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28

Nov 2014

Solar Price Bid In Dubai A New World Record Low

28 November 2014 | Posted by Zachary

Solar Price Bid In Dubai A New World Record Low

There have been a few really low-priced solar power deals across the world this year, in Texas (USA), Georgia (USA), Andhra Pradesh (India), and Brazil. However, a just-completed auction in Dubai (UAE) beats them all.

First of all, let’s go back a little further, to early 2013, when I first started seeing really low solar power prices for large-scale solar projects. A New Mexico power purchase agreement (PPA) with First Solar, a world-leading solar power manufacturer and project developer, resulted in a price of 5.8 cents per kilowatt-hour (kWh), lower than coal and just about every other source of electricity. Granted, that was with about 4.7 cents per kWh worth of subsidies as well, so the actual price would have been about 10.5 cents per kWh, but then again, if you add in the social costs of coal (health costs, environmental costs, etc), its price comes to 19–41 cents per kWh, and natural gas wouldn’t fare a whole lot better.

Fast forward one year and things were looking even much better. A 20-year PPA in Austin, Texas, showed a Recurrent Energy solar power plant selling electricity for 5 cents per kWh. That’s without any state support, so even if you add in the federal tax credit, the price would just be about 7 cents per kWh. However, remember that all energy sources have some form of support from the government, and fossil fuels actually have more than solar and other renewables! Austin was initially looking to sign a deal with a 50-megawatt solar project, but this one ended up being 150 megawatts, showing that Austin really liked what it saw.

Last month, an auction in Andhra Pradesh, India, received some very low bids. Again, First Solar, a 2015 Zayed Future Energy Prize finalist in the “Large Corporation” category, offered the lowest bid. The price for the first year of the contract was 8.75 cents per kWh, without subsidy. Over the course of the 25-year contract, the average (or levelized) price equalled 10.3 cents per kWh, still quite low.

Just a few weeks ago, another power auction, this one in Brazil, brought in another low solar price. Without subsidy, the lowest bid for the 20-year contract was just 8.7 cents per kWh! Another 2015 Zayed Future Energy Prize finalist in the “Large Corporation” category, Enel Green Power, won a large portion of the contracts, about 25% of the total. However, it was not publicly indicated who offered the 8.7 cents per kWh low.

Now, finally, on to the news of the week: a similar power auction held in Dubai, in the UAE, this week resulted in a bid of 5.98 cents per kWh! As far as I can see (and the same goes for other reporters and analysts commenting on the news), that’s the lowest price for solar power ever seen. (And, notably, the second-lowest bid was just 6.13 cents per kWh, coming from a consortium of Spain’s Fotowatio Renewables and Saudi Arabia’s ALJ Energy. It would have been a world record low if it were not for the even lower bid mentioned above.) This, by the way, is for a 25-year PPA for a 100-megawatt solar project.

Dubai’s state utility, DEWA, is buying the electricity, and the company that won the bid is ACWA Power. Notably, ACWA Power also has its hands in coal power and desalination plants, which I think actually shows that solar power is increasingly big business and is attracting companies that previously weren’t focused on renewable energy.

"As an additional coup, Acwa Power not only provided the lowest bid, but also provided alternative bids in which it proposes to immediately build 200, 800 or even 1,000 MW at the foreseen site, at a tariff of 5.4 cents/kWh for the 1,000 MW variant," a partner at Apricum notes. "This alternative proposal, which became public only through a glitch in the readout process, is testament not only to the commercial competitiveness of solar energy in the Gulf region, but also to the confidence with which serious market players would commit to extremely fast large-scale deployment of solar PV power."

Naturally, great solar resources in the UAE help to bring down the price of electricity from solar power plants. However, the heat and dust reduce their efficiency and thus have the opposite effect. With everything taken into account, I expect the suny location did still end up helping to produce the lowest-priced solar electricity on the planet.

With the price of solar now so low, and particularly in the Middle East, one can only imagine what the future holds. Well, I guess one could try to capitalize on it, too!

