Green generation in the Middle EastApril 7, 2021
Jeremy Crane, CEO of Yellow Door Energy, talks to The Energy Year about how the UAE and the region can implement renewable energy projects and the company’s operations. Yellow Door Energy is a multinational renewable energy provider that has over 110 MW of solar projects in the Middle East and South Asia.
What are the major drivers behind the adoption of renewable energies in the Middle East?
The first driving aspect is the long-term cost of energy. There is a lot of uncertainty about the cost of fossil fuels in the coming years. There was a significant reduction in demand during Q2 2020. The way demand ramps up is going to have an impact on our business. Lower-cost carbon fuel will naturally slow the transition to renewables. Renewables are still cheaper, but the smaller the delta, the less the motivation for change.
The second driver will be the macroeconomic impact of the Covid-19 situation. Many of our consumers are light industry, such as retail and the FMCG [fast-moving consumer goods] industries. Our customers will further invest in our solutions to significantly reduce their energy costs, while switching to renewable energy.
What policy changes are required to expand renewable energy consumption in the UAE?
The UAE has been very forward thinking with its Energy Strategy 2050, which aims to increase the contribution of clean energy in the total energy mix to 50% by 2050. This ambitious energy target has opened doors to many solar projects. In Abu Dhabi, the Al Dhafra Solar Project will be the world’s largest single-site solar PV plant, with a capacity of 2 GW. In Dubai, DEWA’s highly successful net metering scheme, Shams Dubai, has connected over 6,500 sites to the grid with a total capacity of 250 MW.
To further expand renewables consumption and improve energy efficiency in the UAE, we could consider giving the end user the ability to choose their source of energy, whether it be green, conventional or a combination of both. Currently there is a single-buyer model here, which supports the strong utilities we have. However, if there are economical ways for companies to acquire energy, there will be a movement to allow these entities to choose green solutions. This will free up the market. Giving people the ability to make green choices is what is missing now.
How do you assess the progress of the UAE’s energy transition programme?
The energy transition in the UAE is well under way. Mega-plants in Abu Dhabi and Dubai have been given the green light. There is a lot of willingness to implement energy storage solutions. Traditional power plants in the UAE – mostly natural gas-based – are well suited to be coupled with renewables. Transition is much easier here than in a country where the energy mix has historically favoured coal or other conventional fuels.
The other side of the energy transition is having a distributed generation network. Having residential, commercial and industrial areas generating their own electricity needs is what I call Utility 3.0. The resilience and safety of this type of system has no comparison. Whatever the reason, be it security threats or technical outages, if you are generating on a distributed basis, you can avoid having a single point of failure.
Regional residential areas will not adopt Utility 3.0 in the short term because their energy is quite subsidised. In areas where you have large expat populations and short-duration residents it does not make a lot of sense. However, on a commercial and industrial scale, we are seeing huge shifts.
Local entities such as Al-Futtaim Group, Landmark Group, Mubadala and multinationals such as Nestlé are all shifting a lot of their power generation demand to on-site production. This is a global trend. It can be accelerated here because renewable energy is abundant and can attract foreign businesses to relocate to the UAE to save money.
What kind of services does Yellow Door Energy provide?
Yellow Door Energy provides clean and affordable electricity to the commercial-industrial sector of the Middle East and also in Pakistan. We service multinationals and large regional players with a fee-for-service model. This is traditionally known as a PPA [power purchase agreement], formerly known as a solar lease and now shortened to a solar agreement. We are the largest provider of distributed solar PPAs in the Middle Eastern region, with more than 110 MW of signed customers.
Our services go beyond solar. We also provide energy efficiency works for customers. We have installed heat pumps to reduce energy consumption and completed HVAC and lighting retrofits. Our focus is on more complex industrial solutions for customers. We partner with the customer to identify the biggest needs and invest in specific technologies and equipment to reduce energy consumption.
In 2020, we were awarded USD 41 million worth of new projects, which included both solar and energy efficiency. In the past year, our company’s operating projects have generated 60 million kWh of clean energy, equivalent to reducing carbon emissions by 36 million kilograms or planting 600,000 trees. We have a lot of construction ventures ongoing. There are several projects in the UAE, a large volume of projects in Jordan and our first projects in Pakistan and Saudi Arabia.
How has the Covid-19 pandemic affected your operations both locally and internationally?
Certainly, 2020 had different impacts on a country-by-country basis. We are mostly focused on the UAE, which from our perspective handled the Covid-19 pandemic very well. It has been an easy place to operate. The UAE has somewhat restricted our ability to travel as managers to our other bases, but it had little impact on our local operations overall.
On the construction side, material supplies were slightly delayed, but this was more due to other externalities, such as a large fire in China at one of the module manufacturers.
Overall, we still closed 2020 on a strong note with USD 41 million in new projects signed and awarded. Our objective is to double this number in 2021. The sustainable energy transition is here to stay, and we look forward to providing businesses with reliable, efficient and sustainable energy for many years to come.