Executive Summary
Recent Market Trends
Competitive Landscape
Best Prospects for U.S. Exporters
Market Entry
Market Barriers
Regulations / Registration Process
Local Industry Resources
US Commercial Service Contact Information
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Executive Summary
Recent Market Trends
Competitive Landscape
Best Prospects for U.S. Exporters
Market Entry
Market Barriers
Regulations / Registration Process
Local Industry Resources
US Commercial Service Contact Information
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Executive Summary
The United Arab Emirates (UAE) continues to be at the frontline of the energy transition in the MENA region underpinned by a strong government commitment and several milestones: the establishment in 2006 of the Abu Dhabi Future Energy Company Masdar and the first carbon-neutral zero waste city Masdar City, the hosting of the annual World Future Energy Summit in Abu Dhabi since 2008, the establishment of the Emirates Nuclear Energy Corporation (ENEC) in 2009, the International Renewable Energy (IRENA)’s designation of Abu Dhabi as its headquarters in 2009 and IRENA’s relocation on the edge of Masdar City campus in 2015, the development of strategic mega solar projects and its climate change action efforts culminating in the signing of the Paris agreement in 2016, the designation of a UAE Special Climate Change Envoy and the UAE bid to host Cop 28 in November 2023.
It is expected that the UAE’s renewables sector will continue to register robust growth over the coming decade with capacity growing at an annual average of 16.7 per cent between 2021 and 2030 to account for 11.3 per cent of the power mix by 2030. The UAE is also looking to revisit its energy strategy with increased focus on solar energy and green hydrogen over the coming decade.1
1 United Arab Emirates Renewables Report, Q2 2021, Fitch Solutions
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Recent Market Trends
In January 2017, the UAE launched the national “Energy Strategy 2050” 2 , considered to be the first unified energy strategy in the country that is based on supply and demand. The strategy is very ambitious and aims to increase the contribution of clean energy in the total energy mix from 25 per cent to 50 per cent by 2050 and reduce carbon footprint of power generation by 70 percent. It also seeks to increase consumption efficiency of individuals and corporates by 40 per cent.
The strategy targets an energy mix that combines renewable, nuclear and clean energy sources to meet the UAE’s economic requirements and environmental goals as follows:
44 per cent clean energy
38 per cent gas
12 per cent clean coal
6 per cent nuclear.
The UAE government aims to invest over USD 163 billion by 2050 to meet the growing energy demand and ensure a sustainable growth for the country’s economy.
Among the seven emirates that make up the UAE, most of the renewables’ activity is concentrated in Abu Dhabi and Dubai, which analyst predict will together account for more than 90 per cent of capacity in 2025. Four solar projects, which are all at various stages of development, are expected to drive this growth: the Al Dhafra (2GW), Abu Dhabi PV3 (1.5GW), and the fourth ( 950MW) and fifth (900MW) phases of the Mohammad bin Rashid Al Maktoum (MBR) solar facility. The MBR plant is said to be the world’s largest single-site solar installation, with a planned total capacity of 5GW when fully operational by 2030. Dubai Electricity and Water Authority will see some solar power from the plant used to produce aluminum.3
As of May 2020, the share of clean energy in Dubai’s energy mix increased to around 9 per cent. This exceeds the target set in the Dubai Clean Energy Strategy 2050, which aimed to provide 7% of Dubai’s total power output from clean energy sources by 2020.4
With multiple government’s initiatives, the country has witnessed significant growth in renewable projects in recent years, which include but are not limited to the following:
One of the world’s largest single-site solar plants, Noor Abu Dhabi, located in Sweihan, began commercial operations in June 2019.5
In April 2020, Emirates Water and Electricity Company (EWEC) announced the 2 gigawatt Al-Dhafra Solar photovoltaic IPP project (mentioned above), a consortium led by France’s EDF and China’s Jinko Power.6 The project will have the capacity to power approximately 160,000 households across the nation and is expected to complete in the first quarter of 2022.
In January 2021, EWEC and Abu Dhabi Waste Management Center (Tadweer) have jointly launched a competitive tender for the development of a greenfield waste-to-energy project in Abu Dhabi.7
In Dubai, Dubai Holding is leading the consortium of local and international companies for a USD 1.1 billion energy-from-waste project, one of the biggest in the world.8 The consortium, which includes Dubal Holding, Itochu Corporation, Hitachi Zosen Inova, Besix Group and Tech Group, is developing the 200 megawatt facility.
