The Kingdom has edged one step closer to developing a viable alternative energy infrastructure with its implementation of a solar energy project in the Awali Township of Manama. The 5MW, utility-scale photovoltaic solar facility was arranged as a joint venture between the National Oil and Gas Authority (NOGA), the Bahrain Petroleum Company (BAPCO), Caspian Energy Holdings and Petra Solar. The project marks one of the Gulf region’s first tendered utility-scale solar project.
The project may serve as a pioneer for the establishment of a local renewable energy market
The pilot venture is currently in the developmental phase, with the facility’s functionality and cost-effectiveness within the macro energy sector yet to be determined. Pending proper execution, however, the project may serve as a pioneer for the establishment of a local renewable energy market.
According to Abdul Hussain Ali Mirza, the minister of state for electricity and water affairs, “Following a successful implementation of this pilot project, we expect other projects to follow in the near future. Through strategic alliances with technologically advanced partners, NOGA aims to diversify the energy supply sources that will help achieve the goals of Bahrain Vision 2030.”
Vision 2030, a comprehensive plan for economic development through 2030, includes a benchmark for 5-7% of installed capacity to stem from renewable sources
The Kingdom currently meets its domestic electricity demand exclusively with fossil fuels – 85% from natural gas and 15% from oil. Vision 2030, a comprehensive plan for economic development through 2030, includes a benchmark for 5-7% of installed capacity to stem from renewable sources.
Yet cost-effectiveness remains a crucial factor for fully integrating an alternative energy infrastructure. Bahrain currently enjoys an adequate supply of natural gas – 1.7bn standard cu feet per day – to meet its industrial, manufacturing and domestic electricity demands. Although the government has moderately raised the price of gas to $2.25 per million British thermal units, an energy subsidy continues to keep the price low, which inhibits the development of a sizable market for alternative energy.
In addition to the subsidy, the Kingdom is actively engaged in increasing its oil and gas supply through various enhanced oil recovery (EOR) techniques, undertaken by the government’s upstream exploratory company, Tatweer, as well as through the development of a large-scale liquefied natural gas import terminal. Tatweer’s success in increasing fossil fuel production is likely to ensure the role of fossil fuel as the most cost-effective power source at the consumer level for some time to come.
Secondary obstacles to an alternative energy segment include high real estate prices and the lack of a legal framework. Land is limited on the 765-sq-km island, and renewable energy projects, particularly solar, require sizable areas for development.
There is an absence of legislation regarding a formalized process for integrating electricity output from renewable plants to the grid
Bahrain also lacks formal legislation that would better facilitate sector development, such as tax incentives or the re-selling of carbon dioxide no longer being used back to the state’s electric grid network. Similarly, there is an absence of legislation regarding a formalized process for integrating electricity output from renewable plants to the grid.
Although the obstacles to wide-scale renewable energy remain significant, the market conditions for renewable technology are continually improving. "In just the past two years, the cost of producing 1 MW of solar energy using American technology has dropped to $2m from $3m,” Rob Sobhani, the president of Caspian Energy Consulting, told CNN in mid-August. “The price of smart grid technology has fallen to $5m per MW from $6m per MW.”
Another policy trend linking to smart technology is Bahrain’s eGovernment initiatives, which aim to apply smart grid technology to several components of infrastructure, such as street lighting, parking meters, automated management systems, and perhaps electric vehicles. The increasingly more affordable technology used for the Petra Solar project may have an important ripple effect for public service systems across Bahrain.
Middle East plan to invest around $500bn in solar energy over the next two decades
“By conservative estimates from private and government experts, countries in the Middle East plan to invest around $500bn in solar energy over the next two decades,” said Sobhani. With high solar energy performance indicators (a global horizontal irradiance of 2160 kWh per sq meter per year and a direct normal irradiance of 2050 kWh per sq meter per year), growing electricity consumption rates, a renewed debate on subsidy reduction, and uncertainty regarding future domestic energy production and foreign gas suppliers, Bahrain possesses strong potential to develop a viable renewable energy market, with solar energy in particular key to potential future success.
Oxford Business Group
12 October
