Isra-Mart srl:Masdar ditches dream of becoming solar-manufacturing hub

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Masdar, the Abu Dhabi Government's clean energy company, has shelved plans to make solar panels in the UAE because of a lack of local demand, local newspaper the National reported yesterday.

The company's solar panel-manufacturing unit, Masdar PV, had planned to begin construction of a plant in Taweelah, between Abu Dhabi and Dubai, by the end of 2009. These plans were temporarily put on hold last year.

But Frank Wouters, the director of Masdar Power, which oversees Masdar PV, said this week that the plan for a domestic solar panel plant had now been abandoned altogether.

"You need scale and you need a regional market for that to make sense," he told the paper.

The price of solar panels is dropping all over the world as the technology improves and supplies increase in response to government subsidies. Fears of oversupply have increased further after leading markets such as Germany and Spain moved last year to cut their feed-in tariff incentive schemes leading to reduced demand.

Some analysts predict the market will be oversupplied by as much as 100 per cent this year, with demand not being restored to 2010 levels until 2012 at the earliest.

Masdar PV is continuing to manufacture thin film solar panels through its current production facility in Germany. Wouters said this plant is selling at competitive prices and is turning a profit, adding that the firm had worked hard to improve efficiency at the plant.

The timing of the revelation will come as something of an embarrassment to Masdar as it coincides with US secretary of state Hillary Clinton's visit this week to Masdar City, the company's much-vaunted flagship "zero carbon" city.

It is also the latest in a series of setbacks for the state-sponsored firm. Last year the completion deadline for the ambitious Masdar City project was pushed back by at least four years to 2020.

At the same time it was announced that the city will no longer rely completely on on-site renewables for power, undermining its claim to be "zero carbon", while a planned personal rapid transport system for the city was downscaled to a pilot project rather than a city-wide rollout.

The Abu Dhabi government faced further embarrassment last year after Helene Pelosse, head of the International Renewable Energy Agency (Irena), quit the role, making critical comments about the government's interference with her work.

Irena, which is due to have its headquarters housed in Masdar City, is tasked with accelerating the growth of renewables globally.

But the agency has struggled to gain international support and Pelosse resigned in October, telling AFP that she had faced "intimidation" from UAE officials and had been forced out of the job. Adnan Amin of Kenya has replaced Pelosse of France as the interim director general of Irena.

Masdar is still going ahead with renewable energy projects in Abu Dhabi, including a 20MW wind farm on Yas Island for which it is now evaluating construction bids, as well as a 100 MW solar power plant which is currently under construction.