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Published on August 12th, 2015 | by James Ayre


Another Low-Solar-Price Record: Saudi Electric Company Lands Solar PPA Under 5¢/kWh

August 12th, 2015 by  

Solar energy prices are continuing to fall rather rapidly around the world, but especially in the Middle East, as evidenced by a new deal that will see the Saudi Electric Company develop a 50 megawatt (MW) solar energy project that already has a power purchase agreement (PPA) secured for 0.1875 Riyals ($0.049) per kilowatt-hour (kWh).

News of the completely unsubsidized project was first broken by the country’s state news agency.

Saudi Arabia flag

The solar energy project is slated to be constructed by Taqnia Energy, with cooperative development occurring between the Saudi Electric Company and the King Abdul Aziz City for Science and Technology (KACST).

Reportedly, the Saudi Electric Company and KACST will also work together to create a new solar energy research center. Taqnia Energy and KACST are currently working together on a solar desalination facility accompanied by a 40 MW capacity solar photovoltaic (PV) facility that will provide the needed electricity.

As Saudi Arabia is currently aiming to invest upwards of $109 billion into solar energy in the coming years — as a means of keeping up with growing electricity demand, and as a means of decreasing local oil use (thereby increasing exports) — it’ll be interesting to see how low future PPAs in the region can get.

Given the very high solar insolation levels that the region receives, the potential is presumably there for the 0.1875 Riyals figure to fall a fair bit more. Though, obviously, much of this depends upon other factors, such as the investment climate and the economic state of the region.

If you haven’t been keeping track of record-low solar prices, don’t worry, we have been. Here’s a rundown of some of the lowest prices we’ve seen:

→ In 2013, First Solar landed a PPA for solar power in New Mexico at 5.8 cents per kWh, or, presumably, 8.5 cents per kWh if you added in subsidies. (But let’s note that if we are adding in subsidies for solar when comparing to other sources, we should also be adding in subsidies for fossil fuels.)

→ Last year, Austin Energy announced that it had awarded a PPA to Recurrent Energy under 5 cents per kWh, or under 7.1 cents per kWh with the US federal tax credit for solar included.

→ Late last year, ACWA Power landed a contract to deliver solar power to Dubai at a record-shattering low cost of 5.84 cents/kWh. However, that record only lasted a few months….

→ In Austin, Texas, this year, Austin Energy announced that it had received solar PPA bids under 4 cents/kWh. If you included subsidies (the US federal tax credit for solar), that would still presumably be under 5.71 cents/kWh.

→ Also this year, NV Energy signed a solar PPA at an initially stunning low price of $0.0387/kWh, or 5.53 cents/kWh after accounting for the US federal tax credit. Though, that PPA came with a price escalator, so the average price across the life of the PPA will be a bit higher.

→ Now we’ve got this contract, unsubsidized, for $0.049 per kilowatt-hour! Wow! 


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About the Author

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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