The World’s Lowest Solar Tariff — MENA's Solar Journey

Published on 04 May, 2016

Lowest Tarrif Solar MENA

Dubai Electricity and Water Authority (DEWA), the UAE’s biggest utility provider, received the lowest-to-date bid of US2.99 cents per kilowatt-hour among five bids to build 800 megawatts (MW) of solar power generation capacity as part of an expansion of the iconic Mohammed bin Rashid Al Maktoum Solar Park.

This is the lowest unsubsidized tariff in the history of the PV industry.

The lowest tariff was tabled by a consortium led by Saudi-owned Abdul Latif Jameel Energy and Environmental Services, Fotowatio Renewable Ventures (FRV) of Spain and Masdar of the UAE. FRV is now owned by Abdul Latif Jameel Energy and Environmental Services.

Saudi Arabia recently announced its “Vision for the Kingdom of Saudi Arabia” which aims at bringing the country out of the Oil-era and diversify its economy into non-Oil sectors by 2030. It’s a common vision for all the gulf countries, and it has been underway long before the unveiling of Vision 2030. Dubai ,for example, aims to achieve 7 percent of its power from clean energy sources by 2020, and Saudi Arabia plans on living without oil by the same time.

These claims might appear ambitious, but they aren't without merit.

Dubai has been expanding its solar power generating capacity with its DEWA solar project. The DEWA solar project had an original capacity of 1 gigawatt (GW), but the authority hopes the park will be around 5 GW by 2030. This is in-line with “Dubai Clean Energy Strategy 2050” which aims to increase its share of clean energy sources in power generation to 25 percent (by 2030) and 75 percent (by 2050).

This 800 MW plant is in addition to a 13 MW operational facility and another 200 MW under construction in the same park. This round will have three phases with commissioning of Phase A (200 MW) by April 2018, Phase B (300 MW) by April 2019 and Phase C (300 MW) by April 2020.

DEWA 800 MW Bids

DEWA 800 MW Bids

The lowest bid of US2.99 cents per kilowatt-hour is ~18 percent lower than next best bid of JinkoSolar of China at US3.650 cents per kilowatt-hour. The winner of the last round of DEWA’s solar park — ACWA Power— was at US3.950 cents per kilowatt-hour.

DEWA is currently evaluating the bids for technical and financial feasibility.

Abdul Latif Jameel, a Saudi-owned company, bettered yet another Saudi company in terms of PV unsubsidized tariffs. Taqnia Energy signed a Memorandum of Understanding (MOU)1 with King Abdul Aziz City for Science and Technology (KACST) and the Saudi Electricity Company (SEC) in July 2015 to build the first 50 MW standalone solar power station in KSA at the then-lowest unsubsidized tariff of ~US5 cents per kilowatt-hour. This was way before the country unveiled it Vision 2030 last month and shows the resolve of the Kingdom in inching towards an economy independent of oil.

The MENA region is gearing up for an era after oil, and alternate energy is one of the cornerstones on which this future will be built.

With an abundance of natural solar irradiance in the region, authorities are promoting and conducting research in the solar industry value chain.

More solar projects and ambitious targets are bound to bloom in the desert.

Although the solar industry took ground in Europe and the USA, its growth was stunted on account of socio-economic upheavals. It wouldn’t be far fetched to assume that the MENA region will be a center of the next big solar flare in the near future.