Yesterday, pv magazine reported breaking news of the world record bid during the tender taking place in Abu Dhabi. Today, new information about all of bids that were entered has emerged and it shows an incredible trend of rock bottom prices for energy generated using solar power.
Six consortiums, made up of two or three members, entered bids into the auction, with the team of Jinko Solar and Marubeni putting in the most price competitive bid of just USD 0.0242 per kWh. pv magazine spoke with a senior representative of Middle East Solar Industry Association (MESIA) today who supplied detailed information about the bids, which can be seen in the table below.
In addition to the official bids, local media is reporting that one of the consortiums offered a price as low as USD 0.023 per kWh, provided that the PV project could be larger than 1.1 GW. The initial size of the project was set at 350 MW, but the Abu Dhabi Electricity and Water Authority (ADWEA) invited bidders to put forth bids for a larger project if they so wished. Presumably ADWEA is deciding whether 1.1 GW is a little too large for the project.
Now that the bids are in, they are subject to further review and verification before a final decision is made, however, it stands to reason that the winner is likely to be one of the three consortiums that put forth record low bids. These include Jinko Solar and Marubeni with the USD 0.0242 per kWh bid, Masdar, EDF and PAL with a USD 0.02533 per kWh bid and Tenaga and Phelan Energy with a USD 0.02598 per kWh bid.
Solars downward price trend
These prices sound almost unbelievable, but they are just the latest in a string of low price world records for electricity generated by solar PV. Previous to the Abu Dhabi tender, the record was USD 0.0291 per kWh set in Chile in August. And it shouldnt come as too much of a surprise in an industry that has seen prices drop over 80% in the last five years alone.
Additionally, as can be seen from the table, these projects expect to have an internal rate of return (IRR) of at least 7%, which suggests their viability. Of course, there are a number of factors involved in the price drop cumulating in this auction, but it is hard to look past the dramatic reduction in the cost of the technology, particularly solar cells.
It is also important to note that the price in Abu Dhabi cannot just be repeated in other markets, as a number of factors make this price viable, including state support and cost of materials and labor. Yet, it clearly represents a trend, which doesnt seem to be stopping anytime soon.
Coincidentally, on the same day that the record-breaking bids were entered, financial think tank Carbon Tracker released a report that stated that renewable power generation costs are already lower on average worldwide than those of fossil fuels. Also stating that utility-scale renewable projects will continue to get cheaper.
Policy-makers and investors really need to question out dated assumptions on technology costs that do not factor in the direction of travel post-Paris [COP21], said Carbon Tracker head of research James Leaton. Planning for business-as-usual load factors and lifetimes for new coal and gas plants is a recipe for stranded assets.
The Abu Dhabi bid is a sign of the times when it comes to renewable energy prices, particularly solar PV. If prices in markets around the world continue to fall there will be no logical option but to turn to PV to solve some of the energy issues of the future. This comes with its own challenges, which should be addressed sooner rather than later.
Markets are having to deal with integrating variable renewable on a growing scale, commented Carbon Tracker senior analyst Matt Gray. Rather than continue debating whether this energy transition is already occurring, it is time to focus on developing the opportunities in energy storage and demand management that can smooth the process.