One Dubai-based company hopes that the promise of long-term cost savings will persuade firms to switch from leasing reliable but expensive diesel-powered generators to using cheaper solar technology at construction sites and labour camps around the country.
Adenium Energy Capital, which has invested US$10 million in hybrid mobile solar-diesel power units provided by the Emirati company Enerwhere, hopes to grab some of an estimated Dh4 billion diesel generator market, according to Adenium’s chief operating officer, Jeremy Crane.
Adenium, established five years ago and headquartered in Dubai, has invested in clean energy projects such as solar plants in Italy and Jordan.
“There’s a large demand from construction sites and industries that are not serviced by the grid or power companies in the region,” Mr Crane said. “The market size is very significant, and this is the new evolution of power supply.”
Diesel fuel costs about Dh2.90 per litre in the UAE, compared to 20 fils per litre in Saudi Arabia, one of the cheapest rates in the world.
“We can save [you money on] diesel [in the UAE], but we can’t save money in Saudi Arabia,” said Daniel Zywietz, the Enerwhere chief executive. “There is a very strong business case for the UAE to replace diesel with solar.”
Enerwhere estimates that the 1 megawatt generated from diesel requires about Dh3m worth of fuel per year, and that around 700 to 800 MW of diesel generators are rented a year in the UAE. With the mobile solar units, fuel consumption can be reduced at project sites by 30 to 40 per cent.
Construction sites use diesel generators for a variety of functions. Many of these sites are not connected to the grid but need power for water pumps, on-site offices and even tower cranes, which typically use 100 kilowatts of power per crane. Diesel-generated power costs four to 10 times more than power from the grid.
Companies would not disclose the difference in the cost of renting mobile solar generators compared to the diesel-powered variety.
An executive from a large backup power distributor who declined to be named said solar power was “not suited for [energy-intensive projects] like the needs of a construction site. This type of technology has two issues: power density and convenience”.
While using solar energy can be cost-effective, it is unlikely that diesel-powered generators will be displaced any time soon because of their proven reliability, he said.
“The sector is moving to more green [technologies], but at the end of the day there is still diesel being used as backup – always,” said Talha bin Masood, a sales engineer at Precision Industries, a diesel generator supplier for the US company Perkins, which sells about 5,000 diesel generators across the Mena region annually.
Enerwhere plans to use the majority of Adenium’s investment to fund mobile solar units throughout the UAE, with plans to tap other markets including Jordan, Kuwait, Oman and Egypt.