Meet the agents of change: Daniel Zywietz

Daniel Zywietz is Founder & Chairman of Enerwhere Sustainable Energy. He explores how fuel subsidies, regulatory evolution and end user education can collectively power future hybrid solutions adoption.

As financial institutions and investors implement stricter ESG criteria for their investments, however, sustainability is becoming increasingly important. The markets with the highest adoption rates today are those where diesel prices are high and there is strong funding support from ESG-driven backers. Good examples are the small Pacific and Caribbean islands, and the Maldives. The UAE is also an early adopter thanks to the decision to remove fuel subsidies as well as the open nature of the market.

The main barrier currently is a general lack of end user awareness and system familiarity. A lack of cost-effective funding for projects that don’t follow the conventional project financing approach is a further challenge. 

To overcome existing barriers, we need to work together to improve end user understanding of the technology and the benefits it can bring to their businesses while, at the same time, explaining to financial institutions why hybrid power is a solid investment. 

A number of Middle Eastern countries still offer local diesel fuel subsidies. In Saudi Arabia, for example, diesel is 80-90 per cent below the global market price. This makes competing against this price level extremely difficult. 

The other challenge is hybrid viability is that while solar-diesel systems that replace fuel primarily during daytime are attractive nearly everywhere, the case for solar-battery systems is limited to markets with high fuel prices (above US$1 per litre). This will improve, however, as the cost of battery storage is rapidly declining.

Without Internet of Things (IoT) solutions, the solar hybrid sector would not exist as hybrid plants are relatively complex for their size. They need to run efficiently and reliably, which requires either highly trained personnel for every (small) site or huge amounts of data, for which remote monitoring and IoT are crucial. 

Artificial intelligence (AI), on the other hand, hasn’t made much of an impact to date as the recent explosion in AI development has outpaced the technology and sales cycle in hybrid systems. In the coming years, however, we expect to see AI have a much bigger impact.

Currently, most countries do not regulate the temporary and remote power industry, as it is not captured by existing utility regulations. This is slowing adoption of hybrid systems, as much-needed data is not available. 

To power adoption momentum it would be helpful if governments required end users to measure and report their diesel consumption and emissions for off-grid power generation. In turn, minimum targets for the adoption of alternative solutions could be set; for example, 25 per cent solar share, which can be achieved in most geographies even without expensive batteries. 

This would dramatically reduce transaction costs across the entire value chain and increase the speed of adoption: saving money and emissions for end users.

In reality, it’s not the energy sector that is holding up transition as off-grid power is obviously energy not covered by conventional grid-based utility companies. Ant regulation or incentives therefore needs to primarily be aimed at end users, and specifically those heavily concentrated in the construction, mining, oil and gas and industrial sectors. 

Collectively, they represent a diverse set of industries so the obvious strategy would be a general removal of diesel subsidies. These are effectively painting an inaccurate picture that diesel generators are a cost-effective solution. 

A secondary measure would be to put in place subsidised financing for solar-hybrid systems and/or the requirement to measure and disclose fuel consumption and emissions from (off-grid) stationary power generation.

We are clear that we want to get to net zero even if, technically, we face operational challenges that require the swift deployment of equipment in a matter of weeks once a contract is signed. In addition, loads can also be highly variable and space constraints mean that we cannot produce unlimited renewable energy on site. 

The starting point for our roadmap, therefore, are solar-diesel hybrid systems that replace between 25 to 50 per cent of fuel consumption: and this is what we are currently doing. 

The next step will be to integrate storage, which will allow us to increase the share of renewable energy to 80 to 90 per cent of annual power consumption. We have been testing various configurations for several years and are confident that this will work. 

Thanks to falling battery prices, we expect to be able to scale this up within the next five years.

The remaining 10 to 20 per cent will require other solutions, as these are often driven by space constraints on site or by seasonal variations in load that cannot easily be covered by short-term storage. In this instance, we will have to rely on biogas, hydrogen or other ways of storing and importing energy. This is already technically possible but often prohibitively expensive; but  I am hopeful that costs will decline, and we can begin to implement these solutions by 2030.

The falling cost of storage is probably the biggest event that will lead to significant changes in the design and operation of hybrid systems in the next five years. 

The rapid adoption of electric vehicles is another critical development that will increase demand for electricity and introduce even tougher requirements for reliability and grid stability. This will be offset by the potential to introduce a significant volume of cheap storage capacity into our microgrids. 

I really hope that we can move from talking to actual action. As the host nation this is the explicit goal of the UAE, but obviously there are lots of other countries that get to vote and, historically, only a handful of these summits have made real progress. 

A big win for us - probably downstream from concrete emissions reduction targets -  would be the removal of diesel fuel subsidies in the GCC by 2030. This would really allow hybrid plants to compete on a level playing field.