Record low solar power prices point to new future for the Middle East
Tuesday September 27, 2016
The Abu Dhabi Water and Electricity Authority confirmed in September that it had received the lowest bids ever for solar power. Five bids were made into ADWEA’s 350-MW tender, the lowest coming from Japan’s Marubeni Corp and China’s JinkoSolar Holding Co. at just dirhams 88.8/MWh ($24.0/MWh).
A year ago even the highest bid at $36.1/MWh would have looked cheap. According to reports, Marubeni and JinkoSolar have also proposed construction of 1,170 MW of solar capacity, from which they will sell electricity at just $23.0/MWh.
In June, Dubai saw offers for 800 MW of solar capacity for the third phase of its 5 GW Mohammed bin Rashid al-Maktoum solar project, all of which were well below the price of $58.5/MWh awarded in the second phase. The lowest bid in June was $29.9/MWh.
In Latin America, electricity tenders this year have also charted exceptional falls in renewable energy prices. A record low was reached for solar in Mexico and in Chile this August, where mainly onshore wind capacity came out the winner with an average winning bid of $47.55/MWh. This compared with the best, but unsuccessful, offer of gas-fired plant at $65/MWh.
Remember Desertec?
The plan was to build a huge amount of solar and wind power capacity in the Middle East and North Africa and bring it via High Voltage Direct Current transmission lines to Europe. With the cost of solar power plummeting – in particular Concentrated Solar Power with its storage capacity and superior dispatch profile, compared with solar PV – projects like Desertec should be looked at again.
Blessed with huge, if unevenly distributed, oil and gas reserves, the countries of the Middle East and North Africa also have a vast solar resource. The drop in oil and gas prices since summer 2014 has exposed, as each oil crash does, the vulnerability of economies so dependent on hydrocarbons.
Although the adoption of renewables might appear a threat to the primary pillars of state finance, they are also a potent source of the economic diversification which would make MENA region economies stronger and more financially secure long term.
Renewable power at these prices could also be the solution to another of the region’s problems – water. Middle Eastern countries have had to build huge amounts of desalination plants to ensure adequate potable water supplies. These plants consume vast amounts of power, which is generated by burning the region...