NRG Matters — China solar installations rise 137% during H1; DEWA to invest $10.8bn in electricity and water projects as demand for energy rises 

NRG Matters — China solar installations rise 137% during H1; DEWA to invest $10.8bn in electricity and water projects as demand for energy rises 
A roundup of developments in the energy sector. (Shutterstock)
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Updated 21 July 2022

NRG Matters — China solar installations rise 137% during H1; DEWA to invest $10.8bn in electricity and water projects as demand for energy rises 

NRG Matters — China solar installations rise 137% during H1; DEWA to invest $10.8bn in electricity and water projects as demand for energy rises 

RIYADH: On a macro level, China solar installations have jumped by 137 percent during the first half of 2022, compared to a year earlier. 

Zooming in, Dubai Electricity & Water Authority is planning to invest 40 billion dirhams ($10.8 billion) in electricity and water projects over the next five years, as the emirate’s demand for energy rises.  

Looking at the bigger picture:

China's solar installations have more than doubled during the first half of 2022, Reuters reported, citing the China Photovoltaic Industry Association.

Up 137 percent from a year earlier, China has built nearly 31 gigawatts of new solar power capacity from January to June, with full-year installations on course to hit a record high. 

Japan has lowered its gasoline subsidy for oil distributors to 36.6 yen ($0.26) a litre, down from 36.9 yen a week earlier, Reuters reported, citing the industry ministry.

The temporary subsidy plan was adopted in January to cushion the blow from high crude prices because of tight global supplies, later exacerbated by the Ukraine conflict.

Through a micro lens:

The Emirates Nuclear Energy Corp. has completed the pre-operational testing of the last unit of the Barakah Nuclear Energy Plant, edging closer towards fully operating the four-unit complex.

The Abu Dhabi-owned firm said it finished the Hot Functional Testing of Barakah’s Unit 4, where components were checked for thermal expansion and vibration, Emirates News Agency reported. 

Once UAE’s powerhouse Barakah Plant is fully operational, all four units will produce up to 25 percent of the country’s electricity needs and will prevent 22.4 million tons of carbon emissions every year.

Dubai Electricity & Water Authority is planning to invest 40 billion dirhams ($10.8 billion) in electricity and water projects in the emirate over the next five years.

The new investment will cover the Hassyan Power Complex and water projects at Hassyan, as well as completing other continuing projects in infrastructure and smart systems, Dubai Media Office reported.

This comes as energy demand in Dubai continues to grow, increasing 6.3 percent year-on-year in the first half of 2022. 


Sterling falls as PM Truss defends economic plans and dollar rises

Sterling falls as PM Truss defends economic plans and dollar rises
Updated 19 sec ago

Sterling falls as PM Truss defends economic plans and dollar rises

Sterling falls as PM Truss defends economic plans and dollar rises

LONDON: Sterling fell as much as 1 percent on Thursday before cutting some of its losses, as the dollar wavered and British Prime Minister Liz Truss defended the government’s economic plans that have contributed to the drop in the pound, according to Reuters.

Truss said big tax cuts were the right path for Britain and refused to consider reversing the so-called “mini budget” laid out last week, which triggered chaos in markets.

The pound was last down 0.3 percent to $1.0854 after hitting a session low of $1.0764. However, the euro was 0.12 percent lower against sterling at 89.27 pence.

Adam Cole, head of foreign exchange strategy at RBC Capital Markets, said the driver in the market was the dollar, which picked up in Asian trading but later fell back somewhat.

The dollar index pared earlier gains after Reuters reported Chinese state banks have been told to be prepared to sell the US currency in favor of the yuan.

Sterling crashed to a record low against the dollar of $1.0327 on Monday after new finance minister Kwasi Kwarteng unveiled plans to cut taxes, particularly for the rich, and raise borrowing.

The mini budget also wreaked havoc in the UK government bond market, forcing the Bank of England to intervene on Wednesday to protect pension funds, which are big holders of long-dated gilts.

