Gulf sets a new global benchmark for solar energy production

MEED    10 October 2019 (Last Updated October 23rd, 2019 08:18)

The Gulf is emerging as a key market for driving down the cost of renewables.

Gulf sets a new global benchmark for solar energy production

The submission of two tariffs below $1.8 cents a kilowatt-hour (kWh) for the fifth phase of Dubai’s Mohammed bin Rashid (MBR) renewable energy park marks the latest world record to be set by the Gulf’s burgeoning solar market.

The lowest tariff of $1.695 cents/kWh submitted by Saudi Arabia’s Acwa Power is not only a new record for unsubsidised photovoltaic (PV) solar production in the world, but further evidence why renewable energy is becoming the technology of choice for utilities and energy companies seeking to boost generation capacities to cope with rising demand.

In January 2015, Acwa Power set the world record for solar power generation with a $5.85 cents/kWh submission for the second phase of the MBR solar park in Dubai, which was far lower than any previous competitively tendered PV solar project across the globe. The Saudi developer faced the wrath of numerous solar companies and developers at the time, many claiming Acwa Power’s tariff was setting a dangerous precedent – reducing profit margins and setting unrealistic expectations for the region’s utilities.

The fact the latest solar project in Dubai has received bids three times lower than the record set for emirate’s first major solar independent power producer (IPP) project shows just how far the development of solar energy in the region has come. With Abu Dhabi and Saudi Arabia having also set records for solar tariffs in this period, the Gulf is emerging as a key market for driving down the cost of renewables.

One area that may concern those within the clean energy sector is that only two groups submitted proposals for the latest record-breaking project in Dubai. While the tariffs achieved will undoubtedly be showcased as an example of the benefits of pursuing renewables in the region, to ensure a sustainable clean energy market in the long term it is vital that the region’s utilities can ensure bidding rounds remain as competitive as possible.

MEED
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