The central tower of Noor Energy 1, the hybrid solar photovoltaic (PV) and concentrated solar power (CSP) fourth phase of the Mohammed bin Rashid Al Maktoum (MBR) Solar Park, is visible to motorists on the Saih Al Dahal Road on the outskirts of Dubai.

The 263-metre solar tower is part of the $4.3bn project that is touted as the largest CSP and thermal energy storage (TES) facility in the world.

It heats the salt stored in nearby tanks during the day to enable the production of energy at night.

Awarded in 2017 to a team led by Saudi utility developer Acwa Power, Noor Energy 1 will deliver electricity at a levelised tariff of $cents 7.30 a kilowatt-hour ($c/kWh), which Acwa Power says competes with fossil fuel-generated electricity without subsidy for reliable and dispatchable solar energy through the night.

Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, inaugurated the project in December.

The project’s higher levelised cost of energy (LCOE) compared to a plain solar PV plant accounts for the round-the-clock capability of the Noor Energy 1 plant to produce power.

The power-purchase agreement (PPA) for the project is for 35 years, which is 5-10 years longer than the average solar PPA in the Gulf region.

Competing technology

Six to seven years after the Noor Energy 1 contract was awarded, a competing technology addressing spinning reserve and intermittency when coupled with a renewable energy plant – battery energy storage –  is gaining acceptance.

Lithium-ion batteries store excess energy produced during the day, which can then be discharged at night, providing grid stability that until recently has been supplied by gas-powered or liquid fuel-powered generation plants.

The cost of batteries is forecast to decline significantly over the next six years and beyond, although the LCOEs for solar or wind farms with storage capacity are still broadly considered significantly higher than those without.

Source: Lazard

According to the US-headquartered financial advisory firm Lazard, the average LCOE in an unsubsidised, utility-scale solar PV averaged between $24 and $96 a megawatt-hour (MWh) in 2023. In comparison, the added cost of lithium-ion batteries with four-hour storage capacity to a similar solar PV farm takes the LCOE to between $46 and $102/MWh.

Critical choices

Several CSP with TES (CSP+TES) projects have been awarded and completed in the Middle East and North Africa region. Kuwait and Abu Dhabi have built 50MW and 100MW CSP facilities, respectively, while Acwa Power has developed three CSP plants with a total combined capacity of 500MW in Morocco.

However, not many CSP+TES projects are forthcoming.

Saudi Arabia previously planned to procure a hybrid solar and CSP+TES project, but such a scheme is not included in the fifth and sixth procurement rounds of its National Renewable Energy Programme.

In 2019, Morocco awarded the contract for Noor Midelt 1, an 800MW solar CSP scheme, but it is understood that the project has yet to reach financial close and construction work has yet to start.

In comparison, half of the GCC states are planning to procure battery energy storage system projects using an independent power producer (IPP) model.

Saudi Arabia plans to procure 10GW of battery energy storage capacity, equivalent to 40 gigawatt-hours (GWh), by 2030. The procurement process is expected to start this year for the first phase, which will comprise a dozen sites with a total capacity of 2GW.

Abu Dhabi's Emirates Water & Electricity Company (Ewec) received expressions of interest from developers last year for its first 400MW battery energy storage project.

Oman, which does not plan to procure further gas-powered plants, is also considering a similar project.

"Broadly, battery energy storage solutions make more sense now than CSP+TES technology," a Dubai-based renewable energy expert tells MEED.

Others, however, remain convinced that there will continue to be a place for CSP+TES, especially in jurisdictions with plenty of barren and unused land. This is mainly due to the technology's ability to produce up to eight hours of energy, compared to an average of four hours offered by lithium-ion batteries.

The first utility-scale battery storage installation in the GCC is in Saudi Arabia. The 1,300MWh facility is designed to support the off-grid utility infrastructure of the Red Sea Project development. The smaller Amaala project will also feature a 700MWh battery storage capacity.

Neom Green Hydrogen Company has incorporated a 400MW battery facility as part of the more than 4GW renewable energy contract it awarded India's Larsen & Toubro last year. The infrastructure will support a 2GW electrolysis plant that will produce green hydrogen to be converted into ammonia for export to Europe.

However, some Middle East-based renewable energy developers remain cautious about the timeline and the scale of the planned battery storage independent power projects across the region. 

"It is not clear if they have received an official mandate to proceed with the projects, but we are definitely interested in bidding," says a Dubai International Financial Centre-based executive from an international utility developer.

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