How are you planning to optimize the fuel mix going forward?
CARTER: Fuel mix is mainly about gas and the sources of gas, and obviously there's nuclear and renewable energy. My view is that going forward, nearly all power plants will be judged not just on their fuel but on their emission of CO2. So most new plants, if you were building a coal fire plant now, in order to compare the cost of a coal fire plant with say a gas one, you would introduce what is known as a levelized electricity cost, but that would almost certainly have to include carbon capture. So the way plants are now compared is as much about total global impact not just the provision of power. Nuclear plants are suddenly more attractive on a long term levelized cost than was the case before because of the requirement to introduce carbon capture and sequestration or storage.
Our fuel mix will almost certainly be gas, nuclear, and renewable energy. Most countries in the world will in the end have to use those three fuels. It is unlikely countries will want to burn crude going forward. It's immensely inefficient and it's just boilers so it's not what we would term a fast response way of providing generation to the sector. Gas is an immensely flexible fuel. It burns cleanly from a hydrocarbon perspective, it's the best of the fossil fuels you can burn. So one of the decisions for the sector is where do they get gas from? Currently, we buy gas from Dolphin Energy, which is a UAE company but its source of gas is in Qatar. And we buy gas from GASCO, which is the main provider of gas to the Emirates, but not the main provider of gas to our sector. The main provider is Dolphin.
GASCO are also expanding plants known as the Shah field in the Western Region, so that will come online about 2015. There's some gas from a different source there. The sector is also looking at liquefied natural gas, LNG, which if it comes to the sector, will likely come in from Fujairah. 25% of our capacity will be nuclear-driven by 2020, and we estimate that perhaps 5-7% will be through renewable energy.
How would you describe your strategy for renewable energy projects? What type of renewable energy projects do you think have the most potential to succeed in Abu Dhabi?
CARTER: Nuclear energy, as you know, is low carbon energy. Renewable energy is extremely low carbon, but dependable energy. So there's a slight trade-off between having dependable energy, which is of course dependent on weather, and the ability to generate whenever you want to. We have undertaken a lot of studies on rooftop photovoltaic (PV) installations. Generally, we believe rooftop, or PV as it's called, is probably the way forward for the Emirate. We have looked at wind, and wind in certain places in the UAE is as competitive at the moment as PV. But PV particularly benefits from cost savings in manufacturing, and not only cost savings in manufacturing but in a reduction in weight per square metre of PV, which means that your installation costs and frame cost for installing this get cheaper. Wind energy, while it is becoming more efficient, blade coupling with wind is more efficient and you can change rotor speeds, it's probably not going to undertake the same level of reduction of costs in the way that PV has. So PV is probably the future.
25% of our capacity will be nuclear-driven by 2020, and we estimate that perhaps 5-7% will be through renewable energy.
We do also have what's known as concentrated solar power (CSP), which is basically heating a liquid to raise steam. It's a salt liquid basis, so it has a better boiling point and it can hold heat more quickly. So we've got 100 megawatts of CSP down in Liwa in the Western Region and there may well be another one built. But generally, we see photovoltaics, generally spread across the whole city, as one way forward of meeting that target. We are also very keen to promote thermal water heating. That's something that we're doing some work on again, with the Powerwise and Waterwise offices.
What is the long-term vision for electricity and water arrangements in Abu Dhabi? How does this support the emirateâ€™s overall strategic objectives as outlined in the Vision 2030?
CARTER: The 2030 vision is something established by the government. We, as a regulatory body, have a duty to ensure that this sector meets its obligations to customers. Now that means that if the government is setting a certain level of building development, of industrial increase in its base or commercial premises, it means that the sector has to respond to those demands. So generally it would be an increase in electricity and water capacity, but also we will seek to bring in more demand side management techniques, which will improve per capita consumption. Some of the Powerwise and Waterwise work that we're doing, that I spoke of earlier, is designed exactly to undertake that.
In terms of 2030, we have to plan ahead but the planning horizon of 2030 is much longer than we would normally plan ahead. So our planning horizon is generally based on what can we achieve within a given time frame. So for example, a nuclear power plant is roughly a 10 to 12 year planning horizon. So if you're going to build a nuclear power plant you need to plan well ahead; for gas fire plants, two to three years, an overhead line for a transmission system, two to three years. The companies that we regulate issue what's known as seven year expansion plans, which incorporates most things apart from nuclear power plants. They also have a 15-year look ahead to incorporate long plan, long lead items such as nuclear power plants, and we approve those plans every year. So we run the process of looking at how the Emirate will develop as far as we know at the time of undertaking that process, and then we look at how the sector companies are planning to meet demand over the next three, five, seven, and fifteen years. That also links into capital requirements, under the price controls going forward for the next four years. So there's a linkage between price controls, CAPEX, OPEX, and expansion.