Background Story
A leading commercial real estate company in the UAE is exploring the installation of a Solar Power Plant to reduce energy costs and improve sustainability. In 2020, the total energy consumption across its buildings was 30,000 MWh, driven primarily by lighting, HVAC systems, and elevators.
The commercial tariff in Dubai is 23 fils/kWh for consumption up to 2,000 kWh, and 28 fils/kWh above that threshold. Due to regulatory restrictions, the client is unable to benefit from net metering or wheeling. The commercial properties have a sufficient rooftop area of 50,000 m², allowing for the installation of a Solar PV system with a capacity of up to 8 MWp.
Problems
The high energy consumption across commercial properties, mainly due to HVAC and lighting systems, led to significant electricity costs. The inability to access net-metering or wheeling options meant that excess energy produced would be curtailed, leading to inefficiencies and lost savings.
Main Objective
The client aimed to implement a Solar PV system to offset energy consumption and reduce electricity costs. Given the lack of net metering and wheeling, Ark Energy conducted a thorough analysis to determine the optimal system size that maximizes cost savings while meeting energy needs.
Approach
Ark Energy performed an energy audit and scenario analysis to identify the most suitable system size. The objective was to reduce curtailment and ensure energy generation aligns with the client’s operational demands.
Table 01
Comparison amongst different plant size scenarios alongside their cumulative savings & cost efficiency with the optimized scenario highlighted
The optimal Solar PV system size was found to be 8 MWp. However, based on further scenario analysis, a 6 MWp system was identified as the best balance between cost efficiency and minimizing curtailment.
Figure 01
Chart representing the optimized Solar PV System Capacity that represented the ideal scenario for cost efficiency & optimal savings
Both self-investment and third-party financing options were evaluated. While the self-investment option provided the highest lifetime savings, it required a large initial capital investment. The third-party Power Purchase Agreement (PPA) model was identified as the most cost-effective solution.
Table 02
Different financing options with their specified CapEX, Annual Savings & PPA Payout with the highlighted being compared
From the financial analysis, it was clear that the self-investment model provided the highest annual and lifetime savings, but required a significant upfront investment. The 15-year contract showed the highest lifetime savings, while the 20-year contract offered better annual savings.
Figure 02
Plant capacity before and after optimization to emphasize the benefit of avoided curtailment
Through the implementation of the activities done by Ark Energy, there an apparent results from the optimized energy production and reduced curtailment of energy.
Ark Energy secured a third-party investor for the development of the Solar PV system under a Solar Leasing (PPA) agreement. The client will purchase solar energy at 160 AED/MWh instead of the regular 200 AED/MWh grid rate, with an annual energy production of 8,000 MWh.
Results
The results that were generated from the project include the following:
- 28% of Energy demand was saved
- 2,162 Tons of CO2 Emissions avoided per year