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TBY talks to Richard Menezes, Vice Chairman & Managing Director of Utico, on increasing the role of renewables, maintaining self-sufficiency in terms of water, and rewarding energy saving.
BIOGRAPHY
Richard Menezes has over 25 years of experience in the utility sector and did the first IWP in the region for the port of Sohar in 1996. He has a great deal of experience with over 45 desalination plants, power generation, and transportation system developments and investments, private equity, and design. He is the founder and co-owner of Utico, the largest full-service private utility in the Middle East.How would you evaluate the efforts of Ras Al Khaimah to diversify its energy mix?
Though we use natural gas to generate electricity, we are also developing solar energy and are involved in clean coal projects. A good energy mix is required, and that is why we are also looking at other clean projects such as landfill gas, biogas, and pumped hydro. Due to the fact that the Federal Electricity and Water Authority (FEWA) is a limited organization, bound by its own legacies, there were many openings in unserved areas for organizations like ours to get involved. Thus, we are not competing, but rather complementing the existing efforts to diversify the energy mix. We still need coal and other fossil fuels in the mix, as in the end it is based upon the purchasing power of the consumer. If a consumer wants solar energy but needs to pay 10 times more and the capital investment is too high, it does not make economic sense. Therefore, the right energy mix is between renewable and fossil of around 50/50.
To what extent is Ras Al Khaimah ready to supply water and energy to the growing population?
In terms of water, Ras Al Khaimah is ready for 100% growth. We are self-sufficient, which is why we supply to Sharjah as well. However, for power we will need to negotiate new gas terms, but it is possible. FEWA has a transmission network, and therefore, it remains an integral part of infrastructure, while we are a complementary option. FEWA has a governmental role and an obligation to support growth, while we are a private enterprise working under government tariffs, so it is a perfect mix and a benefit to consumers. We are growing at 20% YoY, which means that customers are coming to us. We have more than 650 large customers, and FEWA is one of them.
To what extent is there room for growth for new private sector power suppliers to invest?
If a company wants to set up its own network, it is free to do so, though there are only two networks currently. If a company wants to construct a generation plant and supply power, it can only do so with either FEWA or Utico. We are prepared to give a 10% return on investment. Our business model is unique because companies do not build networks; they build power plants, take a guaranteed offtake, and then go to the bank. We have built a network because we go to every single customer directly, which means our capital outlay is more, though our risk is less as we serve a population of 200,000. Therefore, we go to unserved areas so that as the network grows, the demand footprint will grow correspondingly. Our vision is to serve Ras Al Khaimah and build relationships with neighboring states as well.
What opportunities are there for renewable power generation in Ras Al Khaimah?
The main opportunities lie in landfill gas, biogas, solar, and pumped hydro projects. RAK Waste Management has a hybrid project of around 15-20MW, which is huge because typically with landfill gas a 5MW project is big. It will be a unique project in the Middle East as it will combine waste-to-energy and solar energy generation. In addition, it will use hydroponic waste to clean the solar panels.
How can energy saving be encouraged?
I would like to transfer the benefits of the clean energy such as solar onto consumers but at the same time put greater responsibility on consumers to be efficient. Currently in the region, with every utility there is a penalty regime where the more one consumes, the more they pay. However, if one consumes less, there are no rewards or benefits. If someone makes an effort to use less water and power, they should be rewarded.
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TABLE OF CONTENTS
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