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Clean Power Saudi Arabia low cost solar power

Published on August 13th, 2014 | by Tina Casey

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Saudi Arabia Could Beat US To Low Cost Solar Punch

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August 13th, 2014 by  

They’re predicting that the cost of utility scale solar power in the US will hit a range of $130 to $243 per MWh for plants going into service around 2019, which sounds pretty good until you take a look at Saudi Arabia. According to the top official at France’s Solairedirect, the levelized cost of energy for utility scale solar in Saudi Arabia has already hit the range of $70 to $100 pre MWh.

That doesn’t mean too much in terms of the US domestic market, but when you consider the emerging global market for exportable solar technology, it looks like we have some catching up to do.

Saudi Arabia low cost solar power

US solar power plant courtesy of US DOE.

The Levelized Cost Of Energy For Solar

For those of you new to the topic, levelized cost of energy (LCOE) is a standard measurement used to compare costs between various forms of energy. LCOE takes into account the installed price, total lifetime cost, and lifetime electricity production.

If you want to see how it works in practice, the National Renewable Energy Laboratory has a handy LCOE calculator you can try.

Our figure of $130 to $243 per MWh comes from the US Energy Information Agency’s 2014 Annual Energy Outlook.  We heard some hinky things about EIA’s methodology when it comes to solar energy, but for now let’s run with their ball and see where it takes us.

At the low end EIA calculates $130 for photovoltaic systems,  referring to net AC power available to the grid. The higher end of $243 involves solar thermal energy. That’s one place where things get a little hinky, since emerging utility-scale solar energy storage systems could have a significant impact on future solar costs.

Low Cost Solar Power For Saudi Arabia

One thing to keep in mind about LCOE for solar is that costs can vary significantly depending on what region the plant is located in. EIA’s figures represent a national average, so various regions of the US could be more competitive with some regions of Saudi Arabia.

The Saudi Arabia solar cost figure we cited applies only to certain ideal solar regions in that already sun-happy country. Here’s the lowdown from Thierry Lepercq, who founded and is president of Solairedirect, as cited by the solar advocacy company Solar Plaza:

For systems with the right economies of scale – 10 MegaWatt (MW) and above – solar power can now be generated at between US$70 and US$100/MWh. That price is more than four times lower than in 2009.

According to Lepercq, the low figure of $70 per MWh applies to the western areas, and the higher end of $90 MWh applies to the Gulf area.

That’s nothing — as cited by solar Plaza, Lepercq is looking at LCOE of $50 – $70 MWh by 2020, beating out wind and other forms of alternative energy as well as fossil fuels and nuclear.

The Market For Low Cost Solar

Now, here’s where it gets interesting. Like the US, Saudi Arabia is still sitting on some mighty fine fossil fuel assets, but its focus on solar power indicates that it sees the advantages of a strong domestic solar sector for ensuring domestic economic growth in an increasingly carbon-constrained world.

Aside from virtually unlimited access to competitively priced energy, access to low cost solar power will provide Saudi Arabia with a low cost, low impact energy source for powering desalination plants. Solar desalination is going to be a thing as global freshwater resources continue to shrink, so in addition to becoming “energy advantaged” in the global marketplace, Saudi Arabia could also achieve growth in water resources.

That could lead to additional growth in other sectors including agriculture (for a glimpse at the potentials, check out the Sahara Forest solar desalination/agriculture project in Qatar.

 

A strong solar sector also has implications for the export market, as countries without R&D assets scramble to get their hands on low cost solar power. Here’s Solar Plaza citing Dr. Raed Bkayrat, VP at the Saudi Arabia branch of global solar company First Solar:

…the local PV manufacturing sector, already under development leveraging KSA’s excellent industrial infrastructure, with region-specific PV R&D initiatives at local institutions (i.e. KAUST, KACST), would provide a further boost not only to additional cost decrease but also to increased human capital development in the Saudi solar sector…

It looks like Saudi Arabia isn’t letting any grass growing under its feet when it comes to solar power. Meanwhile, over here in the US the solar picture is a little less clear, thanks in part to climate change denial and lobbying efforts funded by the Koch brothers.

Hey, whose side are they on anyways?

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About the Author

Tina Casey specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.



  • shecky vegas

    It’s called Slave Labor.

    • Ronald Brakels

      Saudi Arabia may not have much of an advantage in labour costs over the US. This may sound odd as their minimum wage is about half or less that of the US, but they have to pay about as much for skilled engineering as the US does and other labour is not a huge component of the cost.

  • Zer0Sum

    Ghawar is already at 80:20 water to oil mix. They are right on the edge of the cliff and they are scrambling to make up for lost time. Makes things worse when we look at the progress that Germany and China have already made and compare the solar saturation and available cash resources to the Saudis. Clearly they have been punch drunk on cheap oil for too long to realise they were literally wasting their energy.

    Given they have copious amounts of free land and a huge unemployed workforce available they should be able to ramp up real quick now. Lets see them install 13GW in one year like the Chinese are doing.

