The record low bids submitted this week for the latest phase of work at Dubai’s solar park could be repeated in Abu Dhabi, according to a French company interested in the bidding at both sites.
One bid came in at 2.99 US cents per kilowatt hour (kWh) for the 800-megawatt third phase of the Mohammed bin Rashid Al Maktoum solar photovoltaic (PV) plant, Dubai Electricity and Water Authority (Dewa) announced on Sunday.
The world’s lowest bid had been for a project in Mexico, at 3.5 cents per kWh (US$35 per MW).
The French company Engie, bidding for both utility-scale solar projects in Abu Dhabi and Dubai, expects the bid price of the 350MW Sweihan PV plant to be as competitive as Dubai.
This places solar energy as potentially the cheapest form of energy for power generation, perhaps beating natural gas and coal. The average cost for power produced from natural gas in the UAE, its biggest source, is about 7 cents per kWh.
The lowest submitted bid for the Dubai park is nearly 50 per cent cheaper than the record-breaking 5.84 cents per kWh bid last year for the same project’s 200MW second phase and which was ultimately successful. Just like last year, Sunday’s announcement has rocked the industry with ripples expected to be felt during the contest to win work at Abu Dhabi’s Sweihan plant.
Francois-Xavier Boul, the senior vice president of Engie, said at a Clean Energy Business Council event in Dubai yesterday that the company, which is one of five remaining bidders for the Dubai project and one of the eight single-entity qualifiers for Sweihan, was trying to digest the prices to begin thinking about the implications.
“The size [in Abu Dhabi] is 350MW, so for sure you’ll have economies of scale,” he said, adding that there was a large amount of funding available for the Abu Dhabi project. “There’s a lot of appetite. This is going to be as aggressive [as Dubai].”
The third phase of the Mohammed bin Rashid Al Maktoum solar project is divided into three parts with Dewa only evaluating 200MW at this time. This means that the 3 cents per kWh bid is for a project of lesser scale than Sweihan’s 350MW. Similar to wholesale purchases, the larger the quantity, the cheaper the rate.
Each of the five Dubai bidders, with the exception of Qatar’s Nebras, is still in the running for the Sweihan plant.
“Dubai is definitely the benchmark to beat,” said Frank Wouters, a former director of Masdar Clean Energy and former chairman of Shams Power. “It would be very difficult to explain why Abu Dhabi’s [solar project] would have to be more expensive.”
lgraves@thenational.ae
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