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DUBAI SHAMS

PROGRAM
MESIA suggestions

Annual General Mee+ng


(AGM)


DECEMBER 8, 2015
The Fairmont Dubai

Agenda
1. Context & Objectives
2. Suggestions
3. Financial Study
4. Regulatory Concerns
5. Technical Clarifications

1. Context & Objectives

Context
Dubai Shams programme objective
Support the diversification of Dubais energy mix by promoting the use of clean and
renewable energy sources to build a sustainable future for the Emirate.

Potential customers

Free standing residential


buildings
Undefined presence
Low financial leverage
Low investment
potential (3rd party or
self owned)

Long term owners and


tenants
Long term presence
Relevant financial
leverage
High investment potential
(3rd party or self owned)

Short term tenants


Undefined presence
Low financial leverage
Low investment
potential (3rd party or
self owned)

Objectives
Obtain DEWAs feedback on our technical concerns
To provide the industry with
a uniform understanding of
the DEWA codes,
regulations and processes

To ease and streamline


the communication
process with DEWA

Sustainable growth of distributed solar PV in Dubai


Give Dubai-based
companies OPEX
savings to keep them
competitive

Contribute in lowering
the peak load on the
UAE grid

2. Suggestions

Suggestion Overview
The Dubai Shams programme opens exciting opportunities for MESIAs stakeholders.
The following slides provide MESIA suggestions to DEWA to open the doors for a
successful programme which has the potential to make of Dubai the worlds leading
market for Distributed Solar PV.
Considering the current regulations and costs of Solar installations, investment returns
for Shams Dubai would vary between 5,5% and 8,5%. Considering the long-term risks
over commercial customers investors are expecting much more attractive returns. A
market enabling an addition of 50 MW per year is the most that can be expected.
In order to get drive success of 150MW+ per year further technical clarifications and
regulatory support are needed.

Suggestion Summary
Technical suggestions

Regulatory suggestions

Major inputs on LV and MV connection points,


on inverters sizing and on modules insulation are
needed to enable the right costing of the system
and avoid time loss when getting to the design
approval stage

Clarifications on the timeline for system design


approval and site inspection by DEWA are
needed for companies to frame project delivery

If there is a tenant change, the new tenant shall


assume the contract from the previous tenant to
ensure security of investment.
If a building is vacant for a long period of time,
and it is generating solar power, DEWA shall
either:
- Purchase the power produced
- Store credits for the power produced

Solar financing lease should be registered on a


DEWA account to enable its continuity with a
new tenant when they assume an existing
meter.

DEWA and a financier can work together to


collect missed payments from a customer.

3. Financial Study

Financial study
The financial study has been prepared based on the
current understanding of the DEWA regulations
The study presents the expected costs, prices and return
on investment for three sample PV system sizes
Residential: 10 kW connected on low voltage (LV)
Commercial: 150 kW connected on low voltage (LV)
Industrial:
400 kW connected on medium voltage (MV)

Financial study
MESIA member feedback
required
Solar PV equipment pricing depending on the installation size
Capital Cost
Item
BASE PV SYSTEM COST
Modules
Inverters
Mounting System
Basic Monitoring System
Installation
BOS Electrical and Misc
Duties & Taxes
EPC Margin (range)
SUBTOTAL BASE PRICE
SPECIFIC DEWA COSTS
DEWA Connection Fee
Remote Control Provision
Remote Monitoring
Interface Protection
MV Connection
EPC Margin (range)
SUBTOTAL BASE PRICE
TOTAL PRICE

10 kW LV PV System
10 kW
Price
(USD)

% of Total

Price Per
Watt ($/Wp)

$5 400
$1 800
$1 400
$100
$2 000
$1 200
$473
$2 183
$14 556

37%
12%
10%
1%
14%
8%
3%
15%
100%

0,54
0,18
0,14
0,010
0,20
0,12
0,05
0,22
1,46

$327

$58
$384

2,2%
0,0%
0,0%
0,0%
0,0%
15%
2%

0,03
0,00
0,00
0,00
0,00
0,01
0,04

$14 941

102,6%

1,49

150 kW LV PV System
150 kW
Price
(USD)

% of
Total

$79 500 41%


$19 500 10%
$18 000
9%
$1 125
1%
$25 500 13%
$16 500
8%
$6 435
3%
$29 393 15%
$195 953 100%
$327

0,2%
0,0%
0,0%
0,0%
0,0%
$58
15%
$384
0%
100,2
$196 337
%

400 kW MV PV System

Price Per
Watt (USD/
Wp)

400 kW Price
(USD)

% of
Total

Price Per
Watt ($/Wp)

0,53
0,13
0,12
0,008
0,17
0,11
0,04
0,20
1,31

$208 000
$40 000
$40 000
$2 000
$60 000
$40 000
$15 840
$71 619
$477 459

44%
8%
8%
0%
13%
8%
3%
15%
100%

0,52
0,10
0,10
0,005
0,15
0,10
0,04
0,18
1,19

0,00
0,00
0,00
0,00
0,00
0,00
0,00

$327

$58
$384

0,1%
0,0%
0,0%
0,0%
0,0%
15%
0%

0,00
0,00
0,00
0,00
0,00
0,00
0,00

1,31

$477 843

100,1%

1,19

Financial study
General assumptions
Project
Parameters

Site Parameters
Meteorological
data

Dubai

Angle of panels

Azimuth of panels

Tariff
Annual
Production

Estimated soiling
loss

5%

Panel
Degradation

PV system
production

1600 kWh/kWp

Performance
Ratio

$112,0/MWh
AED 411/MWh
15 MWh/year
0,7% / year
2,50% year 1
80%

This study was made based on the customer leasing the equipment
from a financing company at 10% below DEWA peak tariff, and
consuming all of the power produced.

