META Monthly: Renewables Update - October/November 2018

INTRODUCTION

The global desalination market is currently projected to expand at a compound annual growth rate of 7.8 percent from 2018-2025. Over recent years, desalination has become an integral part of water management strategy in several countries across the world. This trend has been particularly pronounced in some of the more water-scarce countries in the META region, where sufficient availability of water is an essential resource in supporting economic growth and development.

Another renewables area seeing considerable growth is the solar power sector, and in particular the PV solar market. Reports suggest that global PV capacity will surpass 756 GW by 2025. Certain countries in the META region are aggressively pursuing solar power programmes. Notably, the UAE has made great strides in this regard.

In this issue of META Monthly we consider the potential for a combination of solar and desalination technologies, looking in particular at some examples in the GCC where the two have been successfully combined to date.

In our next META Monthly edition, we will cover recent trends in financing solar and water projects in the GCC, a topic that was discussed in detail in a panel session at this year’s Project, ECA & Structured Finance Middle East & Africa conference.

DESALINATION TECHNOLOGY

It is estimated that, globally, approximately 90 million m³ of water is desalinated each day, 58 percent of which is processed in the Middle East and North Africa region, and 45 percent in the GCC alone. The GCC has greatly increased its capacity for seawater desalination over recent years, and continues to do so. In 2015, its capacity was up to approximately 6,600 million m³ per year, and projections at the time indicated that by 2020 the GCC region will have increased its overall capacity to approximately 9,100 million m³ per year.

The most common desalination process in the GCC currently is “thermal desalination,” with approximately 70 percent of the desalination that occurs in the region being realised by this method. Historically, thermal desalination has been the preferred choice from a technology perspective, in part because it was considered to be more efficient in processing the highly saline water of the Arabian Gulf—in turn, making it more economically viable. However, the process also releases hot brine, certain chemicals, and other trace elements into coastal waters, which increases the temperature and salinity of the water, and thus can have a negative impact on the marine environment. In addition, the thermal desalination process, in particular, produces a large amount of CO₂. It is estimated that, currently, approximately 76 million tons of CO₂ are emitted each year due to desalination overall.

An alternative to thermal desalination is reverse osmosis (RO). Through this process, water is demineralised by forcing it, under pressure, to flow through a semi-permeable RO membrane, which filters out salt and other chemicals and minerals, as well as a range of other impurities and harmful bacteria. Due principally to technological advancements, the RO process is now significantly more energy efficient than thermal desalination, and thus produces less CO₂. As a result, it is now generally accepted that RO desalination is more economical and more environmentally friendly than thermal desalination. To underscore the energy efficiency of RO with today’s technology, RO expends between just one quarter and one fifth of total comparable electricity usage, respectively, compared to the two main types of thermal desalination processes.

Due to the economic and environmental benefits, a shift has been observed away from thermal desalination to RO. RO is now generally the preferred choice for new facilities coming on-line, whether a standalone desalination plant or one developed in conjunction with a fossil-fuel powered generating facility. Furthermore, as aging plants are upgraded, it is anticipated that the owners of some of the plants will take the opportunity to switch from thermal desalination to RO technology. In Oman, thermal desalination technology is due to be phased out from two of the country’s three large-scale thermal desalination facilities.

Undoubtedly, desalinated water is a critical part of the solution for water-stressed areas (including in a number of countries across the GCC and the wider META region) where the demand for water is high. Whilst the process generally is still relatively energy intensive and thus relatively costly, technological advancements have been bringing increasing efficiencies - and particularly in the realm of RO. However, it is thought that many of the mainstream technologies may have reached, or will soon reach, the limits of efficiency improvements that can be implemented without unreasonable or entirely prohibitive cost. Therefore, alternative methods will have to be combined with existing desalination technologies, or entirely new technologies (such as pre-treatment) must be introduced to the process. If this can be achieved, the energy requirements for the desalination of water and the CO₂ footprint associated with the processes are likely to be further reduced in the future.

THE ADVANCEMENT OF SOLAR POWER

Solar power has been developed across many parts of the META region for a number of years. Recently, the focus on solar has ramped-up considerably. This renewed focus is driven in part by a desire to meet targets for increasing the renewables components of a given country’s energy mix, as well as to reduce its carbon footprint. A further driver has been the marked reduction in the cost of solar panels and related technologies, which have made solar projects both more bankable and more scalable. For example, PV panel production costs have dropped in excess of 80 percent since 2008.

GCC countries, such as the UAE and Saudi Arabia, have played a leading role in this area and have announced ambitious capacity targets for solar power.

Notable recent solar projects in the GCC include: the 200 MW Phase II and 800 MW Phase III of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai; the 1,177 MW Sweihan PV solar IPP in Abu Dhabi (which will be the largest single-site solar plant in the world); and the 300 MW Sakaka IPP PV solar project in Saudi Arabia, the first utility-scale renewable energy project under the Renewable Energy Program of the Kingdom. Saudi Arabia has also recently confirmed its commitment to renewable energy, including solar, as part of its Vision 2030, and potential projects in the Kingdom include a plan by Softbank to develop a US$1.2 billion solar power plant set to produce 1.8 GW of power.

