Posted below are two articles on a massive (1.1 GW) PV project in Abu Dhabi. The first, from pv magazine and dated September 20, 2016, reports on the three bids received for this project by the Abu Dhabi Electricity and Water Authority. The second, a press release put out by JinkoSolar Holding Company on May 24, 2017, announces the signing of an $870 million agreement for the project. It is estimated that commercial operation will begin in April 2019 for what will be the world’s largest single utility scale solar PV plant.
Both articles confirm what is becoming increasingly obvious: the world is in the initial stages of an energy transition from dependence on fossil fuels to steadily increasing dependence on solar energy and other forms of renewable energy. This transition is inevitable and represents a major step forward in human history and a positive legacy to all future generations.
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Abu Dhabi: Three world record bids entered for Sweihan solar project by Sam Pothecary (9-20-2016)
Further information has arisen from the record breaking solar PV tender that took place in Abu Dhabi yesterday, which saw a bid as low as USD 0.0242 per kWh for a utility-scale project in Sweihan, however, this was not the only record-breaking bid, as three of the six bidders went lower than ever before.
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.
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Financial Agreements of Sweihan Photovoltaic Independent Power Project in Abu Dhabi Were Signed
05/24/2017
SHANGHAI, May 24, 2017 /PRNewswire-FirstCall/ — JinkoSolar Holding Co., Ltd. (“JinkoSolar” or the “Company”) (NYSE:JKS), a global leader in the photovoltaic (“PV”) industry, today announced that in a signing ceremony held at the Emirates Palace, the financial agreements for the debt and equity funding for the Sweihan Solar PV Independent Power Project (the “Project”) were signed by the Abu Dhabi Water and Electricity Authority (“ADWEA”), Sweihan Solar Holding Company Limited (“Sweihan”), a joint venture between JinkoSolar and Marubeni Corporation (“Marubeni”), and a syndicate of international and local banks.
The agreements closed a US$870 million financing for the Project, an 1,177 MW (DC) solar PV project with a 25-year PPA signed with ADWEA. The Project is expected to reach commercial operation date in April 2019.
“Today’s Financial Closing is the culmination of 18 months of hard work, determination and commitment from many people, from multiple Abu Dhabi Government stakeholders, the international PV investor market, the international and local lending community and related advisors,” commented H.E Abdullah Ali Musleh Al Ahbabi, Chairman of ADWEA. “I would like to take this opportunity to thank all those involved in making today’s milestone possible. However today’s event is just the beginning. Over the course of the next 2 years, the vision of the Sweihan PV Project will become reality.”
“The financial closing of the Sweihan Project is an important step-forward to energize one of the largest solar power plants in the world,” commented Mr. Xiande Li, Chairman of JinkoSolar. “We will continue to cultivate to the successful completion, operation, and maintenance of the Sweihan project with the highest standard, along with our partners ADWEA and Marubeni.”
The world’s deserts may well become the Niagara Falls of the 21st Century.