Financial study

Operating
costs

Construction
parameters

CAPEX and OPEX price comparison of PV system sizes


Parameter

10 kW LV PV
System

150 kW LV PV
System

400 kW MV PV
System

DC Size (kWp)

10

150

400

AC Size (kWac)

135

360

EPC Price ($)

14 900

196 500

476 000

O&M Price* ($)

260

3 900

10 400

Insurance* ($)

75

983

2 380

* Value for first year and subject to an expected annual inflation rate of 3%

Financial study
Investment Returns of PV system sizes
10 kW installation
Cumulated Free
Cashflow over 25 years

150 kW installation Cumulated Free Cash


flow over 25 years

$750 000

$250 000

$20 000

$150 000

$10 000

400 kW installation
Cumulated Free Cashflow
over 25 years

$250 000

$50 000

$-
0

10

15

20

-$10 000
-$20 000

25

-$50 000 0

10

15

20

25

-$250 000

10

15

20

25

-$150 000
-$250 000

-$750 000

For a 10 kW installation:

For a 150 kW installation:

For a 400 kW installation:

13 yrs payback period


5.56 % Internal Rate of
Return after 25 years

11 yrs payback period


7.09 % Internal Rate of
Return after 25 years

10 yrs payback period


8.56 % Internal Rate of Return
after 25 years

Financial study
Conclusion
The values of the Internal rate of return and of the payback period imply that
either Solar PV will be only be a viable investment when:
Contracts are with long term owners or tenants that have a very low risk of
moving or bankruptcy, Or
Within a regulatory frame enabling the transfer of ownership of the
installation which could open a the market to contracting with mid-term
tenants

4. Regulatory Concerns

Regulatory concerns
It is expected that most Owners and Tenants will choose to lease rather than
purchase solar installations given the following:
- Tight economic period of the region reduce the ability of many businesses to
invest
- With high upfront costs for installing solar, businesses prefer to invest in their
core functions rather than solar
- Owners & tenants dont want to be responsible for owning and operating the
systems and would rather have the risks on a 3rd party
The following concerns are therefore related to financing solar:

Concern 1 Continuity of Contract


1. If there is a tenant change, can the new tenant assume the contract from the previous tenant?
2. If a building is vacant for a long period of time, and it is generating solar power, will DEWA:
- Purchase the power produced?
- Store credits for the power produced?

Regulatory concerns
Concern 2 Customer Default
Customers are sure to move, close, change over the life of a solar plant. Given the long duration of
payback (over 10 years), how can DEWA support with the continuity of revenue?
1. Can a Solar financing lease be registered on a DEWA account to enable it continuity with a new
tenant when they assume an existing meter?
2. Can DEWA and a financier work together to collect missed payments from a customer?

5. Technical Clarifications

Technical clarifications
Topic 1 LV Connection point
1. Is the point of connection, and metering, the Contractors choice or is it mandated by DEWA?
Connection at the MDB vs SMDB
2. Can a system have multiple LV connections to MBD/SMDBs? If so, are multiple DEWA meters
required?
3. Can multiple solar meters be assigned to a single consumption account?
4. What is the specification and communication protocol for the connection to the DEWA Outsation ?

Topic 2 MV Connection point


1. How can the Contractor/End User get substation information from DEWA prior to NOC issuance?
2. What is the DEWAs scope in the MV works?
o How to request a quote from DEWA?
o When will a quote be provided?

Technical clarifications
Topic 3 Inverters
1. Is it a requirement or recommendation from DEWA to oversize the inverter for reactive power
compensation?
2. Is it a requirement or recommendation for a motorized circuit breaker? Does the inverter meet this
requirement with the anti islanding function?

Topic 4 Cabling
1. Does DEWA limit the routing of cabling (AC or DC) in the building or underground?
2. Is Aluminium allowed for DC, LV, or MV cables ?

Topic 5 Modules & Grounding


1. Is it a requirement or recommendation to have isolation between the modules and Mounting
system?
2. Is it a requirement or recommendation to have a minimum of 50mm between the modules and
roof ?

Technical clarifications
Topic 6 Mounting
1. What is the design wind speed to use in sizing the mounting system?
2. Will DEWA accept using ASCI standards for mounting system design?
3. Is it a requirement or recommendation to have a minimum distance between the skylight and the
array?
4. Is it a requirement or recommendation to have walkways between the array?

Topic 7 Permits & Approvals


1. What NOC is required from the Civil Aviation Authority of Dubai? What is the distance from the
airport where these approvals are not necessary?
2. What is the required approvals from the Dubai Municipality ? Is there a contact person or
department that is familiar with the Shams Dubai program?
3. What is the required scope of the Grid Impact Study ?
4. What is the time required by DEWA to approve the system design?

Technical clarifications
Topic 8 Inspections
1. Can the mechanical inspection happen after the electrical works have started?
2. What is the required notice period to book a site inspection with DEWA?
3. Does DEWA need to be present when the system is energized and connected to the grid?
4. What is DEWAs involvement in the performance test ?

For more information contact:


Micheline Thienpont
Micheline@mesia.com
+971 55 77 19 456

Annual General Mee+ng


(AGM)


THANK YOU
The Fairmont Dubai