With Solar Costs Falling, GCC Govts Should Speed Up Projects – Expert

The GCC’s regional governments should speed up planned solar power projects since costs have reduced, an energy expert has said.

Cameron Kelly, legal counsel for the New Port Project, pointed out the recent bid for Dubai’s solar power plant, which saw the world’s lowest tariff of under 6 cents/kWh from a consortium led by Saudi’s ACWA, as an example.

“To get an idea about how aggressive this is, consider that the average of the 10 finalists’ bids was 9.35 cents/kWh, with the highest bidder being the Chinese Huaneng Power International at 14.71 cents/kWh,” she said.

“In light of these results of the DEWA auction, existing, outdated roadmaps and assumptions for the cost and complexity of procuring and installing solar that many of the GCC’s regional governments have so far based their plans on will need to be revised; there is little excuse now to further delay solar procurement programmes,” she added.

As part of its energy diversification goals for 2030, Dubai launched the Mohammed bin Rashid Al Maktoum Solar Park in 2012. The park began with a 13MW solar PV plant in 2013 and aims to generate 1,000 MW by mid-2017.

Meanwhile the Qatar Solar Energy company launched a solar-panel factory last year, which has the ability to generate 300mw of energy annually. It plans to eventually produce 2.5GW of solar energy annually.

Other Gulf countries such as Saudi Arabia and Kuwait are also eyeing major solar power projects to diversify their energy mix and capitalise on the sunny weather conditions in the region.

Speaking ahead of the Solar Middle East Conference, Kelly urged governments to consider reverse auction mechanisms.

Under a reverse auction, the government invites competitive bids from (solar and other) project developers to supply a specified amount of electricity from a certain renewable energy technology over a predetermined period of time.

The successful bidder offering the lowest price per kilowatt or megawatt per hour is awarded a long-term power purchase agreement at its winning bid.

“The key advantage involves achieving cost effectiveness. A well-designed reverse auction can effectively bridge the gap between the current state of the market and the market for low – emission technologies urgently required by the global community,” she explained.

“Reverse auctions drive product volume and installation, assist in delivering competitively priced electricity and can provide a credible and secure financial return over the long term to both developers and financiers.

“Economies of scale will apply and the speed and flexibility of renewable-energy deployment will be further increased through added competition,” she added.