What Is Driving the Middle
East Solar Market?
In a recent auction
to build the world’s
largest solar PV power
plant, Masdar entered
a bid for US $.0299 per
kWh, which would be
the lowest price ever
paid for solar power.
SUSAN KRAEMER, Contributor
With regard to solar project
development PPA prices, nor-
mally, it is local deployment over
time that gradually gets solar
prices down. But the Middle East has only just begun to
deploy solar. So what is behind Masdar’s bid for Phase III of
the Sheikh Mohammed bin Rashid Al Maktoum Solar Park
in Dubai — at the world’s-lowest-ever 2.99 US cents?
Oxford University Middle East Energy Expert Justin Dargin
said partly it is the result of competitive auctions. In Dubai,
as in other new solar markets in South Africa, Mexico and
Chile, solar is not paid a set tariff.
“There has been a conceptual shift in the renewable ener-
gy sector. Governments prefer tenders over feed-in-tariffs,”
Dargin explained. “Auctions shift costs from governmental
budgets to developers.” Using auction-based renewable bid-
ding; the offtaker; state-owned Dubai Electricity and Water
Authority (DEWA) will be able to grow the project to its ulti-
mate stated goal by 2030 of 5 GW.
Another factor in Masdar’s 2.99 per k Wh
solar bid for the Phase III 200 MW was suggested by Former Masdar co-founder/direc-tor Steven Geiger, now a partner at the U.S.
investment frm Innova Partners.
Masdar’s startling bid followed last
year’s loss to Saudi-based ACWA Power
whose winning bid for Phase II was at a
then-record 5.85 cents, he said. Masdar is
closely tied to the Emirate of Abu Dhabi,
the sister Emirate to Dubai.
“Masdar probably assumed Abu Dhabi’s
close ties with Dubai would mean a sure
win — at a nice proft. Losing to ACWA by a
HH Sheikh Mohammed bin Rashid Al
Maktoum inaugurates the second phase of the
Mohammed bin Rashid Al Maktoum Solar Park.
Credit: Government of Dubai.