Low bids on project in Jordan likely to trigger solar energy boom
The lowest ever bids for a solar power project in Jordan could lead to a boom in the region – especially in Saudi Arabia, industry experts say.
“The Jordanian solar market is going to be booming now that solar energy is evidently cheaper than conventional energy,” said Hadi Tahboub, the regional executive director of development at SkyPower, a UAE firm and bid participant.
He said that the company expected Jordan’s solar photovoltaics (PV) market to boom and trickle into other areas such as Saudi Arabia.
The second round of Jordan’s solar independent power producer (IPP) tender, totalling 200 megawatts, drew the lowest rates for a solar project in the country. The top four bids will each be awarded 50MW.
The lowest bid came from a relatively unknown Greek firm, GI Karnomourakis SunRise PV Systems, at 6.13 US cents.
This is half the amount of the winning bid in Jordan’s previous round and also only a slight difference of about 10 per cent from the world-record breaking solar PV prices in Dubai’s Mohammed bin Rashid Al Maktoum solar park, according to the UAE-based solar trade organisation Middle East Solar Industry Association (Mesia).
According to some estimates, 1MW of energy can power about 1,000 homes, which means the project once completed will be able to supply 200,000 homes.
Jordan is said to be looking at generating 10 per cent, or 600MW, of its electricity via solar in five years. The country imports 96 per cent of its oil and gas, most of which is used to generate power. It is a major drag on its import bill.
According to Acwa Power, a top regional player from Saudi Arabia, prices in Jordan continue to signal growth in the PV sector. “This [bid round] reinforces and makes even more of a compelling case for policymakers in the region, including Saudi Arabia, to embrace renewable energy,” said the Acwa chief executive Paddy Padmanathan.
It should also be noted that two of the top four bidders in Jordan’s projects are Saudi firms, Saudi Oger with a bid at 6.49 cents per KWh and Abdul Latif Jameel/Fotowatio at 6.91 cents.
“The results in Jordan will definitely raise eyebrows across the region, especially in Saudi Arabia which has so far remained on the sidelines of the region’s booming solar market,” said Vahid Fotuhi, the president and founder of Mesia.
Unlike Jordan, a country that relies heavily on fuel imports, Saudi Arabia wants to diversify its power mix to increase its oil exports. It is only one of a handful of countries that generate power directly from crude oil.
However, the kingdom has experienced many delays along the way to reaching its ambitions.
In January, Saudi Arabia announced that it would delay its clean energy target, which included a US$109 billion solar programme, by eight years to 2040.
The country now plans to more than double its available generating capacity to 120 gigawatts from 58GW by developing solar and nuclear power projects, according to the US energy information administration. Yet to date there are no utility scale solar projects under way and less than 1 per cent of solar energy is being generated by scattered rooftop panels.
Mr Fotuhi said that the Jordanian results will “tickle Saudi Arabia’s belly” and entice the country to take a closer look at its own solar market. “Once Saudi Arabia wakes up, you will see the market explode,” he said.
Nathan Weatherstone, the head of National Bank of Abu Dhabi’s renewables initiative, said the reduction in the cost of solar PV has been driven by a drastic reduction in the cost of polysilicon and manufacturing efficiencies created through the scaling up of PV panel production. The research NBAD commissioned from University of Cambridge and PwC suggests that solar PV will be at grid parity [same cost as conventional power] in 80 per cent of countries over the next two years, he added.
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Updated: May 21, 2015 04:00 AM