    • Ronald Brakels

      Crude oil sells for 60+ cents per kilowatt-hour of energy. Electrical energy from solar in Saudi Arabia will soon be 5 cents a kilowatt-hour. They are not going to care if it requires more energy to extract oil than it contains. No one has ever cared. Australia did not care when they used detergent to scrub out the Bass Strait oil deposits back when oil was $40 a barrel. They just cared about the money.

  • Dallin Paul Jensen

    I feel the analysis would have been more insightful if it had mentioned how Saudi Arabia’s high solar potential affect the difference in price. It’s like comparing Arizona to Maine and assuming the difference is due to policy alone.

  • Roger Pham

    This is smart, use solar energy domestically while conserving oil and gas for exportation. EIA’s prediction is biased against RE.

    • Calamity_Jean

      Nobody but the rulers of Saudi Arabia know how much oil is left under the Kingdom. There may not be much.

      • Ronald Brakels

        There’s a lot of oil, it just doesn’t want to come out. In the good old days they’d drill a hole and oil would flow out. Now they have to pump in seawater to keep the pressure up so the oil will come out. Once too many oil wells start pumping out sea water instead of oil they’ll switch to the next phase which is pumping detergents and other weird stuff down there to try to flush the oil out of the rock. All this of course eats into their profit margins. Of course the simple solution is to just stop extracting so much oil and let the oil that is trapped in the rock below the seawater level slowly float to the top over the course of centuries. So they could produce a small amount of oil at a low cost for a long time, or they could do what they’re doing now which is spending a huge amount of money to maintain current production and then falling off, maybe not a cliff, but a very very steep hill.

        • Calamity_Jean

          Either way, their income is gonna go ** Splat! ** in the not too distant future. When that happens, the Royal Family may need to flee the country.

          • Ronald Brakels

            Improved technology means they cannot rely on being the biggest producer in a world of declining oil production to keep revenue coming in. Increases in oil prices these days just lead to more electric car sales and other efficiency measures.

          • Calamity_Jean

            Yes, if I were a Saudi prince, I’d be very nervous.

          • Ronald Brakels

            Having three quarters of a trillion dollars in foreign reserves shoved down the back of the couch must be reassuring though.

          • Calamity_Jean

            True.

          • mds

            I’ve been told this is a Saudi saying:
            “My father rode a camel. I drive in a limo. My son flies in a jet. His son will ride a camel.”

          • Calamity_Jean

            I’ve seen that too. Dunno if it’s true.

          • Bob_Wallace

            I doubt it. I think the Royal Family has made a lot of investments around the world.

    • Roy Wagner

      I agree a recent article I read says Saudi Arabia uses 20% of it’s domestic oil consumption providing electricity for air conditioning.

  • Victor Provenzano

    Tina, the widescale desalination by Saudi Arabia and the other Gulf States is a rising ecological calamity. The thick brine that is a byproduct of desalination is being released into the Gulf and is turning it little by little into a marine desert. In the U.S., due to a 2011 court ruling under the Clean Water Act, the use of ocean water for desalination is no longer seen as viable without reducing the mortality of the sea life, the plankton, the fish eggs, etc., by 90%

    • Roger Pham

      There is an easy fix : avoid dumping the thick brine back into the sea but let it evaporates out on land and collect and sell the salts and the minerals, including the Lithium that the sea has to offer.

      For desalinization, solar thermal at 70-80% efficiency of collection may be cheaper than using solar PV at 20% efficiency. Parabolic trough and heat transfer liquids can be used, but at much lower temps, hence much cheaper and higher efficiency of collection than solar thermal to electricity.

      • Bob_Wallace

        “avoid dumping the thick brine back into the sea but let it evaporates out on land and collect and sell the salts and the minerals, including the Lithium that the sea has to offer.”

        I’ve been wondering if that might be a solution. Do you know of any studies that have worked through the numbers?

        For example, it might be necessary to line the brine pits to avoid leaching into the ground water. Necessary? Cost effective?

        • Roger Pham

          The following link outlines how the concentrated brine is processed to extract the salts:
          http://saharaforestproject.com/concept/technologies/technology-extentions/salt.html

        • Ronald Brakels

          Adelaide does this. It collects water in lagoons, lets evaporation do its job and then collects the salt. Adelaide is the only Australian city that is completely self sufficient in salt. Of course, this is done in North Adelaide with normal sea water. The desalination plant is in South Adelaide and dumps its brine into the ocean. It looks like we didn’t really think this through, doesn’t it? On the other hand, once the desalination plant was completed half of Australia immediately flooded while the other half caught on fire and the Murry River actually started to flow into the ocean. We all went down and had a look since it was so bizarre. So I don’t think we’ve actually switched on the desalination plant yet. And land developers are clamoring to sub-divide the salt flats. But only once the government has paid the massive cost of protecting them against sea level rises of course. Then the developers can go back to hanging out in expensive coffee shops and boasting about how they never got anything from the government. But we can’t even stop Port Adelaide dropping below sea level every now and then. And this is after we filled in the streets and turned the first floor of every building into a basement.