The BoE said it would buy around £65 billion pounds ($70.54 billion) of long-dated government bonds to rectify “dysfunction” in the market.

Sterling bounced 1.41 percent on Wednesday to close at $1.0877 as investors digested the BoE’s plans.

But the currency it resumed its long-running slide on Thursday as Truss came out to defend her government’s policies.

“We are facing difficult economic times,” she said on local BBC radio. “I don’t deny this. This is a global problem. But what is absolutely right is the UK government has stepped in and acted at this difficult time.”

Jonas Goltermann, senior markets economist at consultancy Capital Economics, said both dollar strength and fears about the British economy were weighing on the pound.

“I don’t think (the BoE’s intervention) is going to be a long-term boost for sterling, although it might prevent an extreme downturn,” he said.

Goltermann said further falls in sterling are probable. He said traders are expecting the BoE to hike interest rates above 6 percent but are likely to be underwhelmed.

One analyst said they were also watching for signs of more selling of UK assets by pensions funds.

Pensions funds have been heavily selling gilts in recent days after the market falls triggered calls for collateral payments on their gilt derivatives positions, analysts and pensions advisers said.

The dollar regained ground after falling back from a new 20-year high on Wednesday after the BoE’s intervention. The dollar index was last up 0.17 percent to 113.22, after pulling back from a session high of 113.79.

Many analysts said they remained pessimistic about the pound, given the strength of the dollar and the storm clouds over the UK economy.

“There is no confidence in the Truss government right now. The problem is not fiscal spending per se, the problem is that people just don’t trust what she is doing,” Ipek Ozkardeskaya, senior analyst at Swissquote, said. 


Saudi Royal Commission signs $1.9bn investment agreements with INEOS Europe

Saudi Royal Commission signs $1.9bn investment agreements with INEOS Europe
Updated 20 min 21 sec ago

Saudi Royal Commission signs $1.9bn investment agreements with INEOS Europe

Saudi Royal Commission signs $1.9bn investment agreements with INEOS Europe

RIYADH: Saudi Arabia’s Royal Commission for Jubail and Yanbu has signed SR7.5 billion ($1.9 billion) worth of investment agreements with the chemical company INEOS Europe to build two factories in Jubail Industrial city. 

With a value of SR3.75 billion, the first agreement will establish a factory for the production of alpha-olefin and hydrocarbon derivatives, with a total area of 180,019 square meters in the Plascim area in Jubail Industrial city, according to the Saudi Press Agency. 

The second contract, which is valued at SR3.75 billion, is to create a factory for the production of acrylonitrile, acetonitrile and hydrogen and sodium cyanide with an area of 334,224 square meters in the Plascim area. 

The contracts come as part of Saudi Arabia’s industrial strategy to attract value-added manufacturing industries in order to raise the percentage of local content in these industries.


Saudi Arabia raises the bar in green hydrogen production: KAPSARC

Saudi Arabia raises the bar in green hydrogen production: KAPSARC
Updated 29 September 2022

Saudi Arabia raises the bar in green hydrogen production: KAPSARC

Saudi Arabia raises the bar in green hydrogen production: KAPSARC

RIYADH: Given its resources, infrastructure and land, Saudi Arabia is placed at a very competitive position in the green hydrogen industry, especially in terms of cost and volume capacity of the product, according to Rami Shabaneh, a King Abdullah Petroleum Studies and Research Center researcher.

Global prices of hydrogen range between $2 and $7 per kg. The Kingdom falls at the lower end of the cost curve due to low natural gas and renewable electricity prices locally.

“In Saudi Arabia, it is much lower because of the low-cost resources and high capacity factors the electrolyzers can achieve. A recent study by KAPSARC shows that reaching $1 per kg is plausible in the long term,” Shabaneh told Arab News.

“Other countries can achieve a similar levelized cost of hydrogen production, but only a few can produce the volumes required to meet the decarbonization targets,” he added.

The cost of green hydrogen is highly sensitive to renewable electricity costs and electrolyzer load factors.

