Saudi Arabia's solar plans could be realized with PV price falls

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Saudi Arabia’s ambitious plans to develop a thriving solar power industry could be aided immensely by the ongoing price reductions in PV technology, provided the Kingdom plays it smart, say research analysts IHS.

Saudi’s leaders have finally outlined concrete plans for a solar future by inviting bids on an introductory tender round for PV development in early 2014, marking the first tangible step in the country’s ambitious plans to generate one-third of their power from solar by 2032.

IHS has analyzed Saudi Arabia’s potential and ambitions, and predict that the wealthy Kingdom – grown rich on petro-dollars – will install 1.48 GW of PV systems between now and 2017, putting the country third among all MENA nations in terms of PV installations. IHS predict that, come 2017, South Africa’s solar installations will account for 31% of all PV capacity in the region, followed by Israel, with 21%, then Saudi Arabia, with 18%.

Such confidence in Saudi potential is born from IHS’s belief that the country’s plans have come at the right time. PV module costs are falling, making such ambitious, large-scale installations more cost-effective than ever. If the Kingdom can seize the initiative (they have the money) they could take real advantage of the fact that the average selling price for solar modules is expected to tumble to $0.38 per Watt in 2023, down by almost 50% from $0.73 last year, believe IHS.

Currently, Saudi Arabia’s inaugural tender is aimed at procuring a solar PV plant in the range of 500 MW to 800 MW. Bidders must, however, find a balance between a competitive bid and sourcing locally made equipment – something that could prove tricky given the region’s lack of local manufacturers. These conditions, say IHS, could harm the nation’s solar objectives.

"The outcome of this first tender in Saudi Arabia will serve as a benchmark for future tender rounds," said Henning Wicht, Ph.D., senior director of solar research for IHS. "Expected technology costs are poised to play a key role in determining the success of this tender. While PV module production costs are expected to drop by half during the next decade, for Saudi Arabia to benefit from global price reductions its supply chain for modules must be transparent and not overruled by mandates for local content."