The downward momentum in pricing for solar energy projects is unlikely to continue without significant technological advances, according to one regional expert.
Sharath Coorg, a director of acquisitions and project finance for Saudi Arabia’s Acwa Power, said that solar prices have dropped by 90 per cent over the past decade, driven by much cheaper solar cells, government investments and economies of scale, with solar projects in the Middle East dwarfing earlier schemes in terms of size.
Developers looking to build 800 megawatts of solar power projects for the Dubai Electricity and Water Authority at the Mohammed bin Rashid Park set a new record of 2.99 US cents per kilowatt-hour in April this year.
This record was subsequently broken by a project in Chile, and again in September when a joint venture between Marubeni and Jinko bid 2.41 cents for the yet-to-be-awarded 350MW Sweihan solar project for the Abu Dhabi Electricity and Water Authority.
“There’s a lot of discussion in the market about what we’ve seen in the past few months in Abu Dhabi and Dubai and whether it is sustainable or not,” said Mr Coorg.
“In my opinion, a lot of it is driven by record-low prices for silicon panels and low interest rates. If it has to go any lower than this, it has to be through technological changes – either in terms of panel efficiencies or better tracking mechanisms,” he said.
Tracking systems using algorithms to more accurately follow the sun would be one of the few ways that project developers could increase the amount of energy produced to drive prices lower, he said.
Daniel Zywietz, the chief executive of the Dubai solar generation rentals company Enerwhere, said that solar installations now cost less than the fuel for a gas power plant, and were almost as cheap as coal. He argued that for renewables to become more established they need to be regarded as not only as a method for saving on fuel costs, but as a reliable source of energy in their own right.
mfahy@thenational.ae
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