Race Heats Up For Title Of Cheapest Solar Energy In The World

Dubai has narrowly missed out on reclaiming the title of having the world’s cheapest solar photovoltaic (PV) energy, after receiving bids for the latest phase of a massive solar park on the desert outskirts of the city.

 

Saudi Arabia’s Acwa Power submitted a tariff of just 1.6953 U.S. cents per kilowatt hour (kWh) for the 900MW fifth phase of Dubai’s Mohammed bin Rashid Al Maktoum (MBR) Solar Park, according to a report by the Middle East Economic Digest. That sets a new record for unsubsidized solar PV production, in the region at least. However, it is still a little way short of the 1.654 cents/kWh achieved in Portugal earlier this year.

 

The Dubai authorities have delighted in repeatedly setting new records for previous phases of the MBR Solar Park and they may be disappointed to have fallen just short this time. A carefully-worded statement from the government-owned utility, DEWA, earlier this week claimed they had, however, set a new world record for a PV solar plant based on the independent power producer (IPP) model.

 

A field of solar photovoltaic panels that form part of the Mohammed bin Rashid Solar Park in Dubai, United Arab Emirates, on 17 January 2018.

 

The MBR Solar Park is designed to be the largest single-site solar power facility in the world and will have a total capacity of 5GW by 2030. It is only four years since it was set up, but its short history shows just how quickly solar energy prices have tumbled.

 

In 2015 the first phase of the facility was launched, with a 200MW PV solar plant developed for a then-record tariff of 5.85 cents/kWh. A new record was set for the second, 200MW phase at 5.6 cents/kWh. In June 2016, that benchmark was beaten for the 800MW third phase, with a price of 2.99 cents/kWh – the first time a solar project had come in under 3 cents/kWh.

 

The fourth phase of the park saw the price drop again, to 2.4 cents/kWh for the 250MW PV element – a further 700MW in that phase is based on more expensive solar technologies including Concentrated Solar Power.

 

In between these events, others have briefly claimed the mantle of having the cheapest solar power.  In early 2017, for example, Abu Dhabi secured a tariff of 2.42 cents/kWh for the Sweihan solar PV project. And in February last year, Saudi Arabia handed a contract to Acwa Power to develop a 300MW PV project for a tariff of 2.342 cents/kWh.

 

If anything, the pace of change is speeding up. In June this year, a 400MW project in Los Angeles was agreed at 1.997 cents/kWh, breaking through the 2 cents level for the first time. That was eclipsed within days by an even cheaper scheme in Brazil priced at 1.75 cents/kWh.

 

And that price was then bettered in Portugal in July, when the Direcção-Geral de Energia e Geologia awarded a series of contracts to provide 1.15GW of solar energy. Within that, 150MW was secured for a price of just €0.01476/kWh, equivalent to 1.654 cents/kWh.

 

The results underline the fact that solar energy is now becoming cost-competitive with conventional forms of energy in markets around the world. A recent study covering 344 cities in China, published in Nature, found that in all cases unsubsidized solar PV was cheaper than electricity supplied through the grid.

 

Often, the low prices are being secured by the use of reverse auctions. "This July's auction [in Portugal] is, by a distance, the lowest-cost contract awarded through a public auction in Europe and gives a measure of solar PV’s increasing economic competitiveness in the region,” said Tom Heggarty, senior research analyst at Wood Mackenzie, following the results of the Portuguese auction.

 

Industry eyes will now turn to other parts of the Middle East. At the end of October, developers are due to submit proposals for a 2GW solar project in Abu Dhabi and before the year is out, bids are also due in for 1.47GW of solar power projects in Saudi Arabia.

 

Whether or not Abu Dhabi or Riyadh manage to reclaim the prize of having the lowest cost, they are unlikely to hold on to it for long, as more countries plan ever more solar energy schemes.

 

Portugal is planning another auction in January 2020, for 700MW of solar power. In the longer-term, the country is planning to have between 8.1GW and 9.9GW of solar PV capacity in place by 2030, up from just 689MW at the end of last year. That will allow it to meet 80% of its total power demand from clean energy generation.

 

That is in line with trends elsewhere in Europe and around the world. Ireland is planning to have 65% of its energy needs met by non-hydro renewable power by 2030, while Chile is aiming for 50% by that date. Tumbling costs will surely encourage more govenments to set even more ambitious targets.