The Dubai Electricity and Water Authority (DEWA) is also developing a pilot green-hydrogen mobility project to be showcased at Expo 2020 Dubai (postponed to October 2021 due to the pandemic).9
The Federal Electricity and Water Authority (FEWA) has invited independent power producers to submit expressions of interest for a 500-megawatt solar power plant.10
The United Arab Emirates (UAE) is capable of reaching its renewable energy targets thanks to a “robust” development pipeline of solar projects, new research from Rystad Energy suggests. Installed solar PV is expected to increase fourfold from now to the end of 2025, increasing from its 2.1-gigawatt level to reach 8.5-gigawatt, when it will represent around 94% of the country’s renewables capacity.11
The UAE’s renewables market is further expected to grow in the future with ongoing renewable policies.
2 https://u.ae/en/about-the-uae/strategies-initiatives-and-awards/federal-governments-strategies-and- plans/uae-energy-strategy-2050
3 https://www.pv-tech.org/uae-solar-capacity-to-increase-fourfold-by-2025-robust-development-pipeline/
4 https://www.researchandmarkets.com/reports/4828189/united-arab-emirates-power-market-growth
5 https://www.thenationalnews.com/uae/environment/noor-abu-dhabi-solar-plant-begins-commercial-operation-1.880723
6 https://www.prnewswire.com/ae/news-releases/jinkopower-and-edf-renewables-consortium-sign-the-power-purchase-agreement-for-the-worlds-single-largest-solar-project-in-abu-dhabi-301101924.html
7 https://www.constructionweekonline.com/projects-and-tenders/270252-ewec-tadweer-call-eoi-for-greenfield-wte-project-in-al-dhafra
8 https://www.thenationalnews.com/business/energy/dubai-to-develop-dh4bn-energy-from-waste-project-1.1193129
9 https://www.prnewswire.com/news-releases/dubai-inaugurates-green-hydrogen-project-first-of-its-kind-in-mena-301295800.html
10 https://www.pv-magazine.com/2020/01/08/emirate-of-umm-al-quwain-launches-tender-for-500-mw-solar-park/
11 https://www.pv-tech.org/uae-solar-capacity-to-increase-fourfold-by-2025-robust-development-pipeline/
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Competitive Landscape
As a regional trade hub supporting significant international business activity, the UAE is a market where American firms face strong multinational competition. Successful American firms often rely on technological and qualitative advantages to compete with foreign competition that may have lower price points.
In the UAE solar energy market, the major players are Chinese and are dominating the market in part due to very competitive prices, heavy subsidies and advanced technologies in certain segments of the industry.
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Best Prospects for U.S. Exporters
Solar Power Sector
Based on the ongoing project developments in Photovoltaic (PV) solar panels (some highlighted above), PVs will continue to offer multiple prospects for U.S. exporters in the future. Concentrated Solar Panels (CSP) are another prospect and constitute the second-largest technology by installed capacity.
Desalination growth to meet water consumption creates demand for investment in desalination projects that utilize solar capacity. Dubai is at the forefront of deploying distributed solar capacity and aims to push generation and efficiency initiatives for households.
There is potential for the development of waste-to-energy facilities.
Energy Storage
Dubai is testing pilot projects and remains cautious on which technologies to deploy. The market is very nascent. Nonetheless, it bodes well for future opportunities.
Chemicals and Derivatives Sector
There are numerous large opportunities in services and exports for chemicals and derivatives manufacturing. The projects are very ambitious in scale and the SMEs are advised to partner with major U.S. industry players as suppliers or subcontractors.
Abu Dhabi plans to develop a 1 billion USD green ammonia plant. The project will be powered by an 800-megawatt solar plant in Khalifa Industrial Zone Abu Dhabi (Kizad) and will produce 200,000 tons of green ammonia.
Currently the Abu Dhabi National Oil Company (ADNOC) produces 300,000 million tons per year of hydrogen and has plans to boost capacity to more than 500,000 million tons per year.12
EWEC is considering a major investment program in new reverse osmosis (RO) water desalination projects.
The Ruwais Derivatives Park in Abu Dhabi is a designated industrial hub for the chemical derivatives sector in Abu Dhabi. It is targeted to become the world’s largest integrated refinery and petrochemicals complex. The Park is operated by Ta’ziz company, ADNOC’s 60/40 joint venture with Abu Dhabi’s industrial holding company ADQ. Ta’ziz disclosed that total investment in these projects (selected for the first phase at the Ruwais Derivatives Park) could amount to USD 7 billion with most of the chemicals set to be produced in the UAE for the first time. Ta’ziz will explore potential projects to manufacture a number of chemicals at a global scale, with opportunities for additional investors and partners to participate.