“The renewable energy prices in the Kingdom are some of the lowest in the world. An auction price accepted at $10.4 per MWh is a world record low right now,” he said.

KAPSARC analyzes the resource, export and cost reduction potential of Saudi Arabia’s hydrogen production.

According to Shabaneh, despite significant decreases in hydrogen costs, the world still needs supporting mechanisms for hydrogen to substitute for traditional fuels in some sectors.

He further pointed out that having fossil fuels in the Kingdom’s energy system does not necessarily mean more emissions.

“You can still use fossil fuels to make blue hydrogen with high capture rates of GHG emissions,” he said.

Saudi Arabia is building a $5 billion green hydrogen project in NEOM, powered by renewable energy, to supply 650 tons of carbon-free hydrogen daily. The plant will see its first production in 2026.

The project will export hydrogen in the form of liquid ammonia to the world market for use as a biofuel that feeds transportation systems.

The plant will need around 4.3 gigawatts of clean energy to power it, as ACWA Power, one of three project owners, plans to use solar during the day and wind at night to eliminate the need for batteries and expensive storage solutions.

 


Abu Dhabi power transmission project secures $3.2bn financing

Abu Dhabi power transmission project secures $3.2bn financing
Updated 29 September 2022

Abu Dhabi power transmission project secures $3.2bn financing

Abu Dhabi power transmission project secures $3.2bn financing

DUBAI: Abu Dhabi Offshore Power Transmission Company has secured more than $3.2 billion in financing with export credit agencies and banks for an offshore electricity transmission project, the Japan Bank for International Cooperation said in a statement.

The financing is to build and operate a high-voltage direct current offshore power transmission system linking two offshore production facilities owned by state-controlled oil giant Abu Dhabi National Oil Company to Abu Dhabi’s onshore grid.

Japan Bank for International Cooperation provided $1.201 billion for the direct current transmission project. The remaining $2 billion was financed by Export-Import Bank of Korea, Mizuho, Sumitomo Mitsui Banking Corporation, BNP Paribas Fortis and Standard Chartered, JBIC said in the statement on Wednesday.

“The project will receive payment of power transmission charges from ADNOC for 35 years after the construction has been completed,” JBIC said.

ADNOC and JBIC signed a memorandum of understanding in November to cooperate on decarbonization, energy transmission and energy efficiency.

JBIC said the project was in line with the United Arab Emirates’ commitment in October last year to cut carbon dioxide emissions to net zero by 2050.


OPEC+ has begun talks on output cut for Oct. 5 meeting, source tells Reuters

OPEC+ has begun talks on output cut for Oct. 5 meeting, source tells Reuters
Updated 29 September 2022

OPEC+ has begun talks on output cut for Oct. 5 meeting, source tells Reuters

OPEC+ has begun talks on output cut for Oct. 5 meeting, source tells Reuters

DUBAI: Leading members of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have begun discussions about an oil output cut when the group meets on Oct. 5, according to Reuters.

One OPEC source told Reuters a cut is “likely” and two other OPEC+ sources said key members had spoken about the topic. 

A source familiar with Russian thinking told Reuters earlier this week that Moscow could suggest a cut of up to 1 million barrels per day.

The latest comments suggest that key OPEC members have started communicating over the matter, although the volume of any potential cut is still unclear.

Next week’s meeting takes place against a backdrop of falling oil prices from multi-year highs hit in March, and severe market volatility.

OPEC+, which combines OPEC countries and allies such as Russia, agreed a small oil output cut of 100,000 barrels a day at its September meeting to bolster prices.

Top OPEC producer Saudi Arabia flagged in August the possibility of output cuts to address market volatility. 

Also at the group’s last meeting, OPEC+ members agreed to stick to their forecasts for robust global oil demand growth in 2022 and 2023, citing signs that major economies were faring better than expected despite headwinds such as surging inflation.

Oil demand will increase by 3.1 million barrels per day in 2022 and by 2.7 million bpd in 2023, unchanged from last month, OPEC said in its monthly report.