          Anyway, Saudi Arabia has the space to evaporate brine and bulldoze the resulting salt. But it will be worth a negative amount of money as much more salt will be produced than people want. Saudi Arabia has a lot of impermeable rock so contaminating ground water may not be a problem and salt dumps will be near the sea anyway as it costs a lot to pump water inland. But the salt piles will need protection so that a once in a century deluge, which occurs twice a decade these days, won’t wash a huge amount of salt into the sea and kill stuff.

        • Roy Wagner

          If the discharge pipe is properly located in an area with ocean currents the concentration is quickly dispersed.
          Salinity levels naturally and constantly change in the ocean this occurs in all areas of the world.
          Two things essential for life fresh water and salt

      • Omega Centauri

        I suspect the brine is only a (local) problem if you dump it into a part of the ocean that doesn’t get much water flowing through it. Dumping it into an nearly enclosed bay, which the Persian resembles, and it can’t easily migrate to the global ocean. Clearly we won’t affect the salinity of the global ocean -the desalinated water returns to the ocean as rain or runoff at some point.

    • Matt

      In CA they could dump the brine into those huge salt caves. But either way you need a big place to hold it. From 10 liters of sea water how much brine how much fresh water do you get?

      • Ronald Brakels

        Typically 4 liters of fresh water might be extracted from 10 liters of seawater.

    • Wayne Williamson

      Something is very wrong with this post. Water is not a finite resource. It is infinitely recyclable. What ever you use does make its way back to the ocean. Victor, please provide some kind of link that supports your statement…

  • JamesWimberley

    “Our figure of $130 to $243 per MWh comes from the US Energy Information Agency’s 2014 Annual Energy Outlook.” Tina: please, please ignore the EIA for anything but historical data.
    The go-to people in the USA are Mark Bolinger for data on utility solar and Ryan Wiser for wind, both of them at Lawrence Berkeley laboratory and moonlighting at NREL. You’re a journalist, email them.

    Bolinger, at an October 2013 webinar (link): “PNM recently filed for regulatory approval of 23MW of projects to be built in 2014 at a contractual price of $2.03 W(AC).”
    A later slide of Bolinger’s shows numerous PPAs being signed in the US Southwest in 2013 in the range $50-$70 per mwh.

    All this is exactly what Economics 101 predicts. Solar panels and inverters are commodities, with strongly converging global prices (adjusting for quality). Racking is low-tech metal-bashing that can be done anywhere. Initially, prices in different countries reflect local institutions and cultures, and vary a lot. As the industry expands, these fade into the background and prices are dominated by costs of production and capital, which will be very similar. Theory also predicts the price convergence will be faster for utility than for residential, which is again reflected in the data.

  • vensonata

    So, I looked at the Nrel site…still mystified. Does $70 mwh mean that electricity is produced at 7cents per kwh or does it mean the system was installed for $70 per peak kw hour rating of the panels? If it is 7cents kwh that is not very good. If it is $70 per kwh peak, that is very, very good since it would be about 2cents per kwh over a 30 year lifespan. Sorry to be so dense, but I would be surprised if they can already sell pv electricity in Texas to the grid at 5cents and they still can’t come close in Saudi Arabia. Any professors out there?

    • JamesWimberley

      5c/kwh plus say 2.5c PTC= 7.5c/kwh, similar to Saudi Arabia. Bob has a better number for the PTC value.

      • Bob_Wallace

        The 2.3c/kWh PTC subsidy applies to only the first 10 years of production. That means the power produced during the second half of a 20 year PPA is not subsidized.

        One could simply divide the 2.3c by 2 and use 1.15c but getting ones money early has some value, so to be conservative I use 1.5c as the subsidy value over the length of the PPA. It’s probably between 1.15 and 1.5, but if one gets too close to the low end the anti-renewable coyotes start howling.

        I would guess that Saudi Arabia is new to the game and will be able to pull their prices down as they build their supply stream. But there’s also the vertically integrated companies like First Solar that can cut costs by being in charge of the entire process.

    • anderlan

      You’re killing us with “kwh peak” and “peak kw hour rating”, you know.

      I’ve taken to writing kwhr when I mean kwhr, because otherwise I (along with everyone else) make the typo of writing kwh when I mean kw. (Maybe something about the h being silent makes it harder for me to catch my mistake.)

      (And I’m not worried that “kwhr” with the r at the end doesn’t use the standard SI abbreviation for hour, because kwhr has nothing to do with any remotely sane or simple SI standard of talking about energy anyway other than the fact that it’s 3.6MJoules.)

      • Vensonata

        Yes, thank you for the attempt to clear things up. As I was typing I tend to think about the two categories of reader, the first, trained tech people familiar with standard notation, the second are green bozos like me who only sort of know what we are talking about. The abbreviation I usually see for pv labels is “kwhp” apparently meaning peak production of kilowatts per hour. But then I think “who knows what that abbreviation means?” and so I try to be a little more generous with the wording. Sorry for killing you!

        • anderlan

          Thanks for the info. I didn’t know that panels had “kwhp” on it. I mean, it’s a totally meaningless number to put on a panel because it varies based on the geographic location and angle it’s installed at! I would never use it. I rely on the kw peak spec of a panel, then I run my own kwh numbers based on siting.

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