We spoke with Tom Lindberg and Stein Amble Haugan, Managing Director and Key Account Manager of ECOHZ, who attended the World Future Energy Summit (WFES) in Abu Dhabi 17-18 January 2017. The World Future Energy Summit is one of the most influential renewable energy conferences in the world. The Gulf region is mostly run on fossil fuels today, but it is also a region in transition due to increased demand for energy in general and abundance of available renewable sources like wind and solar, and governmental willingness to invest in renewables. We asked Tom and Stein about their views on the development of renewable energy in the region and to share their experiences from their visit to Abu Dhabi and the World Future Energy Summit.
What is the renewable energy market like in the Gulf region?
Stein: Today, the Gulf region primarily produces its energy from fossil fuels, with a very small proportion of production from renewable energy sources. There are a few well-known renewable initiatives like Masdar City: a city designed to be a hub for cleantech organisations and run on 100% renewable energy. The United Arab Emirates for example are aiming to have an energy mix with 44% renewables within 2050. Yet only about 1% of the energy production is renewable in the United Arab Emirates today. As it stands, there are few options for corporations looking to secure renewable energy for their operations in the Gulf region.
What are your predictions for the region? Do you think the Gulf will continue to rely mainly on fossil fuels, or will they develop their renewable options?
Stein: We believe the Gulf will quickly realise that there are benefits to developing their renewable resources. The region depends on large amounts of energy to cool buildings and desalinate salt water, so reducing vulnerability caused by fluctuations in oil and gas prices is valuable. The Gulf region has shown it has the capital and the willingness to develop renewable energy, and that they are proud to be a part of the transition.
A recent governmental tender for energy in the region resulted in a company offering electricity from solar power for the lowest price ever of USD 0.0299 kW/h, crushing the price of fossil energy. A sign that momentum is building.
Tom: But demand from global corporations will also have a significant impact on the development of renewable energy in the region. It simply isn’t an option for a lot of corporations to set up operations in a region where renewable energy isn’t available – especially for corporations that have committed to using 100% renewable energy.
So you can say that movements like RE100 are driving demand for renewable energy in regions like the Gulf?
Tom: Yes, corporations are increasingly demanding renewable energy in the Gulf. Many of the world’s most influential companies have committed to using 100% renewable electricity by 2020 under RE100. Movements like RE100 are a reaction to increased pressure from stakeholders who want to see companies use exclusively renewable energy.
There’s a reason it’s called RE100 – not RE95. Corporates are not demanding renewable energy for some of their operations; they are demanding it for all operations in all regions where they operate. And the backlash for non-compliance can be massive. IKEA recently refused to invest 524mln pounds on renewable energy in the UK until the government commits to renewables.
Stein: And because of the influence of initiatives like the RE100, it will soon be impossible for a company to enter regions that only run on fossil fuels. This means that there will be a dramatic impact on the competitiveness of countries and regions that don’t provide credible renewable energy solutions.
Due to regulations and ownership structures in the Gulf region, PPAs and similar renewable energy solutions are difficult to put in place. Until now, there has been no internationally recognised system for companies to document that the electricity they consume comes from renewable energy sources in the region. Multinational companies with operations in the Gulf are looking for credible solutions to document and report that the energy they use comes from renewable energy sources. We are working to make this possible.
Tell us more – how are you helping companies document their renewable energy consumption?
Tom: Since we have customers who want and need to be able to source renewable energy from the region, ECOHZ is trying to get ahead of this demand and establish a network of partners so companies can purchase documented renewable energy in the Gulf region.
This means that the Gulf region will become a place we can offer I-RECs. This is a global standard used in regions where no similar documentation scheme exists. Companies can buy I-RECs to document and report that the energy they consume outside Europe and North America comes from renewable energy sources. I-RECs are being introduced in a growing number of countries, including countries in the Gulf region.
Stein: Unilever recently purchased I-RECs from ECOHZ to document their renewable energy usage, as part of their global renewable energy ambition.
Given the presence in the UAE of global companies like Unilever that have committed to using renewable energy, there is an imminent demand for I-RECs in the Gulf region. This was the main reason we attended the World Future Energy Summit last week.
As a part of this trip, you also met with the Dubai Carbon Centre of Excellence (DCCE), why did you meet with them?
The Dubai Carbon Centre of Excellence was established to support a growing niche market, catering specifically to the transition to a low-carbon and green economy through the consolidation of knowledge. They are the government-approved issuers of I-RECs in the region. We met with them because working directly with the local issuer enables us to ensure that I-RECs will be made available to corporate customers.
What are your reflections from your visit to Abu Dhabi last week?
Stein: Action needs to be taken towards developing renewable energy options. There is a sense of urgency as 80% of RE100 companies are aiming at a 2020 target for 100% renewable energy. Since its difficult to realise corporate PPAs in this region, it’s important to get I-RECs in place in the Gulf so that corporates can continue to grow and consume renewables in the region.
This means that I-RECs can be used to satisfy stakeholder expectations: The world now expects a certain amount of openness and transparency. These expectations show themselves in standards like the Greenhouse Gas Protocol and CDP. While we were at the conference, we communicated the demand we saw for an instrument like I-RECs, and how ECOHZ can build a bridge between corporate demand and renewable energy projects in the region.
Tom: There is great opportunity for renewable energy in the Gulf region. The region is well suited for it, with readily available capital, land and infrastructure. And we know from the companies we work with that a surge in demand for renewable energy in the Gulf is imminent.