Some of the world’s leading solar power developers have pulled out of the running for Abu Dhabi’s upcoming plant amid expectations that aggressive bidding will push prices to record lows.
Top industry names, including Enel of Italy, Spanish company TSK and Saudi Arabia’s Acwa Power and Abdul Latif Jameel (ALJ), are no longer among the companies vying for the 350 megawatt Sweihan solar project, according to an industry source.
Each of these companies has a track record of aggressive bidding. Acwa and TSK set a new solar benchmark last year in Dubai for the 200MW second phase of the Mohammed bin Rashid Al Maktoum solar park at 5.84 US cents per kilowatt hour.
In April, Enel bid 3.5 cents per kWh in Mexico for 1,000MW of projects only to be topped last week in Dubai.
Abu Dhabi's Masdar and ALJ's FRV won the latest 800MW tender in Dubai at 2.99 cents a kWh – setting a new world record.
A great deal of chatter has surrounded the Sweihan tender issued by the Abu Dhabi Water and Electricity Authority (Adwea) with some saying that the Dubai price will either be replicated or beaten again causing some companies to retreat from the bidding.
Mohammed Atif, the Middle East and Africa regional manager for DNV GL, an energy consultancy, said companies may be exercising caution or simply not placing all eggs in one basket. “A number of the ‘usual suspects’ may be looking to diversify their strategy to maintain a balanced investment portfolio,” Mr Atif said, pointing to the example of partner switches by Masdar.
“What is interesting on the list is that Masdar is partnered with FRV in Dubai but joined with EDF in Abu Dhabi,” Mr Atif said.
ALJ said that its plate was simply full and that is why it would sit this one out. “Abdul Latif Jameel Energy did not proceed with a bid at this time having considered the pre-qualification criteria and in light of the large megawatt projects that we are currently managing around the world,” said Roberto de Diego Arozamena, the chief executive of ALJ Energy. “We continue to be interested in energy projects in the UAE and fully support the renewable energy ambitions of the region.”
Acwa, Enel, TSK and the Abu Dhabi utility’s procurement arm could not be reached for comment.
Gus Schellekens, a partner at the clean energy division of the consultancy EY, said attracting new bidders allows a greater potential for innovation.
“If you have different bidders successful in Abu Dhabi and Dubai, it’s good for the renewable energy programme in the UAE as well as the international market in terms of technology,” he said.
“For the region to be successful in the long term in achieving ambitious targets requires the international markets to be engaged in delivering new projects – not just a couple of successful bidders.”
lgraves@thenational.ae
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