Image Credit: Dubai view from the sky by 2 Top (CC BY 2.0 license)

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Solar Price Bid In Dubai A New World Record Low

28 Nov 2014 | Posted by Zachary

There have been a few really low-priced solar power deals across the world this year, in Texas (USA), Georgia (USA), Andhra Pradesh (India), and Brazil. However, a just-completed auction in Dubai (UAE) beats them all.

First of all, let’s go back a little further, to early 2013, when I first started seeing really low solar power prices for large-scale solar projects. A New Mexico power purchase agreement (PPA) with First Solar, a world-leading solar power manufacturer and project developer, resulted in a price of 5.8 cents per kilowatt-hour (kWh), lower than coal and just about every other source of electricity. Granted, that was with about 4.7 cents per kWh worth of subsidies as well, so the actual price would have been about 10.5 cents per kWh, but then again, if you add in the social costs of coal (health costs, environmental costs, etc), its price comes to 19–41 cents per kWh, and natural gas wouldn’t fare a whole lot better.

Fast forward one year and things were looking even much better. A 20-year PPA in Austin, Texas, showed a Recurrent Energy solar power plant selling electricity for 5 cents per kWh. That’s without any state support, so even if you add in the federal tax credit, the price would just be about 7 cents per kWh. However, remember that all energy sources have some form of support from the government, and fossil fuels actually have more than solar and other renewables! Austin was initially looking to sign a deal with a 50-megawatt solar project, but this one ended up being 150 megawatts, showing that Austin really liked what it saw.

Last month, an auction in Andhra Pradesh, India, received some very low bids. Again, First Solar, a 2015 Zayed Future Energy Prize finalist in the “Large Corporation” category, offered the lowest bid. The price for the first year of the contract was 8.75 cents per kWh, without subsidy. Over the course of the 25-year contract, the average (or levelized) price equalled 10.3 cents per kWh, still quite low.

Just a few weeks ago, another power auction, this one in Brazil, brought in another low solar price. Without subsidy, the lowest bid for the 20-year contract was just 8.7 cents per kWh! Another 2015 Zayed Future Energy Prize finalist in the “Large Corporation” category, Enel Green Power, won a large portion of the contracts, about 25% of the total. However, it was not publicly indicated who offered the 8.7 cents per kWh low.

Now, finally, on to the news of the week: a similar power auction held in Dubai, in the UAE, this week resulted in a bid of 5.98 cents per kWh! As far as I can see (and the same goes for other reporters and analysts commenting on the news), that’s the lowest price for solar power ever seen. (And, notably, the second-lowest bid was just 6.13 cents per kWh, coming from a consortium of Spain’s Fotowatio Renewables and Saudi Arabia’s ALJ Energy. It would have been a world record low if it were not for the even lower bid mentioned above.) This, by the way, is for a 25-year PPA for a 100-megawatt solar project.

Dubai’s state utility, DEWA, is buying the electricity, and the company that won the bid is ACWA Power. Notably, ACWA Power also has its hands in coal power and desalination plants, which I think actually shows that solar power is increasingly big business and is attracting companies that previously weren’t focused on renewable energy.

"As an additional coup, Acwa Power not only provided the lowest bid, but also provided alternative bids in which it proposes to immediately build 200, 800 or even 1,000 MW at the foreseen site, at a tariff of 5.4 cents/kWh for the 1,000 MW variant," a partner at Apricum notes. "This alternative proposal, which became public only through a glitch in the readout process, is testament not only to the commercial competitiveness of solar energy in the Gulf region, but also to the confidence with which serious market players would commit to extremely fast large-scale deployment of solar PV power."

Naturally, great solar resources in the UAE help to bring down the price of electricity from solar power plants. However, the heat and dust reduce their efficiency and thus have the opposite effect. With everything taken into account, I expect the suny location did still end up helping to produce the lowest-priced solar electricity on the planet.

With the price of solar now so low, and particularly in the Middle East, one can only imagine what the future holds. Well, I guess one could try to capitalize on it, too!

Image Credit: Dubai view from the sky by 2 Top (CC BY 2.0 license)

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