analysis CSH Markets STA-Solar Jorge Servert Third workshop of the MENA CSP KIP - Amman Sep

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1 CSH Markets analysis Third workshop of the MENA CSP KIP - Amman Sep 2018 STA-Solar Jorge Servert Picture CIEMAT- Plataforma Solar de Almería

2 Content CSH status around the world Opportunities in MENA Cost of fossil fuels Gas production by country Oil production by country: EOR Water stress by country: Desalination Market segment attractiveness by country Suggested policies

3 CSH Applications by industry Applications are quite disperse, reflecting the nature of the industrial base. Distribution is very uneven, there are many small-scale systems and a few very largescale ones. The majority of applications are between 5 and 16 barg except EOR which is 100 barg STA 2018, data for chart sourced from International Energy Agency, Solar Heat for Industrial Processes and self-research

4 CSH world distribution by capacity MENA has almost all the installed CSH capacity because of the Enhanced Oil Recovery application in Oman. This type of large-scale application is fundamentally different from the rest as it produces high-pressure steam and is located in dessert-type environment. Approximate installed capacity: 1.2 GW-t STA 2018, data for chart sourced from International Energy Agency, Solar Heat for Industrial Processes and self-research

5 Opportunities for CSH in MENA Main driver: replacement of fossil fuel Application Industrial Residential hot water / cooling networks Enhanced Oil Recovery Water desalination / agriculture Main favorable factors Existence of industrial activity Competes better vs. high-priced fuels Urban planning to include CSH, either central or distributed Existence of oil extraction activity Sea water with high specific salinity Decontamination of brackish waters Markets are identified according to their feasibility for these applications

6 Fossil fuel prices - gas Fuel Price/MWh-t Natural Gas 20 LPG 34 HFO 43 Gasoil 66 Wood pellets 53 Graph based on Natural Gas Prices Forecast: Long Term 2017 to 2030, COMSTAT 2018 Current forecasts suggest that gas prices will increase at annual escalation rates of nearly 3% till 2030

7 Current forecasts, such as the ones shown in Figure 5-10, do not show such an accelerated path. They suggest that gas prices will increase steadily at annual escalation rates of nearly 3% till 2030 Fossil fuel prices Fuel oil & Gasoil Source: ww.macrotrends.net Source: Eia Oil-derived products depend on oil price and are subject to strong volatility

8 Increasing reliance on NG Source: IEA Gulf oil producers rely on gas to power their industries, supply electricity, and support petrochemicals production. The Gulf is rich in crude oil but its gas resources are in just a few countries. Qatar and Iran share the world s biggest gas deposit. The MENA region houses some of the fastest-growing importers of liquified natural gas. Countries like Kuwait nearly tripled their imports in Decreasing industrial use could help alleviate this excessive reliance.

9 Water Stress by Country: 2040 Water scarcity Rank Country Water Stress 1 Bahrain Kuwait Qatar UAE Saudi Arabia Oman Jordan Libya Morocco Algeria 4.17 Water scarcity is projected to become more severe in the MENA countries. CSH could help decontaminate or desalinate water for human and agricultural use. Source: World Resources Institute

10 Solar potential and markets Source: DLR The whole MENA region has very good direct solar radiation and is, therefore, well suited for CSH applications. The whole area is adequate for industrial, agricultural and solar district cooling. The biggest market for water desalination is in the Gulf countries.

11 CSH attractiveness drivers The MENA CSH market is difficult to put in figures at this time because of the nascent stage of the technology, but the country by country attractiveness can be assessed by evaluating the main perceived drivers: Source: Solargenix Energy Economic efficiency savings on fuel Energy security Environmental Sustainability CO 2 reduction Contribution to Country's economic progress Improvement of Country's image Call effect - Market potential Social Sustainability

12 Example 1 - Oman Oman has placed itself as the world leader in CSH with the Mirah 1,000 MW-t project that supplies steam to the Amal oil field. On the industrial side, there is policy aimed at increasing the added value of its resources. One of the initiatives is to use of natural gas as feedstock for the production of fertilizers.

13 Example 2 - Morocco Morocco s industrial sector is experimenting a substantial growth. The sector s value added contribution to the DGP, excluding oil, refining increased from 0.8% in 2013 to 1.8% in It is reasonable to expect that industrial heat applications will obtain support from the public and private sectors and become a focus of interest in the near future.

14 Example 3 - UAE The UAE is at the forefront of CSP with the announced DEWA 700 MW project. Also the Emirates has activity in two fields that are adequate for CSH: EOR techniques designed to extend the lifespan of the Emirates existing oil fields and several District Cooling networks in operation

15 Suggested Policies Prioritize the replacement of diesel/fuel-oil applications Replacement of fossil fuel subsidies with CSH subsidies Industrial Site Planning Cooperation between Governments and IFIs Development of new financing support mechanisms Knowledge Diffusion

16 CSH Markets analysis Third workshop of the MENA CSP KIP - Amman Sep 2018 STA-Solar Jorge Servert Picture CIEMAT- Plataforma Solar de Almería