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While Dubai is one of the world's top energy consumers, it's also at the forefront of global initiatives to reduce consumption, enhance production and diversify the energy mix. Green building regulations have been in place since 2008, so it's no surprise that Dubai has made significant strides in its vision to be a leading green economy.
The cornerstone of Dubai's energy strategy has been the Green Building Regulations and Specifications, which aims to con serve energy across the largest consumption base comprising residential and commercial buildings. The emirate is now taking its energy conservation schemes to the grass roots with the launch of the Distributed Renewable Resources Generation (DRRG) programme, a new initiative that will allow owners to install solar panels on the rooftop of their property to generate energy, which could be used to power their homes or sold to the Dubai Electricity and Water Authority (Dewa).
''The DRRG programme is a smart initiative to bring solar panels to the rooftops of Dubai,'' Saeed Mohammad Al Tayer, Managing Director and CEO of Dewa, which is implementing the initiative, tells Property Weekly. ''Dewa is committed to the implementation of this programme to help realize the objective of the Dubai Integrated Energy Strategy 2030 to generate 7 per cent of the emirate's total power output from solar power by 2020 and 15 per cent by 2030.''
Studies have also shown that properties that generate their own energy are valued more, but it is still unclear how this could play out in Dubai's real estate market.
''Several researches carried out in Europe and the US show that solar panels can increase the value of a property with time,'' Ahmet Kahyan, CEO of Reidin.com, a real estate information company, tells Property Weekly.
''A recent study in the UK has shown that a third more buyers would be willing to pay more for a property already fitted with solar panels that qualify for tariffs. As the independent production and scale of the facilities increase, energy-generation capabilities of a property will have significant impact on the yield.
''That is a major input specifically for large commercial properties with extended space ownership and large residential communities with add-up roof space.''
However, Kahyan does concede that the implementation of the solar power generation regulations will not have a big impact on real estate in the short term. And while new legislation, government directives and pilot projects bode well for the future of solar panels in Dubai homes, ultimately creating an upswing in property prices, its success will be linked to the uptake by the largely expat and transient population of the UAE.
''We are at the initial stages of this programme and making every effort to encourage a positive response, both on a commercial and a residential level,'' says Al Tayer. ''We expect significant commercial and investor interest in the first phase, given that such investments can result in major cost savings and net returns in the short term.''
Welcoming the initiative and its implications on a green economy, developers are also cautious as incorporating such elements could increase the cost of building property, while its direct impact on savings and price appreciation have yet to be fully understood. However, the market already boasts first movers such as the Zen project by Indigo Properties and Akoya Oxygen by Damac, which use solar energy to support the power needs of the community.
''I think this is a fantastic initiative by Dewa and the Supreme Council and a significant step in the direction of green buildings and the green economy vision of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai,'' says Anand Lakhiani, Director of Indigo and Managing Director of Al Huraiz Real Estate. ''We are great supporters of going green and yes, we are adopting the latest green building requirements and technologies in our new projects such as Zen, where rooftop solar units of the latest technologies are already specified.
''It is too early to say how this will impact the property market in the short term. But in the long term, we believe it won't only result in direct energy cost savings but going forward it can also impact property valuation, as can be seen globally. This will increase construction cost and property value, but as a developer we are absorbing such extra cost as part of our marketing strategy.''
Energy consumption in the region has grown manifold over the past few years, particularly in Dubai and the UAE. Initiatives such as installing rooftop solar panels are expected to help consumers and commercial establishments generate their own power, save on cost and also feed power back into the grid, thereby reducing the pressure on utility providers. However, the subsidized price of electricity in the UAE provides less incentive to residents and commercial enterprises to reduce consumption and energy bills by producing their own power from renewable sources.
To be economically viable and for uptake to be faster, solar energy generation will not only require a stable legal and regulatory framework, but an increase in electricity prices and incentives for conservation, at least in the short term.
A solar policy discussion paper published by the Middle East Solar Industry Association (Mesia) notes that significant technological advancement due to growth in global solar production has led to considerable cost reduction, indicative of solar generation costs soon dropping below fossil fuel dependent generation costs. Thus, financial incentives might be required merely as an interim measure. And this has direct implications on the property market.
While developers contend with increased construction costs by including solar power in their energy mix for commercial and residential projects, brokers believe solar can add a new dimension to property pricing dynamics.
''Residents and landlords who install the panels will not only cut greenhouse gas emissions and save money on their fuel bills, but also be able to feed any excess power back into the emirate's electricity grid,'' says Abdul Kadir, CEO of ERE Homes. ''The landlord who spends on the installation of solar panels would be able to rent at a higher price. Also, a tenant would prefer an apartment that has solar panels installed as that would save money on electricity.''
Al Tayer also believes Dubai's DRRG programme has many benefits for the property market.
''This makes properties more attractive for their net energy use and the uptake will be higher for commercial-scale deployments, which will eventually make solar-powered buildings more appealing,'' he says. ''Not only will it help people recover their initial investments and enhance savings in the short term but also add to the value of the property in the long term.''
From a property valuation perspective, the debate also hinges on the pace of commercial or residential uptake. Lakhiani believes commercial uptake would be higher, although only after infrastructure is in place for installing commercial-scale solar rooftop panels. ''Commercial establishments such as malls are among the highest consumers of energy,'' says Lakhiani.
''So the cost implications there can be considerable in terms of savings.''
Kadir also feels the commercial sector would be more keen to realise cost savings from solar panels as its ''consumption is higher and [companies] are charged more than individual users''. With energy savings expected to range from 15-30 per cent, in addition to significantly reduced consumption bills, the future of the project looks bright. However, awareness among end users, consumers, developers and brokers of the direct and indirect benefits of installing photovoltaic rooftop panels is another issue.
Lakhiani says there is now greater awareness of its impact on property cost, value and day-to-day performance, but Kadir believes there is a need to educate stakeholders and the public, especially as the cost of installing solar panels is currently the biggest barrier to adoption. However, he adds, ''It is a cost-saving decision for the commercial segment and for the end user in the long term.''
The Dubai government is leading by example with respect to the use of solar and renewables as alternative energy sources. Abdullah Raffia, Head of Dubai's Sustainable Committee and Assistant Director-General for Engineering and Planning Sector at the Dubai Municipality, told reporters at the Middle East Electricity Exhibition that the Dubai Frame, the emirate's latest tourist attraction to be opened later this year, will be harnessing sunshine by using photovoltaic tiles across its 150m-high façade. Another large-scale project in the emirate is Diamond Developers' Dubai Sustainable City, slated to be powered by 600,000 sq ft of solar panels. The project will install panels on each house, which are expected to supply 60 per cent of the residents' energy needs.
Dewa, for its part, is optimistic the DRRG programme will steadily gain traction, with top developers expected to be among the major adopters. ''Developers have shown keen interest and while there are no formal commitments as of now, we expect the leading developers to support these go-green measures, both from a commercial and a social responsibility perspective,'' says Al Tayer. He adds that various policies and plans are currently being reviewed to support the transition of consumers from grid power to solar power.
''At a component level, we have released safety and quality standards for manufacturers of mechanical equipment and hardware in close coordination with Mesia,'' says Al Tayer. ''From an installation perspective, trained specialists for installing the solar panels and mechanisms are being sourced along with servicing companies for continued maintenance.
''Simultaneously, smart metering initiatives are under way to track consumption and solar production, excess feedback into the main grid, monitor cash paybacks for consumers and provide main grid power backup as part of redundancy management.''
Source: Neha Kaul, Special to Property Weekly