Clean Power

Published on May 2nd, 2016 | by Saurabh Mahapatra

40

Dubai Gets Record-Low Bid Of 2.99¢/kWh For 800 MW Solar PV Project

May 2nd, 2016 by  



Dubai Electricity and Water Authority has received yet another record-breaking bid for expansion of the iconic Mohammed bin Rashid Al Maktoum Solar Park, the lowest solar price bid in history, for an 800 MW solar PV project that expands on 213 MW.

Low Solar Prices May 1 2016

Dubai Electricity and Water Authority (DEWA) had floated tenders for expansion of the Dubai solar power park. The third phase of the project will see addition of 800 MW capacity, to the existing 13 MW (phase I) and under-development 200 MW (phase II) capacity.

DEWA has reported that it received 5 final bids, but did not disclose the names of the participating companies. The lowest bid among them is at a record-breaking 2.99¢/kWh, which makes the project the cheapest-ever in the world.

Initially, the Authority received as many as 95 expressions of interest. Many prospective bidders are believed to have formed joint ventures for the subsequent rounds of bidding, with around 20 left in the fray at the end of last year. These included biggies like SunEdison, ACWA Power, JinkoSolar–RWE, REC Solar, and Engie.   

The first phase of the solar park involved the installation of 13 MW worth of capacity and was executed by First Solar, and through the second phase tender, 200 MW capacity was auctioned to Saudi Arabia’s ACWA Power–TSK consortium at a then-record-low average tariff of 5.84¢/kWh.

Rumor is that Abdul Latif Jameel (Saudi Arabia) + Fotowatio Renewable Ventures (Spain) + Masdar (UAE) formed a consortium for the low solar price bid of 2.99¢/kWh, JinkoSolar was next at 3.65¢/kWh, and a consortium of First Solar & ACWA Power was next at 3.95¢/kWh.

The initial installed capacity target for Mohammed bin Rashid Al Maktoum Solar Park was set at 1 GW by 2019. However, last year, DEWA announced that it would boost the park’s capacity to 3 GW by 2030, with a total estimated investment of $3 billion.

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.

Recently, the Abu Dhabi Water & Electricity Authority (ADWEA) also announced that it received bids from a total of 34 companies for the development of a 350 MW solar power project. The 8 companies competing for the role of main project developers include First Solar, EDF, Enel, Engie, RWE–Belectric, Solar Reserve, and Total–SunPower.





Tags: , , , , , , , , , , , , , , , , , , , , , , , , , ,


About the Author

A young solar enthusiast from India keeping an eye on all regulatory, policy and market updates from one of the fastest emerging solar power markets in the world.



  • If you want to feel and see the desert of the planet Mars go to the desert surrounding the city of Dubai. The landscape outside the city make you feel like you are in the planet Mars.Both the city of Dubai and planet Mars have problems with strong dust storms. Dust storm kills the efficiency of solar panels. The dust storm prevent sunlight from reaching the solar sheet.

    • Bob_Wallace

      There are already robots that clean solar panels and use very little water in the process.

  • Bob_Wallace

    IIRC, the 3.7 c/kWh for Palo Alto was for a 30 year contract, not the more usual 20 years. Stretching it out lowers the cost.

    At least one of the 4c Texas PPAs was not a fixed price over the contract term, but increased with inflation which made it (roughly) 5c/kWh.

    Not all numbers are based on the same set of factors.

  • JamesWimberley

    The projects will be spread out between 2018 and 2020, The bids are partly bes on future drops in solar equipment prices. Still, they are remarkable. The headline winning bid may be rash; but Engie, ACWA, EDF, Jinko, First Solar etc are not tyros and all bid under $50/Mwh.

    We are seeing a step change in large-scale utility solar pricing. My guess is that it’s driven by changes in access to finance. The Dubai contract was seen by bankers as genuinely very low risk, maybe comparable to top-rated corporate bonds from the likes of GE or IBM.

  • neroden

    The *highest* bid this year was less than 5 cents?!? Good grief. If Dubai’s plan is to generate cheap electricity and sell it to the rest of the world, they’re off to a good start — they’ll need a few transmission cables, though!

    • Insane. I really hope the bidders can deliver.

    • Bob_Wallace

      1) Buy up some land along the south rim of the Med.

      2) Drop some UHVDC lines to Europe.

      3)Sell solar to the places which have less sunshine.

      4) Make money.

      • neroden

        Thinking about it, the European connection may be a pain in the neck to construct thanks to the Iraq and Syrian wars, and the lack of cooperation between the UAE and Iran. Israel is another obstruction point. I also wouldn’t want to depend on a cable across Saudi Arabia if I were them.

        Their only geopolitically sound route is through the Red Sea and Egypt, and Egypt is somewhat of a risk, though the Cairo market by itself is probably worth something.

        They can also run cables the other two directions.
        (1) Pakistan and India, running along the north and east coasts of the Arabian Sea.
        (2) Africa. Run along the west coast of the Arabian Sea and the Indian Ocean (the underwater cable location makes disruption unlikely) and supply electricity to Kenya and Tanzania.

        While they’re dropping the cables they can drop data cables and make money from that too.

        • JamesWimberley

          There is an existing cable under the Straits of Gibraltar from Morocco to Spain. In the heyday of Desertec, there was a plan for a high-capacity cable from Tunisia to Sicily and then Italy. We can take it that it’s doable – if there is a market. It probably makes sense to build much cheaper land interconnectors along the North African coast first, to give all the littoral countries better grid security. Minor snag: a civil war in Libya.

          • Bob_Wallace

            A second line might make a lot of sense, prior to increasing the Morocco/Spain transmission cable. Create multiple routes so that there’s some redundancy in the system. One blocked line would not stop all flow.

