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The Effect of Implementing a Feed-in Tariff in Abu Dhabi UAE

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  • Daisuke Sasaki
  • Gun Matsuo
  • Sameh El Khatib
  • Mikiyasu Nakayama

Abstract

Although most countries in the world have been trying to introduce renewable energy into their power supplies to address issues related to the environment and energy security, the Middle East has the lowest overall renewable energy capacity in the world. However, there is currently a trend of accelerating renewable energy deployment with increased investment in the region for the purposes of improving energy security and independence and promoting long-term social and economic benefits. This study aims to examine the impact of implementing a feed-in tariff (FiT) in Abu Dhabi, United Arab Emirates. After a simulated test, it was found that the levelized cost of electricity (LCOE) and the current average unit cost of electricity were considerably divergent. That is to say, a large extra cost is incurred in order to deploy renewable energy in Abu Dhabi. In this context, the effectiveness of implementing a FiT in Abu Dhabi is confirmed. Furthermore, an estimation of the size of the renewable energy surcharge indicated that the impact of implementing a FiT would be enormous. For example, if the target rate of deploying renewable energy is set at 7%, a renewable energy surcharge equivalent to approximately one third of the total turnover of the electricity sector should be additionally imposed. It follows that the electricity rate will be raised by about thirty percent on average, unless subsidies are provided by the government.

Suggested Citation

  • Daisuke Sasaki & Gun Matsuo & Sameh El Khatib & Mikiyasu Nakayama, 2017. "The Effect of Implementing a Feed-in Tariff in Abu Dhabi UAE," Applied Economics and Finance, Redfame publishing, vol. 4(2), pages 38-43, March.
    • Handle: RePEc:rfa:aefjnl:v:4:y:2017:i:2:p:38-43
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    References listed on IDEAS

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    1. Juaidi, Adel & Montoya, Francisco G. & Gázquez, Jose A. & Manzano-Agugliaro, Francisco, 2016. "An overview of energy balance compared to sustainable energy in United Arab Emirates," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 1195-1209.
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    3. Al-Amir, Jawaher & Abu-Hijleh, Bassam, 2013. "Strategies and policies from promoting the use of renewable energy resource in the UAE," Renewable and Sustainable Energy Reviews, Elsevier, vol. 26(C), pages 660-667.
    4. Mokri, Alaeddine & Aal Ali, Mona & Emziane, Mahieddine, 2013. "Solar energy in the United Arab Emirates: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 28(C), pages 340-375.
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    More about this item

    Keywords

    renewable energy; feed-in tariff; levelized cost of electricity (LCOE); Middle East; Abu Dhabi;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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