The Ruwais park will also have opportunities in planning and construction of a new port, utility plants, infrastructure, feedstock supply and shared services. These facilities will be made available to new investors under a ‘plug-and-play’ concept, meaning that new projects can be plugged into the existing park infrastructure. Phase 2 of this project set for 2027-2028 will present additional opportunities for US companies.
Hydrogen and Carbon Capture
The UAE is embarking on a mega-hydrogen project to establish the eco system for low-carbon green and blue hydrogen production. To achieve that, Mubadala Investment Company, ADNOC and ADQ formed the Abu Dhabi Hydrogen Alliance along with the Ministry of Energy and Infrastructure. The port of Fujairah, one of the world’s largest bunkering hubs, can serve as a strategic location for large-scale hydrogen-based exports.
Opportunities in the field of hydrogen include: potential partnerships with ADNOC, Mubadala and ADQ once a clear strategy has been set by this newly formed alliance; collaboration in the production of low-cost blue and green hydrogen in the UAE directly or by partnering with well-established U.S. corporations; development of end-use properties for clean hydrogen to create a demand for it and contribute to UAE’s export of hydrogen; and development of security features for the handling on hydrogen.
Nuclear
In 2021, the UAE has embarked on a nuclear power program in close consultation with the International Atomic Energy Agency and with wide public support. It accepted a USD 20 billion bid from a South Korean consortium to build four commercial nuclear power reactors, total 5.6-gigawatt, by 2020 at Barakah. Unit 1 of the country’s first nuclear power plant was connected to the grid in August 2020 and started commercial operations in April 2021.
12 https://cen.acs.org/business/petrochemicals/ammonia-fuel-future/99/i8
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Market Entry
In most sectors, foreign firms seeking to establish themselves within the UAE market no longer need to have a local sponsor or agent and are not limited to a minority ownership position. In July 2019, the UAE Cabinet approved foreign ownership across 13 additional economic sectors including information technology, manufacturing, renewable energy, space, and agriculture.13
Many American firms looking to do business in the Middle East often find practical advantages in a regional approach to their marketing activities in 14
An extremely advantageous point of market entry for U.S. exporters is the Dubai Expo 2021. Due to COVID-19 disruptions, the new dates will be October 1, 2021 to March 31, 2022. This event will not only help international companies find potential partners but also increase country tourism and private consumption. Post-expo, UAE GDP is expected to grow at 3.2%.15
13 https://u.ae/en/information-and-services/business/business-regulations
14 https://www.trade.gov/knowledge-product/united-arab-emirates-market-entry-strategy
15 https://www.expo2020dubai.com
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Market Barriers
The UAE is vulnerable to oil price movements and the funds to implement ambitious renewables projects may not be available as projected.
A nuclear and high efficiency coal may reduce the range for a renewables-driven power diversification away from natural gas.
The commissioning of the 5.6-gigawatt Barakah nuclear facility in 2020 is reducing the demand for renewables capacity.
Dealing with the government owned entities such as ADNOC and MASDAR will require to comply with the In-Country Value (ICV) program, which will increase the company’s contribution to the continued development of the UAE economy and strengthen its relationship with the UAE’s private sector. All business partnerships with ADNOC and/or MASDAR may now include an ICV assessment integrated into the tender evaluation and award process.
The customs duties for most items are calculated on Cost, Insurance, and Freight (CIF) value at the rate of 5 percent. CIF value will normally be calculated by reference to the commercial invoices covering the related shipment, but customs is not bound to accept the figures shown therein and may set an estimated value on the goods, which shall be final, as far as duty is concerned.
Effective January 1, 2018, the UAE started applying the Value Added Tax (VAT). Companies that provide taxable goods or services, with annual revenue of more than $102,000 will be required to register with Ministry of Finance. Businesses with taxable supplies below $102,000 but over $51,000 will have the option to register. Businesses not registered for VAT cannot charge VAT on their sales and cannot claim any VAT incurred on their inputs.
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Regulations/Registration Process
To bid on ADNOC opportunities, suppliers should register with the ADNOC Commercial Directory in order to be considered for tendering opportunities from across the Group.
If U.S. suppliers are interested in bidding for the renewables projects in MASDAR tenders, they need a prior e-registration on Masdar e-Procurement Portal (Masdar ePP).
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Local Industry Resources
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US Commercial Service Contact Information
For additional information, please contact:
Olga Ford, Commercial AttachéOlga.Ford@trade.gov
Maya Najm, Commercial SpecialistMaya.Najm@trade.gov
Our intern Rafael Candelario (Rafael.candelario@trade.gov ) contributed to this report.
