The rise of waste-to-energy in the GCC

It’s no secret that the region’s energy sector is in the midst of a major transformation.

The oil price drop of 2014 has left a lasting legacy, with diversification plans across the GCC reshaping not just energy industries, but entire economies, societies, and business landscapes.

Yet it is the energy industry that has perhaps felt the tremors of these seismic changes in the most profound way, as governments try to break what Saudi Arabia’s Crown Prince Mohammed bin Salman describes as an “addiction to oil”.

As a result, a wider range of energy sources than ever before have come to prominence, with solar, wind, hydro and other types of energy emerging across the region. One of the most promising avenues is waste-to-energy (WTE) – a process that not only generates significant levels of energy, but also tackles a major problem for the region.

“Across the GCC, governments are actively pursuing strategies to achieve zero waste,” says Khaled Al Huraimel, group CEO of Sharjah-based environmental and waste management company Bee’ah.

“Average levels of waste per capita per day in the region stand at 1.65kg, and with the rapid urbanisation of the Middle East, waste production in the region is only expected to increase.

“Waste-to-energy projects will enable us to tackle this insurmountable problem of waste, in addition to meeting our energy needs and creating value out of discarded materials. The rise of several new waste-to-energy projects in the region exhibits the responsiveness of the GCC market to waste-to-energy initiatives.”

One of these projects was confirmed earlier this year when Bee’ah formalised a partnership with clean and renewable energy player Masdar to create the Emirates Waste to Energy Company (EWEC) and build a WTE facility that will incinerate up to 37.5 tonnes of solid waste per hour – adding an extra 39MW of green energy to the Sharjah electricity grid and providing power to thousands of homes.

It was a big step in the company’s WTE ambitions, and is set to complement the firms existing projects and initiatives, which include the region’s first – and the world’s largest – gasification plant. The facility has the capacity to process around 160,000 tonnes of non-recyclable waste annually – generating a gross output of 35MW of energy that can be used to power around 50,000 homes.

“This facility will enable Sharjah to become the first city in the region to achieve ‘zero waste-to-landfill’ status, in addition to achieving the UAE’s 2021 goal of diverting 75 per cent of solid waste away from landfills,” says Al Huraimel.

“The project will also displace almost 450,000 tonnes of CO2 emissions every year, and save 45 million m3 of natural gas,” he adds.

Bader Al Lamki, executive director of clean energy at Masdar, adds that the partnership was also driven by the possibilities ahead for WTE.

“The significant potential of WTE is one of the reasons Masdar launched EWEC with Bee’ah in May,” he says.

“WTE has an important role to play in diversifying our energy mix, potentially providing an important source of baseload power. With prosperous countries like the UAE still producing a significant volume of waste per capita, WTE solutions could play an important role in driving more sustainable waste management strategies.”

Al Lamki says that EWEC is “securing project financing for the new plant” and that he expects it to be operational by 2020, with construction starting next year.

The project is one of a number of similar WTE endeavours that are now on the horizon across the UAE and wider Middle East.

Also planned for the coming years are Taqa’s 100MW facility with Tadweer, a plant in Sharjah’s Sajja area that will convert 400,000 tonnes of waste per year, a 2MW facility in Ras Al Khaimah and a Dhs2bn ($544.5m) facility in Dubai’s Al Warsan 2 area.

The Dubai project is expected to be completed by the second quarter of 2020 and will become the Middle East’s largest WTE plant, processing 2,000 metric tonnes of waste every day during the first phase of operations and producing 60MW of energy.

And Al Lamki says that EWEC is already planning beyond its debut plant.

“We are also look at other opportunities,” he explains.

“In fact, this summer, Masdar and Bee’ah signed an agreement with the UAE’s Ministry of Climate Change and Environment to evaluate implementing a WTE facility to serve the emirates of Ras Al Khaimah and Fujairah.”

This all adds up to a lot of confidence in the potential of the WTE market, which Al Huraimel says has the capacity to become a major player in the energy industry.

“Alternative sources of energy like solar and wind are usually erratic and therefore undependable,” he argues.

“Waste-to-energy is an inexhaustible source of energy, and unlike sources like geothermal, can be feasibly implemented in any region of the world.

“Given waste generation in the region, its growth potential is indisputable. According to the World Bank, the amount of solid waste produced in urban areas in the GCC will increase by 95 per cent to reach 82,600 tonnes per day. If properly used, WTE initiatives can divert almost 90 per cent of this waste away from the landfills.”

Al Lamki adds: “In the UAE alone, as much as 5 million tonnes of solid waste could be processed through WTE solutions each year. That translates into 500MW of power capacity. The potential for WTE in the wider region is therefore considerable.”

So what is there to stop the region – and the UAE in particular – from becoming a WTE pioneer? According to Al Huraimel, the challenges mainly come from it being such a recent development in the energy industry.

“Compared to other sources of energy, it is relatively new. Technological advancements, improvements in R&D and revisions in policy making will create a more conducive environment for waste-to-energy projects.

“Since these projects are new to the Middle East, significant effort is also required to finance and set up the required infrastructure.

“Large-scale investment is required, especially to construct WTE plants that are state-of-the-art and environmentally conscious. Compared to the cost of sending waste to landfill and of using conventional energy WTE facilities are significantly expensive. Apart from maintenance, disposal of residue, such as ash, can also incur costs.

“In order to encourage adoption of waste-to-energy, landfill taxes have to be increased, clear legislation and guidelines introduced, and PPAs must be instated that will reduce the risk of deploying waste-to-energy projects.”

Al Lamki concurs, pointing to other markets that have taken similar proactive measure.

“For the most part there is still plenty of land available in the region on which to dump waste, while the cost incentive to divert waste away from landfills isn’t yet there,” he says.

“If you look at the markets where WTE has been successful to date, there has generally been a landfill tax in place or a shortage of land. More incentives are therefore needed for WTE to take off in the Middle East.”

For organisations prepared to make the investment and take the plunge, however, there are huge opportunities on the business front.

The global WTE industry is expected to grow to more than $54bn by 2023 according to a report published by Allied Market Research. Frost & Sullivan is more conservative in its estimates, suggesting the market is expected to be worth $29.9bn by 2022 – a figure that is still four times the value of the current market.

“This is a lucrative industry as the input is inexhaustible in availability and the output is inexhaustible in demand,” says Al Huraimel.

“Waste-to-energy plants are functional 24 hours a day, seven days a week, throughout the year. With public sector outsourcing, private sector investments and through mutually beneficial partnerships, the industry is expected to grow. The value of clean energy is undeniable, increasing the profit margin for producers of this energy.

“WTE is a sustainable growth market. With its increasing potential, many companies are developing their own units, moving away from public, centralised facilities.”

The push for clean energy, and a reduced dependency on fossil fuels, has become a major focus for GCC nations – primarily the UAE and Saudi Arabia, whose ambitious diversification plans and commitments such as the Paris Climate Agreement would add up to a huge decarbonising of the economy.

“The pace of reduction in oil dependency has been fastest in the UAE as compared to other GCC countries,” says Al Huraimel.

“Oil dependency has declined in the UAE from 90 per cent in 1980 to below 60 per cent by 2005. While this is a commendable fact, there is now an urgent need for clean sources of energy.

“When WTE is understood – first and foremost – as a way to manage waste in a sustainable manner, and as a source of electricity and energy and diversification in a secondary capacity, the GCC can claim its rightful position as pioneer in WTE initiatives.”