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Clean Power Mohammed bin Rashid Al Maktoum Solar Park

Published on July 21st, 2015 | by Smiti


World’s Cheapest Solar Power Project In Dubai Achieves Financial Closure

July 21st, 2015 by  

The world’s cheapest solar power project being built in Dubai is one step closer to commercial operation, the Dubai Electricity and Water Authority has reported.

The 200 MW second phase of the Mohammad Bin Rashid Al Maktoum Solar Park being implemented by Saudi Arabia-based ACWA Power has achieved financial closure. The project was awarded to ACWA Power earlier this year at a record-low tariff of US¢5.98/kWh. The 200 MW capacity would add to the 13 MW phase I project that is already operational. Phase II is expected to achieve commercial operation in 2017.

The project will have a higher debt component compared to most other solar power projects, with about 86% of the funding for the project coming through debt financing, while the rest will be through equity investments.

In March, ACWA Power announced that it secured a debt financing loan worth $344 million for the project. The 27-year loan will be provided by Abu Dhabi’s First Gulf Bank and 2 Saudi banks — the National Commercial Bank and the Samba Financial Group. Paddy Padmanathan, Chief Executive Officer, ACWA Power had announced at Abu Dhabi Sustainability Week 2015 that the company would secure debt financing at a low interest rate of just 4%.

DEWA plans to invest billions of dollars into the expansion of the Mohammed bin Rashid Al Maktoum solar park. The authority has upgraded plans for the installed capacity of the solar park. From an initial target of 1 GW by 2019, DEWA now plans to have 3 GW installed capacity at the park by 2030.

The solar power park is central to DEWA’s target to source 7% of Dubai’s total power output from renewable energy sources by 2020 and 15% by 2030.

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About the Author

works as a senior solar engineer at a reputed engineering and management consultancy. She has conducted due diligence of several solar PV projects in India and Southeast Asia. She has keen interest in renewable energy, green buildings, environmental sustainability, and biofuels. She currently resides in New Delhi, India.

  • PhineasJW

    Can someone clarify:

    is the 5.98 cents / kwh the price that their consumers pay, or the price that the utility is paying?

    • Bob_Wallace

      A PPA (Power Purchase Agreement) price is the contract a utility pays to the seller.

      Utilities are going to add their other costs (distribution, operating, etc.) on top of that “wholesale” price.

  • JamesWimberley

    It’s no longer the world’s cheapest. Buffett has signed a 50MW PPA in Nevada for $0.0387/kWh, as already reported here (link).

    • Bob_Wallace

      The Buffett PPA unlike (most/many/all other?) solar PPAs has a built in inflation factor. The cost goes up 3% per year during the life of the contract which gives it an average 5.2c/kWh cost over the 25 year lifetime.

      • Ronald Brakels

        I assumed that US PPAs would have a CPI adjustment built into them. I thought Australia was weird for having some without. That means that wind power is not just cheaper in the US than in Australia, it is much cheaper. (It also means we have a lot of room for improvment, which isn’t a bad thing.)

        Thanks for the information.

        • Bob_Wallace

          I don’t know about wind PPAs. What I’ve read about non-inflating prices was for solar PPAs.

          Maybe Zach can get some info from the AWEA.

      • neroden

        Given that inflation has been 0.5% for the last couple of years, it seems insane to sign a contract with a 3% inflator. Why didn’t they tie it to CPI-W or something?

        • Bob_Wallace

          Can’t tell you. But at a 3% inflating price the average cost over the life of the contract is not much higher than fixed price contracts.

        • Matt

          The history raise in electric cost has been more than 0.5%. Some ran numbers and looked in the foggy crystal ball and thought this option was better than paying more at the start and less at the end.

  • Folatt

    Why not state the costs in dollars per MegaWatthour? I use a little over 2 MegaWatthours per year in my home, so the calculation becomes a lot easier to how much it will cost.
    Having paid $82.90 per MegaWatthour in 2013 means the people in Dubai are probably going to get their electricity cheaper than I do.

    • cents/kWh is the norm.

    • Oscar Martín

      US¢5.98/kWh = 0.0589 $/kwh = 58.9 $/MWh

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