French utility EDF has entered the Middle East solar market by partnering with Abu Dhabi’s Masdar for the third phase of Dubai’s US$14 billion Mohammed bin Rashid Al Maktoum solar park in Dubai.
EDF, through its EDF Energies Nouvelles unit, will help to develop the 800-megawatt solar photovoltaic (PV) project, taking over the stake from Saudi Arabian company Abdul Latif Jameel’s FRV.
The deal signals a stronger alliance between the two companies for upcoming projects in the Middle East as EDF places a greater focus on the region’s renewable energy sector.
“The Middle East is a strategic area for EDF which has strong ambitions for renewable energies,” said Antoine Cahuzac, chief executive of EDF Energies Nouvelles. “This 800MW solar project realised alongside Masdar, a key player in renewables, seals a major long-term partnership.”
The award of the project for the plant, to be constructed in three stages over the next three years, in June to Masdar and then partner FRV was at a world record- breaking price for electricity produced from solar of 2.99 US cents per kilowatt hour. Construction has already begun on the first tranche totalling 200MW.
Mohamed Al Ramahi, Masdar’s chief executive, said that EDF’s international experience would help the consortium bring to fruition what will be the “largest solar power plant in the world on completion”.
The new partnership will be jointly developed by Masdar and EDF, contributing equal amount of financing with France’s Natixis acting as the lead bank.
EDF is the largest renewable energy power producer in Europe, with 1,200MW of wind and solar capacity commissioned and another 1,800MW of renewable energy projects currently under construction, according to its year-end earnings.
It is not the first time that Masdar and EDF have tied up for projects, as the two partnered on Abu Dhabi’s 350MW Sweihan solar PV plant, losing by a narrow margin to Asian consortium, Japan’s Marubeni and Jinko Solar of China.
EDF also bid for the third phase of the Dubai solar park with Qatari partner Nebras at a 33 per cent higher price than the winning Masdar bid with original partner, FRV. Yet solar prices have dropped since the summer making the winning Masdar bid more attractive, according to Jean-Bernard Levy, chairman and chief executive of EDF.
“We have trust to achieve the kind of return we expect based on improved pricing. As time has elapsed, we’ve seen the benefit in the drop of solar prices,” he said.
While FRV is no longer on board with the Dubai project, the Saudi company wants to expand to other countries including the United States and India.
"Now that the contract has been awarded and the implementation phase has commenced, we feel that the time is right to concentrate our resources on projects where we have a key delivery role or a major stake," an FRV spokesman told The National.
The Mohammed bin Rashid Al Maktoum solar park project, with planned capacity of 5,000MW by 2030, highlights the increased international importance of the UAE’s renewable energy market.
“The solar park has attracted the interest of global business and energy companies, which reflects the trust and interest from international investors in large projects adopted by the Dubai government,” said Saeed Al Tayer, managing director and chief executive of the Dubai Electricity and Water Authority.
Mr Al Tayer added that the framework for the power sector encourages more foreign investment that will help the emirate to reach its target of 25 per cent of Dubai’s total power output from clean energy sources by 2030.
The 200MW second phase of the Mohammed bin Rashid Al Maktoum solar park began producing electricity on Monday with enough capacity to power 50,000 homes in Dubai.
lgraves@thenational.ae
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