As countries in the META region further progress towards decarbonising their economies—assisted by increasing technical advancements and financial viability, and encouraged by political pressures globally—the number and size of solar projects across the region are certainly expected to grow.

COMBINING TWO TECHNOLOGIES – IS THERE REAL SCOPE FOR SOLAR-POWERED DESALINATION?

Given the desire of many countries to increase the level of renewable energy in their energy mix, and at the same time to meet the ever increasing demand for potable water, it begs the question: Can renewable energy sources power desalination technology to deliver greater energy efficiency?

The short answer to that question is, yes, it certainly is possible. The use of solar, wind, and geothermal energy have all been garnering attention in relation to powering desalination. In particular, solar projects have been attracting increased levels of attention in certain countries of the META region. This is perhaps unsurprising given the recent in-roads being made with the scaling and implementation of bankable standalone solar projects.

A small number of solar-powered desalination projects have been completed, are in the operational stage, or are in the process of being implemented in the Middle East. To date, most of these projects have been relatively small-scale facilities or small pilot or research projects. However, we are starting to see the scale of projects grow. We summarise headline details regarding some recent projects below.

Al Khafji City Solar-Powered Desalination Plant: A US$130 million plant with a capacity of 60,000 m³ per day is being developed in Al Khafji City, Saudi Arabia. The Al Khafji plant will be one of the world’s first larger-scale solar-powered desalination plants. Saudi government-owned Advanced Water Technologies is developing the project in conjunction with Spain’s Abengoa, while the King Abdulaziz City for Science and Technology will provide funding. The project is part of Saudi Arabia’s public-private partnership programme developed under Saudi Arabia Vision 2030. The plant will use the new Solar Saline Water Reverse Osmosis (Solar SWRO) method and will source power from an ultra-high concentrator PV plant, which will have an installed capacity of 15 MW using a solar array with polycrystalline solar cells. The solar plant will be connected to both the desalination plant and the national grid. It will produce enough power during peak operation that will be sufficient to sustain the energy requirement of the desalination plant.

Ghantoot Research Programme: Masdar Institute of Science and Technology launched the first solar-powered desalination plant through its Energy Water Desalination Programme, which commenced in 2013. The Programme comprises five pilot desalination plants operating in Ghantoot, about 65 km northeast of Abu Dhabi city. The five plants are designed with the aim of achieving an electrical energy requirement of under 3.6 kilowatt hours per cubic metre (kWh/m³) using membrane technology. Four of the five plants use a variety of innovative desalination technologies but are reliant on the grid for energy, while the fifth combines solar and water desalination in one plant.

The solar-powered desalination plant is being operated by a French company, Mascara NT, and is understood to have a capacity of 30 m³ per day, powered by its 30 kW PV plant. No provision has been made for battery power-storage, and thus the facility only operates during the day. According to Masdar, the programme has illustrated that renewable energy powered RO plants are commercially viable, as the Mascara plant at Ghantoot achieved an energy consumption rate of 2.5kWh/m³ of seawater, and with a cost of AED 3.3/m³ (if applied at a scale of 100,000 m³ per day), as compared to the current average water production cost in the UAE of AED 5.16/m³. Masdar has also suggested that as the demand for desalinated water grows in the UAE, the increased use of renewable energy to produce that desalinated water could reduce natural gas consumption by up to 234 million MMBTu per year, effectively making an annual saving of more than US$1.4 billion.

King Abdullah Economic City Solar-Powered Desalination Plant: This solar PV-powered desalination plant in King Abdullah Economic City, Saudi Arabia, is expected to have an initial capacity of 30,000 m³ per day of potable water, expandable to 60,000 m³ per day. Metito Saudi Limited was awarded the project after competing with 10 other tenderers. The project is reported to be valued at US$ 59 million (SAR 220 million). Production of potable water at the facility is expected to begin in the first quarter of 2020.

Ras Al Khaimah Solar-Powered Desalination Plant: A solar-powered desalination plant is being developed in the Emirate of Ras Al Khaimah in the UAE. Utico Middle East, a private GCC utility solutions business, and Grupo Cobra, a Spanish energy firm, signed a joint-venture agreement to develop the 100,000 m³ per day facility, which will supply water to the UAE’s Federal Electricity and Water Authority. The total project value is understood to be approximately US$195 million. Power for the desalination process will be provided by a 40 MW solar plant. Once completed, it will be the largest solar-powered desalination plant in the world. Notably, according to Utico Middle East, the plant will also reduce CO₂ emissions by at least 33,280 tons per year.

CONCLUSION

Without question, positive strides have been taken in the development of both desalination and solar technologies in recent years. As illustrated by the recent projects we have highlighted in this META Monthly issue, the combination of solar and desalination technologies is now also a realistic possibility.

Whilst there currently is a degree of constraint on the scalability of combined solar-desalination projects, the trend for project size appears to be on an upward trajectory. As technological advances continue, and the pressure further mounts on countries to meet their environmental targets and commitments, we anticipate that the scope for larger-scale exclusively solar-powered desalination plants will likewise increase, accordingly presenting opportunities for investment in this area in many parts of the META region.