Published on August 13th, 2014 | by Tina Casey34
Saudi Arabia Could Beat US To Low Cost Solar Punch
August 13th, 2014 by Tina Casey
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.
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?
Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.
Own or lease an electric car? Complete out EV Owner/Lessee Survey.