Record low solar cost

Dubai solar power plant, PV and CSP

From IEEFA:

A consortium led by Saudi Arabia-based ACWA Power has reportedly lodged a world record low price bid of $16.953 ($A25) a megawatt hour for a 900MW solar park in Dubai.

The bid – reported by infrastructure journal IJGlobal – is one of two record low offers made by the two consortia still competing for the right to build the fifth phase of the huge 5GW Mohammed Bin Rashid Al-Maktoum solar park in Dubai. According to IJGlobal, the bid offered by a rival consortium comprising Masdar, French energy giant EDF and China’s Jinko Solar, also beat all previous bids with an offer of $US17.25/MWh.

The tender is being run by Dubai Electricity and Water Authority (DEWA), which had already attracted world-record low bids for previous phases, including a then record low of $US24/MWh by ACWA for the fourth phase of the solar park, which will combine solar PV and solar thermal technologies.

Dubai has often set record lows for solar power thanks to its low cost of finance, cheap labour and excellent solar resources, and intense competition from the likes of ACWA and Masdar, who have been rivals in numerous tenders in Dubai and across the Middle East and in north Africa.

ACWA won the first tender for the Dubai solar park just four eyes ago with a price that then shocked the solar energy world – $US58/MWh. The new offer is less than one third of that price.

Dubai is always likely to have cheaper solar than places in higher latitudes.  But the really interesting aspect of this report is the plunge in costs over the last 4 years.  This isn't due to location, but to an underlying global cost reduction.  I remember when the $58/MWh was announced that there was shock and surprise that costs should be so low.  And look at them now.  The annualised rate of decline is in excess of 25%.  There have been special factors over the last couple of years (an unexpected glut in solar panels from China, for example) but even if the annual rate of decline slows to 15%, costs will halve again over the next four years.

Battery costs are also declining by 20% per annum.  So storage costs are halving every 3 years.  That means that the cost of "firmed" solar (i.e., solar power which mimics the output of fossil fuel power stations) is halving every 3 or 4 years.  It's very hard to see coal, and eventually gas, surviving in that sort of environment.  In a few years at most, around the world, coal and gas will be priced out of the market.