The cost of solar power continues to drop. But the latest record low price of solar power came in at a stunningly low 2.99 cents per kilowatt hour for solar projects in Dubai. The lowest price came from FRV and Masdar, a consortium of businesses from Abu Dhabi and Spain, respectively.
“This not only marks the lowest cost ever for solar power, but also easily beats all available fossil-fuel options in Dubai on cost,” wrote Dr. Moritz Borgmann, a partner at global clean tech advisory firm Apricum. “Besides setting world records for solar power, the results unequivocally demonstrate that large-scale solar power can now regularly beat fossil-fuel power plants on cost. Solar (when delivered in 2018–2020) has now become by far the lowest-cost option for generating electricity in the Gulf region, effortlessly beating even coal-fired power plants.” Indeed, a coal-fired power plant won a bid for a Dubai project last year at 4.5 cents per kilowatt hour.
The Emirate of Dubai’s competitive bid process was for the 200 megawatt Sheikh Maktoum Solar Park Phase III project for the Dubai Electricity and Water Authority (DEWA). The project could be expanded up to 800 megawatts. The country is a leader in the region in terms of adding in solar power to meet its growing energy needs.
The new record low prices for solar power continue a trend of lower costs for the earth’s most abundant energy source. Some analysts are quick to warn that this type of result and these types of projects coming in at such low costs are an exception.
“This price is borderline in terms of viability, but it’s an outlier project,” Josefin Berg, a solar analyst at IHS, told Bloomberg. “The size of the installation makes it easier to get good conditions on their procurement. It shouldn’t be used as a benchmark.”
Still, the trend towards lower-cost solar power is continuing. Solar power, installed at those prices will continue to put downward pressure on project costs throughout the industry. Essentially all bids for the solar projects came in at less than the cost of power from the coal plant, with the highest bid coming in at 4.48 cents per kilowatt hour.
Borgmann explained that the bid from Masdar and FRV was 19 percent lower than the second-lowest bid. “One may speculate how Masdar and FRV seemingly manage to play in a universe of their own,” he said. He speculated that Masdar likely had access to long-term financing through the emirate of Abu Dhabi at lower costs than competitors.
“Still, with this somewhat unique bid, 50 percent lower than Acwa Power’s winning bid in the previous phase II submitted just 18 months ago, the danger arises that Dubai’s tender raises global expectations of the cost of solar to a level that cannot be quite matched elsewhere, making the industry get somewhat ahead of itself,” Borgmann cautioned.Tweet