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CLIMATE ACTION PROGRAMME


1 November 2016

Interview with Mr. Paddy Padmanathan, President & CEO, ACWA Power

Climate Action spoke with Paddy Padmanthan, President and CEO of ACWA Power - a developer, investor, co-owner and operator of a portfolio of power generation and desalinated water production plants.

 

Firstly, could you please introduce who ACWA Power are and what you do?

ACWA Power is a developer, investor, co-owner and operator of a portfolio of power generation and desalinated water production plants currently with presence in 11 countries in the Middle East, North Africa, Southern Africa and South East Asia regions. Our portfolio, with an investment value of more than USD 32 billion, currently generates 23+ GW of power and produces 2.5 million m3 /day of desalinated water, delivered on a bulk basis to state utilities and industrial majors on long term off-take contracts under Public-Private-Partnership, Concession and Utility Services Outsourcing models of contract.

Our core mission is to reliably deliver electricity and desalinated water at the lowest possible cost, all whilst seeking to maximize local content and local employment creation, thereby contributing to the countries we invest in  and to the social and economic development of the communities we serve.

 

Could you outline some of ACWA Power’s recent projects?

This year, we inaugurated two pace setting renewable energy power plants, both now fully operational; one in Morocco and the other in South Africa. NOORo1 CSP IPP, at Ouarzazate, Morocco utilizing a parabolic trough cased concentrated solar power technology generates 160 MW while the sun is shining and with molten salt storage for heat, dispatches 160MW for three hours at night. This is phase 1 of a three phase complex of CSP technology, which when completed will be the world’s largest CSP complex. Both the subsequent phases are now in construction in parallel. Phase 2 is a 200MW CSP trough based technology with 7.2 hours of storage and Phase 3 is a 150MW CSP tower based technology with eight hours of storage.

The Bokpoort IPP project in South Africa is dispatching 50 MW during sunshine hours and also for 9.3 hours when the sun is not shinning utilizing heat stored I molten salts. Construction is also underway at high pace at Dubai, a 200MW PV power plant which delivered a pace setting tariff of US$ Cents 5.845/kWh at the beginning of year 2015 which gave the impetus for the subsequent wave of new price levels in PV technology across the world. And at Tangiers in Morocco a 120 MW wind farm is underdevelopment to primarily serve the energy intensive cement manufacturing industry.

 

ACWA Power operates largely in the Middle East and North Africa, Southern Africa and South East Asia regions. What is the current state of innovation and potential in these regions?

It was the application of the transparent competitive tendering process, moving away from predetermined feed-in-tariff procurement of renewable energy capacity at Morocco, impeccably executed by Masen - the then newly created Moroccan renewable energy procurement agency - that achieved a new tariff benchmark for the very versatile technology of concentrated solar power back in 2011 and reset the relevance of this technology that can reliably and flexibly dispatch solar energy day and well into the night. Then it was yet another well executed series of procurements this time by the IPP unit at the Treasury of the Government of South Africa that has enabled over 4,000 MWs of renewable energy to be fully operational within a period of five years in that country all at a very competitive tariff with many more thousands in either construction or mid procurement. It was also within the geography we operate in, at the Emirate of Dubai, where yet another text book case in procurement that new tariff benchmarks are being set for PV technology. Also at Morocco, new tariff benchmarks are being established for Wind energy. All of this is being achieved by fearlessly embracing innovation. Innovation in policy, business models, procurement practices, technology and delivery methodology are coming together to deliver stunning results. We are confident that the region is far from being done yet. 

 

Why is the delivery of reliable electricity and desalinated water so important today?

Electricity and water are not only key to fuel economic development but to sustain life itself. The state of the African continent is the visible proof of the consequences of energy poverty. Africa, a continent of 54 countries and home to a billion people, is also where 80 percent of these people survive on just US $2.50 per day. It is also in Africa where one can point to an example of the transformative impact of implementing a sustainable energy solution. In early February this year, just a month after the NOORo1 project started to dispatch electricity, at Ouarzazate in Morocco, Moody’s investor service, a well-known credit rating agency, issued their routine report on the credit standing of Morocco. Given that Morocco relies for 95% of its energy needs on imported fuel and all of it fossil, their analysis showed that the harnessing of significant renewable domestic energy resources is credit positive not only from an environmental sustainability perspective, but highly impactful as at the same time permanently reducing Morocco's balance of payment sensitivity to higher energy prices. Moody’s evaluation confirmed that from an economic perspective, that this complex will save one million TOE representing about 4.8% of energy imports in volume terms in 2015 which at last year's oil prices would translate to a savings from reduced imports amounting to about 0.3% of GDP. A huge impact on a national scale and equally importantly on an enduring basis by this one project.

 

ACWA Power is a platinum sponsor of the upcoming Sustainable Innovation Forum in Marrakech. What were your motivations behind your involvement with this event?

While ACWA Power is a technology neutral fuel agnostic provider of bulk electricity generation and desalinated water production capacity where our focus is on reliability and lowest cost of the delivered service, given that we are an investor who recovers our investment over decades, we are also very concerned about the economic growth and social development of the counties we invest in and the communities we serve and thus are very keen to encourage the selection of the most appropriate technology choices and fuel mix to ensure adequate, sustainable and lowest cost supplies of energy are made available. With renewable energy now becoming a cost competitive solution, all countries in the markets we serve are busy either already procuring, like Morocco, UAE and South Africa or are planning to procure like Saudi Arabia and Oman, large capacities of renewable energy.

Now more than ever we need to keep our attention at further reducing cost, broadening application and business models and take advantage of these large scale deployments to truly contribute to industrialisation and job creation in these economies, thus looking to deliver more than just green electrons. In our view innovation is the key to unlocking the full potential of the emerging green revolution. This year’s SIF is a perfect platform, taking advantage of the presence of such a large number of individuals committed towards this single cause, to encourage collaboration and galvanize action.

 

What do you hope will be achieved at SIF?

There is considerable evidence that human activity during this industrial age is increasing the level of carbon dioxide released into the atmosphere. Much of this CO2 emission is due to fossil fuels being burnt to produce heat and steam to generate power, produce and deliver water, process oil and gas and produce a vast array of material from fertilizer, iron, steel and cement, to provide heat for cooking and warmth for over a billion people and in combustion turbines which in turn powers cars, trucks, ships and aeroplanes. Indeed so dependent we are on fossil fuels for our health, wealth and happiness that only yet another revolution of the scale of the industrial revolution will deliver us from this dependence. 

Humanity so urgently needs new ideas, processes and products to implement to make an effective change and to do this quickly before lasting damage is inflicted on the planet, our only home! But while hope is not a strategy, there is considerable reason to be optimistic as we humans have consistently shown our capacity for invention. To reduce CO2 emission levels to pre-industrial age levels, we need to innovate, which is essentially a step beyond invention, a step that moves inventions to implementation. While much invented by one person or a small group of individuals working together, innovation requires a much larger collective effort.

We very much look forward to this large group of policy makers, regulators, commerce and industry and civil society present at COP 22 exchanging ideas to spark much needed innovation to translate. It’s one thing to commit to limiting global warming to below 2 deg C, another to action implementable results that will last the course of time. 

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