As the economics of photovoltaics begin to stack up the MENA region, particularly as a replacement to oil-fired generation, approval and construction of projects is beginning to get underway. The most recent announcement is the First Solar will supply the first stage of the eventual 1 GW Mohammed Bin Rashid Al Maktoum Solar Park.
The project, in the United Arab Emirates (UAE), is to be part of a new policy direction in the country. The Dubai Energy Strategy 2030 aims at seeing energy sources in the country diversified to include 1% renewables by 2020 and 5% by 2030. While these goals may appear unambitious, demonstration projects may prove to utlities the financial reality emerging in the region.
DEWA is managing and executing the solar project, and the initial 13 MW installation will be connected to the DEWA grid. The utility reports that it received six bids to the tender, issued June 26, from international photovoltaic players. First Solar has been selected to provide both modules and EPC services and the project is set to be completed by October 2013.
Many acknowledge that the MENA region has vast untapped potential, in terms of photovoltaics. The vast majority of the regions electricity is generated by burning its ample oil supplies, but as this oil can be exported at vastly higher prices than it can be burnt domestically for electricity, the case for supplementation by renewables, including photovoltaics, is becoming increasingly persuasive.
In a recent interview with pv magazine, the Director of the Fraunhofer ISE Institute, Eicke Weber, spelt out the numbers in underpinning the change in the region:
"Let me just share with you the numbers in Saudia Arabia. The country burns oil to create electricity. Very soon they will use half of their oil production, only to provide electricity for the Saudi population. And looking at the numbers, Saudi Arabico, the worlds largest oil company, is forced to sell oil for US$4.90/barrel to be converted to electricity. If you look at the numbers, two barrels of oil creates 1MWh of electricity and therefore electricity in Saudi Arabia costs only a few cents/kWh because the cost to the electricity is only one cent 2x$5/MWh or 1c/kWh.
Now if you take the real costs, you can sell the same barrels of oil for a whopping $100 on the world market. The real costs to the country is $0.20/kWh. So for the Saudis they could make billions of dollars in profit by replacing the oil burning electric power plants by PV and the beauty is they can do this without even installing any additional storage or other items, because they have at the moment the power generation capacity based on oil.
So all they have to do is replace part of the oil burning power plant production with PV and then in the night they can still run the old power plants and then they can save half or more of their oil, instead of burning it for electricity."
Back to the UAE and this most recent announcement, First Solar reports that performance of modules in high temperatures was an important consideration of DEWA in the awarding of the contract to the American company. A spokesperson for the company also chose to highlight the significance of the contract win, given it is a flagship project. First Solars largest installation in the MENA region at present, is a 5 MW power plant in Masdar.