Saudi Arabia gets cheapest bids for solar power in auction

Saudi Arabia received the cheapest bid ever recorded, to supply solar power energy.

The energy minister said the Saudi plant would be supplying solar power for as little as 1.79 cents a kilowatt-hour, and this would beat the previous record of Abu Dhabi’s Masdar and Electricite de France SA, supplying power at 2.42 cents a kilowatt-hour.

As Saudi Arabia are currently diversifying their income from oil, the offers submitted are low and the cost of power from the project may inflate by terms of the contract, which have not yet been published.

Saudi Arabia, and other Middle Eastern countries such as the UAE and Iran have spent the past two years working on creating incentive programs and regulations needed to start their clean-energy industries.

Saudi Arabia’s price may be a “base rate” at low demand seasons or an entry-point price for the project, said Jenny Chase, chief solar analyst for BNEF in Zurich. It might also include a payment to the chosen developer, land grants or other incentives to get their solar industry started.

The project is a milestone in Saudi Arabia, especially for a country that receives less than 1 percent of its power from renewable energy, to now developing 30 solar and wind projects over the next 10 years.

Officials at the ministry’s Renewable Energy Project Development Office will review all the bids before selecting a power-purchase contract. The decision on who will build the plant at Sakaka will be announced in January, according to an emailed statement from the office.

The plant will be the first project under the renewables program as a part of Vision 2030. The project will generate 9,500 megawatts of electricity using solar and wind and is set to start producing power by June 2019.

Leave a Reply