2. Executive Summary
SHAMS Initiative is an ambitious and driven plan to deploy PV generation on a
widespread scale within the Emirate of Dubai. SHAMS is to be considered a first
step out of three, aligned to a Sustainable Vision and clear environmental goals to
be achieved by 2030
SHAMS presents evident points of strengths as well as criticalities to be tackled. In
particular, it is yet to be assessed: the upgrade of distribution grid, the scale of
real estate projects involved in the initiative and the long term achievement of
adequate levels of non-subsidized tariff prices for electricity
A basic, preliminary modelling, allows for the determination of financial flows
according to the valorisation of energy as enabled by the Net Metering scheme in
place. Given the available, mature and reliable PV technology, two parameters
greatly affect the economic viability of residential PV: incidence of tariff prices
and dimension (scale) of PV system in terms of peak capacity
Notwithstanding the current decline in real estate prices in Dubai, whose outlook
is negative in the short term, some empirical evidence, as analysed in two studies
realized in the United States, suggests that installed PV system have a potential
positive effect on housing prices. The SHAMS initiative, besides the obvious
industry and environmental benefits, can therefore be instrumental in
accelerating the recovery of the real estate sector, which represents a relevant
share of the economy of the Emirate
3. SHAMS Dubai
A first step into the Smart Initiative framework
Connecting solar energy to houses and buildings by encouraging households and
building owners to install photovoltaic solar panels to generate electricity. The PV
solar system will be connected to DEWA’s grid. Electricity produced will be
consumed within the premises and the surplus will be exported to the network,
according to a Net Metering scheme
Make Dubai one of the Smartest City in the
world
Achieve 7% of renewable generation by
2020 and 15% by 2030
Generate energy savings of 1.7 TWh by
2030
Generate water savings of 5.6 BIG by 2030
Reduce CO2 emissions by 1 M tons by 2030
4. Strenghts and Criticalities - 1
An excellent opportunity facing different challenges
Strenght Criticality
Policies
Infrastructure
Real Estate
Full commitment from the
Government and HH the
Ruler of Dubai, according to
2030 long term goals.
Synergic and gradual
approach with the three
Initiatives, and gradual roll-
out plan
Ambitious plan that requires
a thorough review of many
ongoing patterns:
• High energy consumption
per capita (~20,000 kWh/y)
• Almost total reliance on
fossil fuels
• Subsidization of fuels
Dubai power network is
currently undergoing
modernization, with a total of
1669 km of OHL, 3685 km of
underground cables and
29,200 substations)
Total installed capacity is
9,650 MW vs a peak demand
of 7,233 MW
Overall residential and
commercial sector is a
powerful driver for the
deployment of solar energy,
New projects can be quickly
optimized according to
SHAMS requirements, with a
mark-up in pricing
It is still to be assessed the
technology gaps and
feasibility of the SHAMS grid
concept, in particular:
• Overall costs
• System balance in peak
and off-peak hours
• Storage
The real estate sector is
currently facing a downwards
trend. Moreover, the
economic feasibility of PV
systems is better optimized
for bigger properties, with
more installed capacity and
higher consumption levels
5. Strenghts and Criticalities - 2
An excellent opportunity facing different challenges
Strenght Criticality
Electricity Tariff
PV Technology
Alternative
Technologies
Electricity tariff allows for 4
slab levels of consumption,
plus a fuel component to be
adjusted according to
commodity price. A potential
decision to drop fuel
subsidies is likely to increase
prices
Given current price levels,
the economic break-even of
the average PV system is
much delayed along the
years. The energy fed into the
grid via Net Metering is likely
to move the slab tariff
towards low prices
PV deployment in ME
features a series of points of
strength:
• High solar radiation
• Mature technology and
steadily decreasing costs
• Great receptivity
• Building know-how due to
utility scale projects
A Net Metering scheme as
envisaged by SHAMS can be
successfully applied only to
the PV technology, and
avoids the extra costs of
batteries
Operating expenses are likely
to be higher than average,
because of corrosion and
absence of precipitation.
The concentration of
consumption in sunny hours
overlaps with the capacity
peak of system, with less
beneficial effects for the grid
In terms of break.even
achievement and overall
levelized costs of energy, the
following technologies may
compete with PV:
• Solar thermal
• Solar cooling
• Hybrid diesel + PV
6. 16,500
17,000
17,500
18,000
18,500
19,000
19,500
20,000
20,500
-60
-40
-20
0
20
40
60
80
100
kWh / yk AED / y
12.6 8.6%
Payback (yrs) IRR
16,500
17,000
17,500
18,000
18,500
19,000
19,500
20,000
20,500
-60
-40
-20
0
20
40
60
kWh / yk AED / y
15.3 5.6%
Payback (yrs) IRR
16,500
17,000
17,500
18,000
18,500
19,000
19,500
20,000
20,500
-60
-50
-40
-30
-20
-10
0
10
20
kWh / yk AED / y
23.2 1.0%
Payback (yrs) IRR
Financial Simulation - 1
Tariff price remains the main hurdle for cost recovery
MAIN ASSUMPTIONS FOR FINANCIAL FLOWS
• 10 MW Peak Capacity
• 25 years Forecast
• 82.5% Performance Ratio
• 0.5% Yearly Cumulative PV Degradation
• No Tracker / No Batteries
• 4.3% Yearly CPI (assumption October 2015)
• Net Metering
• Electricity valorized according to single tariff slabs
10 MW - Tariff Slab G 10 MW - Tariff Slab Y
10 MW - Tariff Slab O
7. 33,000
34,000
35,000
36,000
37,000
38,000
39,000
40,000
41,000
-100
-50
0
50
100
150
200
kWh / yk AED / y
12.0 9.4%
Payback (yrs) IRR
33,000
34,000
35,000
36,000
37,000
38,000
39,000
40,000
41,000
-100
-50
0
50
100
150
200
250
300
kWh / yk AED / y
8.9 12.7%
Payback (yrs) IRR
33,000
34,000
35,000
36,000
37,000
38,000
39,000
40,000
41,000
-100
-50
0
50
100
150
200
250
300
350
400
kWh / yk AED / y
7.8 15.2%
Payback (yrs) IRR
Financial Simulation - 2
Tariff price remains the main hurdle for cost recovery
MAIN ASSUMPTIONS FOR FINANCIAL FLOWS
• 20 MW Peak Capacity
• OPEX kept same as 10 MW for simplicity
(increases in hourly maintenance rates are
envisaged)
• All Other Assumptions kept flat
• Positive Scale Effect compared to 10 MW
20 MW - Tariff Slab G 20 MW - Tariff Slab Y
20 MW - Tariff Slab O
8. Real Estate in Dubai
Outlook is negative, but PV systems may provide markup
Source: Jones Lang LaSalle, Dubai Real Estate Market Overview Q3 2015
Two recent studies, “The Impact of Photovoltaic Systems on Market Value and Marketability”
(2013) and “Exploring California PV Home Premiums” (2013) assessed the effects of PV solar
installations on residential prices in the United States, a mature solar market
The first study used three approaches to assess value (sales, cost and income), providing evidence
that a relevant share of properties with PV systems:
sold for higher
had lower marketing times
The second study built a statistical regression model in order to explore sensitivities of PV
home premiums to the age and size of PV systems, with empirical evidence showing a high
degree of correlation among the variables