        • Brunel

          Why not have a HVDC line from Iceland to Scotland.

          Baseload geothermal.

          • globi

            Iceland has far less power than Norway and is farther away.

          • Brunel

            Iceland is closer to England than Dubai.

            When the A380 aircraft was launched, airports widened their runways.

            Iceland can build more geothermal power stations.

        • globi

          Besides, this part of the world has lots of sand storms. So, in theory Greece should be able to produce solar power for less, since there’s less cleaning/kWh.

          • Bob_Wallace

            We’ve already got robotic panel cleaners which use little water.

      • Karl the brewer

        Article linked pegs their net electricity consumption in 2012 at ~ 232 billion kwh – http://gulfnews.com/business/analysis/saudi-arabia-s-soaring-domestic-energy-consumption-1.1559918 – the report is by the EIA though 😉

        They are certainly going to be guzzling a lot of it themselves.

  • vensonata .

    Under 3 cents is certainly a milestone. It is electroshock therapy for all nuclear advocates, clearing up much delusion. Even PV advocates might be a little shocked by the arrival of the future on the doorstep 2 years early.

    • Brunel

      I actually want Dubai to have a grid storage auction instead.

      We basically do not know the cost of storage.

      While we know solar power is cheap enough.

      • Ha, that would be fun/cool. I wonder when it will do one of those. 😀

      • globi

        Given the fact that there’s still over 95% of dispatchable power and demand during daytime is significantly higher anyway, grid storage – apart from hot and cold/ice water – would be a huge waste.
        First solar needs to grow from 1% penetration to well over 60% penetration and then you can start to discuss grid storage.

        • Brunel

          Hawaii gets electricity by burning diesel.

          Would it be cheaper to get solar PV + batteries instead.

          • Bob_Wallace

            Hawaii now has an aggressive program designed to get the islands switched from diesel to renewables.

          • Mike Shurtleff

            Yes, high electricity prices from using diesel and lots of sun being so close to the equator.

            They’ve had problems with HECO trying to block Solar on Oahu, but Hawaiian Supreme Court has told them to knock it off and facilitate Solar PV integration. This was result of class action law suit. Governor Ige also strongly supporting Solar.

            http://www.greentechmedia.com/articles/read/hawaii-passes-legislation-to-go-100-renewable – May 2015
            “Hawaii Passes Legislation to Go 100% Renewable”

            http://cleantechnica.com/2015/06/11/100-renewable-energy-goal-hawaii-governor-signs-bill/ – June 2015
            “100% Renewable Energy Goal For Hawaii: Governor Signs Bill”
            “Hawaii Governor David Ige has signed a bill that sets the state’s renewable energy goal at 100% by 2045. In other words, in 30 years, Hawaii should be running only on electricity made by renewable energy — presumably a mix of solar, wind, and geothermal power. To put a slightly finer point on it, that means no fossil fuels!”

            An example of what they can do on Kuaui:
            http://www.nreca.coop/wp-content/uploads/2014/09/ts_kiuc_pv_case_study_july_2015.pdf
            “Kauai Island Utility Cooperative: The Impact of Extensive PV Penetration”
            page 4:
            “Active In Use” => “36.6% Solar PV + Hydro”
            “Under Construction/Permitting” => “5.2% Solar PV + Hydro”
            “Under Consideration” => “15.8% Solar PV + Hydro”

            Total of All Three Categories => “57.6% Solar PV + Hydro”

            Hawaii and Australia are harbingers of what is coming.

          • Brunel

            But are batteries cheap enough to replace diesel generators.

          • Bob_Wallace

            The cost of diesel in Hawaii is very high.

            At a minimum Hawaii can turn off the generators when the Sun is shining or the wind blowing. That would save a lot of fuel. It will take some time just to replace diesel during the windy/sunny times and storage continues to drop in price.

          • globi

            PV, wind, electrification of the hot water sector, air conditioning with ice storage, demand response and then batteries.

      • Mike Shurtleff

        Patience, it’s coming. May take a few years.

    • Karl the brewer

      Yes, but don’t forget that the sun doesn’t always shine.

      I’ll get my coat….

    • Earl D.

      I’m truly shocked. I haven’t been following PV costs closely for the last several months. I feel like a Rip Van Winkle who’s woken up to find (peek) electrical generation has become free.

  • Bob_Wallace

    What creates these low bids in Dubai?

    I assume low labor rates due to imported workers. Excellent solar insolation.

    Low financing rates provided by the government?

    Cheap land?

    Anything else?

    • Matt

      Crazy Carl’s solar, our prices are so low we have to be crazy!
      Is this the all in price? Or since it is part of a bigger solar part, are something covered as part of the park. If the “park” covered the cost of land, then would result in zero land cost in these bids.

      • neroden

        I could believe zero land cost, but frankly there’s lots of parts of the world where land cost is effectively zero, or close enough to zero to make no difference.

    • Brunel

      It must be due to cheap credit.

      It cannot be cheap labour because other nations in the region have cheap labour also.

      Plus it must get dusty in Dubai, so I assume they would need to be cleaned more often than panels in Sri Lanka.

      How about Tibet? Great insolation there?

    • One thing discussed previously by analysts (when the first record was set under 5 c/kWh) was low cost of capital.

      High solar insolation also helps, but note that the area is very dusty and that could offset the solar resource benefit — well, it does to some extent, but unclear how much.

      Labor costs are likely low, to be done by foreigners from India, Pakistan, Uganda… who knows, but that’s much of the country’s workforce.

      Desert land is likely not that expensive either. 😀

  • jburt56

    1 penny per mile.

Back to Top ↑