World Solar Prices Smashed Yet Again in Abu Dhabi

(3BL Media/Justmeans) - The sun rises earlier in Abu Dhabi than in Europe or North America, a fact that is becoming true in more ways than one.

A bidding war for a new, large-scale Sweihan solar project in Abu Dhabi has led to what Renew Economy analyst Giles Parkinson calls “jaw-dropping” prices. Smashing through what had been the $30 per MWh barrier, Chinese PV manufacturer JinkoSolar, in collaboration with the Japanese industrial giant Marubeni, set a new record low solar price with a bid of $US24.20/MWh. Three other bids of the six tendered also came in below $30 on a weighted LEC basis.

What’s more, the low-bidding team claims that for a larger scale project, greater than 1.1GW, they could go as low as $23, and still achieve a rate of return of 7%. The Sweihan bid request was for a 350MW project, though bidders were invited to suggest larger projects. The Abu Dhabi Electricity and Water Authority (ADWEA) will need to decide if they are willing to expand the project.

Perhaps even more interesting is that the second place bid of $25.33 came from French energy giant EdF, in collaboration with UAE-based Masdar and PAL. EdF, a major player in nuclear power, has now put forth a bid that is literally one-fifth the stated cost per MW of the Hinkley Point C nuclear plant in the UK. That, it should be noted, is after “the huge loan guarantees, insurance backing from the government and other subsidies piled on to the proposed nuclear plant” are factored in.

Of course, there are factors in Abu Dhabi that help to make these low prices achievable—notably inexpensive capital and labor. Still, the trend is clear. In fact, says Parkinson, an anticipated oversupply in the market could bring the price of modules down by another 50%.

EdF has certainly seen this trend, which is why it is moving aggressively into renewables, with 598 MW, mostly wind power, already installed, including the largest wind farm in France. They recently won a contract to install 49 MW of storage in the UK for National Grid.

What’s more, says Parkinson, these prices are coming in at one-third the cost of natural gas generation, which is why the UAE is moving aggressively to add solar, despite their abundant supply of gas. They would prefer to use the gas for export, while at the same time transitioning to a clean energy economy. Dubai is in the process of constructing a 1,000 MW plant called the Mohammed bin Rashid Al Maktoum Solar Park, in Seih Al-Dahal. The city has set a target of 7% renewable energy by 2020. Abu Dhabi already has the 100 MW Shams CSP plant and is aggressively installing solar PV on government buildings.

Image courtesy of First Solar