The bid opening for the first project of Saudi Arabia’s highly anticipated 9.5GW renewable energy programme lived up to the hype. As part of the kingdom’s efforts to boost transparency and media engagement with its ambitious development programme, the newly established Renewable Energy Project Development Office (Repdo) broadcasted the opening of bids for the Sakaka 300MW photovoltaic (PV) solar project live over the web.
The bids submitted did not disappoint. The prices did not just represent a seminal moment for the kingdom’s move to integrate clean energy into its power sector, but also for the global renewable energy revolution. Seven of the right tariff prices received were below $3 cents a kilowatt hour ($c/kWh), and the two lowest prices broke previous world records for utility-scale photovoltaic (PV) production. In fact, the lowest bid, 1.785$c/kWh is the first solar tariff under competitive bidding to break the $2 cents barrier.
The bids for Saudi Arabia’s first major solar project is the latest in a growing list of world record tariffs for renewable projects in the Gulf. When Dubai awarded Saudi Arabia’s Acwa Power a contract to develop the 200MW second phase of its Mohammed bin-Rashid (MBR) solar park in early 2015 for a tariff of 5.585$c/kWh, many in the renewables sector questioned whether this price was achievable and could avail reasonable margins for the selected developer. Less than three years later, and the tariff achieved in Saudi Arabia has slashed the region’s first record breaking tariff by close to 70 per cent.
While recent projects have benefitted from the continued fall in costs of technology used in PV plants, from solar panels to inverters, and a low interest rate environment, some feel that bidders may have squeezed margins to the maximum for the Sakaka scheme to win work on what is planned to be the first of an unprecedented pipeline of projects in the kingdom. Whether this is true or not, the sub-2$c/kWh tariff has got Saudi Arabia’s National Renewable Energy Programme (NREP) off to a flying start.
The submission of new world record tariffs for Saudi Arabia’s first renewables programme came less than a month after Dubai awarded a contract to Saudi Arabia’s Acwa Power to develop its first concentrating solar power (CSP) project for a levelised tariff of 7.3$c/kWh, the lowest unsubsidised tariff achieved globally for utility-scale CSP solar.
The benefit of CSP solar is that it allows energy to be stored, so that power can be dispatched during the night. The awarded tariff for Dubai’s first CSP project represented the first time that utility-scale solar with storage has converged with natural gas-fired power plants.
With the Gulf now achieving tariffs for PV and CSP solar utility-scale projects which are converging or beating costs for conventional fossil fuel power generation, governments will continue to increase targets for clean energy. This should harvest some of the most exciting pipelines for renewable projects in the world.