Thursday, September 18, 2008

Solar Doesn't Make Sense in Dubai

Of all the places in the world for solar to work well, the U.A.E would come to mind. Gulf states have very little rain fall, uninhabited tracks of land, modern infrastructure and plenty of cash.

Dubai, the most well-known of the Emirates, has a "green" building code and is pushing ahead with environmentally friendly buildings.

However..., in a recent article in, Nakheel, the Dubai real estate development company found, "The use of solar power in construction is not economically justifiable right now..."

It turns out that the costs to store solar energy are just too expensive. Additionally, the technology is still too novel to make it profitable. From the article, ""We had a case recently where I wanted solar panels to be used in one of our projects, but after looking into it we discovered that this would have added US $3 million (AED11 million) to our project costs," he said. From a business perspective, we can't justify using solar power right now."

While I think or would have thought that solar would be a no-brainer for Dubai, it just isn't. Additionally, the technology won't make it economically efficient for some time. What bothers me more, however, is the following quote: "People are realising that economics isn't going to be the only driving force for green technology," he said. "The focus on sustainability will actually drive this market."

So, we are to substitute a nebulous concept known as "sustainability" for a known metric, economic efficiency. If anything makes people not buy in to the environmental agenda is that it just doesn't make sense. You may feel good about it, but it hurts you in the pocket. Yikes.


Steven said...

Do you think that the cost of electricity might be REALLY low in Dubai and thus the Return on Investment of solar isn't quite there?

A quick Google of the price of electricity in Dubai is $250 per year for a household (I would also suppose they need a lot of A/C). That would seem to me to imply that the cost of electricity on a KWH basis is a fraction of what we pay.

WRGII said...

Steven, great comment and analysis! The only hitch is the government is subsidizing both electricity and water for its citizens.

I don't know what the unsubsidized cost for electricity is, but to your point, it may not matter, just the cost to the actual consumer.

In the US, the average cost per KwH is $0.1097, as of April.

Thank you again for a good comment.

Real Estate News said...

Solar power is part of the renewable energy. Its cost is still high if you consider Photo Voltic (PV) for solar power.

Advantages of Solar Power:

1) Solar power is free - it needs no fuel and produces no waste or pollution.

2) In sunny countries like UAE, solar power can be used where there is no easy way to get electricity to a remote place.

3) Handy for low-power uses such as solar powered garden lights and battery chargers.

Disadvantages of soalr power:

1) Doesn't work at night.

2) Very expensive to build solar power stations. Solar cells cost a great deal compared to the amount of electricity they'll produce in their lifetime.

3) Batteries require 25 Deg C storage area.

UAE Enegry Power Demand $10 Billion by 2018

WRGII said...

Real Estate News, thanks for your comment. Solar is free, in that it costs nothing to generate, but certainly has a price tag to collect use, and store.

You are dead on when it comes to low voltage requirements, but at current technology levels, it can't replace base power generated by nuclear, coal or natural gas.

Thanks again for your comment!

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