Dubai signs deal with AFC to tap hydrogen fuel-cell technology

Dubai on Thursday signed an agreement with London-listed AFC Energy aiming to install the largest single deployment of fuel cells to power the ambitious emirate's infrastructure plans.

The government's green energy initiative, Dubai Carbon, will with AFC assess the potential for an estimated 300 megawatts of hydrogen fuel cell generation capacity in Dubai by 2020, at an estimated cost of about $1bn.

Proponents of hydrogen fuel cells say that they are more environmentally-friendly than coal or oil, and the technology is gaining ground in the car industry.

But using the cells to generate large amounts of electricity instead of conventional energy sources such as coal is often thought to be too expensive.

Several US utilities have started to install the technology but at nowhere near the scale Dubai is considering.

This early-stage agreement between Dubai Carbon and AFC for the generation of enough electricity to power 200,000 homes is part of the emirate's drive to diversify its energy mix as the fast-growing city looks to consolidate infrastructure development.

AFC is looking at two sites for its fuel-cell technology that it hopes will be finalised in the next three months and "several others" by the end of the year.

Some developments being studied include the Dubai Expo 2020 site, where construction started this month; the massive Al Maktoum International airport complex; and developer Nakheel's man-made islands off the emirate's coast.

The partnership between Dubai Carbon and AFC will assess the cost implications, and outline fuel cells for equity and debt financing with Dubai-based green funds.

"We need to define the projects to dictate the financing, but a number of private and public parties are looking at financing," said Adam Bond, AFC's chief executive. "We are in conversation with them and will finalise that over the coming months."

Dubai and Abu Dhabi, the capital of the United Arab Emirates, have taken a lead in the hydrocarbon-dependent Gulf in exploring renewable energy options.

Dubai this year expanded the second phase of a solar park from 100MW to 200MW, due for completion in 2017, with the bid from the winning Saudi-led consortium recording one of the lowest cost tenders ever for a photovoltaic project.

The park, whose first phase of 13MW came online last year, aims to reach 1,000MW by 2030, when Dubai plans to source at least 5 per cent of its energy from renewable sources.

But the UAE continues to have one of the world's worst carbon footprints and it is taking time to develop a culture of energy conservation.

Dubai's diversified economy has recovered strongly from the global financial crisis, but the emirate, weighed down by large debts, continues to face challenges in funding capital expenditure.

The project is in talks to source the hydrogen from Dubai Carbon's shareholders, including the emirate's oil company.

The partnership between Dubai Carbon and AFC plans to make money both from the energy generated by the fuel cells, and the sale of water by-products. "That's a big attraction here," Mr Bond said.

Additional reporting by Pilita Clark

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