” said Carl Atallah, the president of Chevron Qatar. “We aim to identify technologies that will perform best in this environment and evaluate how well they compete with the alternatives.” Chevron already has three testing sites in the US, but this will be its most comprehensive facility. “The costs of construction and materials are established. We do not expect them to be very different here compared to California,” said Atallah. “The key is to figure out the technology’s relative efficiency here.”

Companies such as GreenGulf and QST ec are, therefore, gearing up for entry into the local and regional solar market. Significant investment and research are preparing the way for the introduction of technologies. While the government has not set any targets for uptake or provided specific incentives, it is working to establish the environment for solar technology demand, building solar generation into its development plans and entering the production side of the business via Qatar Foundation subsidiaries.