HOLISTIC APPROACH

Abu Dhabi 2020 | ENERGY | VIP INTERVIEW

TBY talks to Awaidha Murshed Al Marar, Chairman of Abu Dhabi Department of Energy, on government reform, the new integrated energy model, and private sector interest in the sector.

The creation of the Abu Dhabi Department of Energy marked the decentralization of regulatory and service provision aspects of energy in the emirate. Can you tell us about the vision behind this government reform?

The overall objective of the government of Abu Dhabi is to have a sustainable utilities and sanitation sector that ensures optimal usage of natural resources. This effort builds on Abu Dhabi's economic vision, issued in November 2008, with the aim to develop a sufficient and resilient infrastructure capable of supporting anticipated economic growth. Therefore, a key part of the emirate's success will be how well the needs of business, industry, and consumers can be met by the provision of electricity, water, and wastewater services. The vision also issued Law No. 11 of 2018, which establishes a Department of Energy (DoE) that focuses on developing a strategy for the energy sector, issuing policies and regulating companies active in the energy space. Law No. 3 of 2019 activates Abu Dhabi Power Corporation as the asset owner for the emirate's electricity and water assets. As the energy and water sector's transition develops, the clear separation between the asset owner, on the one hand, and the policy-maker and regulator, on the other, will ensure that Abu Dhabi is able to balance the competing interests of what we refer to as the 'energy trilemma' – the security of energy and water supply, sustainability of the energy sector, and ensuring the lowest costs to end-consumers. Additionally, Abu Dhabi is introducing non-fossil fuel generation, decoupling desalination, and adopting new technologies. Alongside its regulatory responsibilities, the DoE is creating new water and energy strategies and policies to deliver these outcomes and is therefore well-placed to ensure that Abu Dhabi succeeds in this energy transition.

What role does the Department of Energy envision for public-private partnership (PPP) in driving the development of the energy sector?

The Department of Energy continues to see public-private partnership as playing a crucial role in the development of a sustainable energy market, in particular given the focus on cost-competitiveness and end-use efficiency. The local energy market in Abu Dhabi is becoming increasingly complex as a result of factors like nuclear energy, renewables, and the de-coupling of water co-generation entering the energy mix. Furthermore, private investors lay a great deal of emphasis on certainty, and the Department of Energy can play a pivotal role in creating a conducive environment for their investment. As the policy-maker and regulator for the energy sector in the Emirate of Abu Dhabi, the Department of Energy is responsible for fostering creativity and reducing risk. This is especially relevant in the area of clean and renewable energy, where there is little experience at the emirate-level at the moment.

By the second quarter of 2019, DoE will have overseen the creation of one of the world's largest solar power plants. What challenges will Abu Dhabi face in increasing the solar share in its energy mix?

In most developed markets like Abu Dhabi's, the first wave of renewable capacity can be integrated into the wider system without difficulty, and this is what we have been seeing with the Sweihan Photovoltaic (PV) Independent Power Project (IPP). As the scale of PV rapidly increases, however, we will start to face new and interesting challenges. They are not unique to Abu Dhabi, but none of the international models we have examined thus far have found perfect solutions. Everyone is still experimenting and learning. Solar PV, however, is only one part of a broader energy transition for Abu Dhabi. We have to position our targets and policies so as to remain agile and able to take advantage of innovations as they become viable, without locking ourselves into particular technologies in a way that we might come to regret in the future. There is still uncertainty and competition between potential solutions, such as various forms of energy storage and power-to-gas, and we do not want to place our bets too early. We also anticipate new opportunities to manage demand. As smart devices and electric vehicles become mainstream, they could provide some of the flexibility services that we will need. Water will also become a form of virtual energy storage and demand-side management, as we shift production of desalinated water from new reverse-osmosis plants towards the middle of the day, when energy from PV is most abundant. So perhaps the challenge is not whether we can make the system flexible enough to accept much more PV, but rather finding a way to make all the parts work together efficiently.

What does the DoE's new integrated energy model bring to Abu Dhabi's energy sector?

The Department of Energy has developed a holistic energy model that captures the full, end-to-end energy value chain within Abu Dhabi Emirate against the wider context of the UAE. Covering a time horizon up to 2050, this model provides analysis that will support policy choices and development in all energy-related matters. The ambition of this project is to work with our multiple government stakeholders to develop and maintain the energy model collectively and systematically. Upon completion, the model will be accessible to all government departments. The Department of Energy will then work across the government to test envisaged scenarios and support other departments' work and energy-related policy development. Having the whole energy ecosystem on one platform will provide valuable insight on Abu Dhabi's overall demand and supply balance, helping to identify the interplay and inevitable trade-offs to be considered between different government perspectives, outlook scenarios and subsequent policy choices. The energy model is designed with extensive demand segmentation across all major demand groups – transport, industry and buildings – which will be instrumental in facilitating energy and water efficiency measures. The model capabilities include granular segmentation of domestic consumer behaviour, which allows for testing the different dynamics and opportunities for energy efficiency separately in residential and commercial sectors. This will better enable us to understand the effect of specific and targeted individual efficiency measures, as well as their aggregated effects over time, and to assess these measures in terms of their energy savings, cost, and CO2 reduction.

What are the main things that private sector companies looking to participate in Abu Dhabi's energy market over the next five years should bear in mind?

Abu Dhabi's energy sector is on the cusp of major transformation. The role of the Department of Energy will be to provide direction and a clear vision for the sector, and the private sector will need to play a critical role in delivering the transition. Our work plan in the coming years will therefore be directed to ensuring that energy is provided in an efficient and affordable way, to promoting the transition to clean energy, and to ensuring that everyone is aware – and accountable – for using energy responsibly. The Department of Energy wants to strategically partner with relevant stakeholders, public entities, academia, and the private sector to share our experiences and knowledge, and to achieve our sustainable energy goals. Innovation and technology will be equally critical to ensuring that our energy transition is achieved while maintaining affordability and security of supply to the greatest possible extent. For example, in the near future we expect innovation to address challenges in terms of costs and system flexibility arising from the integration of nuclear and large-scale PV. We expect the most innovative solutions to cover energy areas such as new technology enablers (e.g. storage, electric vehicles, block chain, and smart grids), business models (e.g. aggregators), system operation (e.g. distributed energy and digitalization), or market design (e.g. wholesale markets, pricing signals, and ancillary service markets).