Sheikh Mohammed bin Zayed’s China visit an opportunity to lead GCC’s energy future

ABU DHABI // The visit of Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, to Beijing could give the UAE a pivotal role in China’s plans for the region’s energy sector, experts say.

Sheikh Mohammed led a delegation to China on Sunday to sign bilateral trade agreements.

The main opportunity for China is to establish a base in the UAE so that the Asian economic powerhouse can develop a more inclusive regional approach, said Mohammed Atif, area manager of energy for the Norwegian adviser DNV GL.

“I think those are the two opportunities, within the UAE and as a base to look for opportunities to expand, invest and provide hardware into the growing renewable energy sector in Africa – which is quite significant,” said Mr Atif.

Trade volume between the two countries stood at a record levels last year at US$54.8 billion. In terms of energy, the Asian superpower imported more than 1.65 million tonnes of oil from the UAE and also has involvement in oil and gas projects such as the Habshan-Fujairah pipeline.

In terms of conventional power, China has been less successful than some of its western counterparts.

“The Chinese have been coming in slowly winning contracts for engineering, procurement and construction, but they’re not able to supply equipment because the market doesn’t trust them,” said Claudio Palmieri, chief executive of Dubai-based CLS Energy Consultants.

The tide could be turning based on financing options available to Chinese firms. Harbin Electric was part of the Acwa Power-led consortium that submitted the lowest bid of 4.5 US cents per kilowatt hour for the Hassyan clean coal power plant in Dubai.

Paddy Padmanathan, Acwa’s chief executive, said that financing played a crucial role in the project. “The future of commercially viable, low emission power generation is dependent on bringing together global technology vendors and financial institutions,” he said. “The blend of Harbin Electric and finance from the likes of Industrial and Commercial Bank of China and Bank of China is what enabled us to deliver a winning tariff.”

One area in particular that Chinese firms are dominating is solar photovoltaic (PV).

“The PV business is a Chinese business these days,” said Mr Palmieri. “The equipment was developed in Germany, but if you look at the top names today, they’re all Chinese.”

For the UAE and wider GCC, the area of renewable energy remains underdeveloped. That is expected to change as the Paris climate talks clinched an agreement which stipulates that every country must outline its climate change plans every five years.

“As the governments look to procure other technologies, whether it is solar or other methods, at lower costs, Chinese companies have a much better chance now of understanding local requirements,” Mr Atif said.

For Dubai-based clean energy investment firm Adenium Capital and its brainchild financing company, Yellow Door, Chinese solar panels are the way to go.

“All of our PV module agreements are currently with Chinese manufacturers,” said Jeremy Crane, chief operating officer of Adenium Capital.

Adenium is constructing a project in Jordan in which 57 megawatts of PV modules were acquired from China’s Suntech.

Yellow Door will look at 40MW for the next year.

“If the UAE decides to push faster to a more renewables-based energy sector, there are opportunities for Chinese manufacturing and Chinese-sourced equipment,” said Mr Atif.

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