As the world’s energy needs grow exponentially year on year, more and more countries are attempting to reduce their reliance on fossil fuels, focusing instead on adding renewable energies into their power mix.
Following February’s World Future Energy Summit in Abu Dhabi, it is clear that technologies such as photovoltaic solar power, and offshore wind power are garnering real interest in the market.
However, it is not all bad news for the upstream industry, as fossil fuels will form part of the energy mix for the foreseeable future, because right now, there is no cheaper renewable alternative.
“In the long-term the world needs to increase the renewable energy sources to meet the growing demand for power. However, at Shell, we believe that fossil fuels will continue to supply the majority of energy demand for decades to come due to the scale of that demand,” said Andrew Vaughan, Shell vice president for Abu Dhabi, Kuwait and Syria/country chairman of Abu Dhabi.
“Within that mix, natural gas, the cleanest-burning fossil fuel can act as a ‘backbone fuel’ presenting the most straightforward way to a cleaner future.”
Focusing on the Middle East region, countries such as Saudi Arabia are burning their way through oil reserves to fuel its own energy needs, wasting oil and losing important revenue. Saudi is looking at developing a 40 gigawatt solar plant and has a target of introducing 5% to 7% renewables into their energy plan, according to Maersk Oil.
“Saudi Arabia’s prime reason for moving forward on renewables is because they don’t want to burn hydrocarbons; it is the opportunity cost lost for export,” said Bob Alford, deputy managing director, Maersk Oil.
“In the summer they are having to switch to liquid fuel burning which is very expensive. That is equivalent to 27 cents a kilowatt hour from electricity, and when you are selling it between one and four cents a kilowatt hour it requires a big subsidy from the government, whereas if they get solar costs down to around 15 cents a kilowatt hour, even though that requires subsidy it is still cost lot less than burning liquids. We at Maersk Oil think we can bring the cost of solar below 10 cents a kilowatt hour.”
According to Maersk, the UAE is trying to replace some of its existing fossil fuel plants, and by 2017, the UAE will have nuclear energy to add to its energy mix. That nuclear power will be needed to bridge the growing energy gap. Countries such as the UAE and Saudi Arabia are looking to LNG to add into the energy mix. LNG is a cleaner burning fuel than oil or coal and is readily available in the region.
“The trend, particularly in the Gulf in the last three or four years, is that a number of countries that were previously producers and exporters of fossil fuels are now net importers, including Abu Dhabi.
There is the Dolphin pipeline from Qatar to Abu Dhabi and Dubai now has a floating LNG facility and also takes a tapline from the pipeline from Abu Dhabi in terms of gas supplies. We are seeing similar situations in Oman and Bahrain,” said Mohammed Atif, area manager, Energy Advisory Middle East, DNV-GL.
Mark Hopkins, director of International Energy Efficiency, United Nations Foundation, says that the world has spent 150 years developing business models, government policies, and putting concrete in the ground to develop the enormous global energy system worth trillions of dollars of infrastructure.
“We are going to be using fossil fuels for quite a while. Changing to renewables takes a big infrastructure, it isn’t just the one little item like a car, it is the infrastructure behind it and we have a large oil & gas infrastructure that took us a long time to develop,” he said.
Hopkins says the UAE must diversify its energy mix and include renewables in it to ensure a diversified economy when fossil fuels run out.
