World’s Largest Solar Project Will Also Be Its Cheapest

As the solar energy is gaining momentum all over the world, Abu Dhabi has set a global record-low solar price as authorities confirmed the winning bid in a 2-gigawatt tender. The Al Dhafra project had five bidders, with the lowest offer coming in at 1.35 U.S. cents per kilowatt-hour. Upon its expected completion in mid-2022, it is slated to be the largest single-site solar energy project in the world.

Abu Dhabi Power Corporation (ADPower) confirmed to GTM that the leading consortium consists of French energy giant EDF and the projects division of Chinese solar manufacturer Jinko Solar. However, EDF declined to comment when contacted by GTM.

ADPower will now negotiate a 30-year power-purchase agreement with EDF/Jinko. If an agreement will not be reached, ADPower, part of the Emirates Water and Electricity Company, can negotiate with . French utility Engie, Japan’s Softbank and Saudi Arabia’s ACWA Power - the second-best bidder, which has won a string of large projects in the region, were among the final five shortlisted bidders.

Both JinkoSolar and EDF have strong track records in the United Arab Emirates. Jinko developed the 1.2-gigawatt Noor Abu Dhabi project in partnership with Marubeni, which came online last year.

Tenders in the Middle East and North Africa region usually see the state take majority ownership of the project. In the case of Al Dhafra, the winners will keep a 40 percent stake and receive a 30-year PPA contract that includes, construction, procurement, and operations and maintenance duties.

Why solar prices are so low in the Middle East?

The Gulf states have had more than their share of record-low solar prices of late. 

The race of solar energy is not limited to Abu Dhabi. In November, Dubai claimed the title with a 1.7 U.S. cents deal with ACWA Power for the next 900 megawatts of its Sheikh Mohammed bin Rashid al Maktoum Solar Park. The project was started in 2013 with 13 megawatts of First Solar panels and is planned to generate 5 gigawatts by 2030.

Then in January, Qatar started the project with French oil firm Total and Japanese conglomerate Marubeni and went even lower with a bid of 1.6 cents per kilowatt-hour.

Three months later, United Arab Emirates again set the record of lowest offering.

There are numerous factors behind the ever-lower prices for solar in the Middle East, including great solar resources, large and flat sites, cheap-to-zero land costs, massive scale, and the cheap finance that comes with a 30-year PPA with a petrostate as the offtaker.

EDF has teamed up with UAE energy company and investor Masdar on a variety of projects, from solar thermal deployment in North Africa to an energy services company serving the whole region.

Big orders for the coronavirus-hit solar sector

So far, large solar tenders in the Middle East have motored on despite the current crises hitting the energy sector. Saudi Arabia is currently holding a 1.2-gigawatt solar energy tender of its own. First Solar, ACWA Power, Jinko, EDF and Marubeni are among the participants.

For module suppliers, such monster deals can fill a significant hole in their order books. The global module market is moving towards an oversupply situation, as Chinese factories ramp back up even as many key markets remain in lockdown. 

World’s Largest Solar Project Will Also Be Its Cheapest

As the solar energy is gaining momentum all over the world, Abu Dhabi has set a global record-low solar price as authorities confirmed the winning bid in a 2-gigawatt tender. The Al Dhafra project had five bidders, with the lowest offer coming in at 1.35 U.S. cents per kilowatt-hour. Upon its expected completion in mid-2022, it is slated to be the largest single-site solar energy project in the world.

Abu Dhabi Power Corporation (ADPower) confirmed to GTM that the leading consortium consists of French energy giant EDF and the projects division of Chinese solar manufacturer Jinko Solar. However, EDF declined to comment when contacted by GTM.

ADPower will now negotiate a 30-year power-purchase agreement with EDF/Jinko. If an agreement will not be reached, ADPower, part of the Emirates Water and Electricity Company, can negotiate with . French utility Engie, Japan’s Softbank and Saudi Arabia’s ACWA Power - the second-best bidder, which has won a string of large projects in the region, were among the final five shortlisted bidders.

Both JinkoSolar and EDF have strong track records in the United Arab Emirates. Jinko developed the 1.2-gigawatt Noor Abu Dhabi project in partnership with Marubeni, which came online last year.

Tenders in the Middle East and North Africa region usually see the state take majority ownership of the project. In the case of Al Dhafra, the winners will keep a 40 percent stake and receive a 30-year PPA contract that includes, construction, procurement, and operations and maintenance duties.

Why solar prices are so low in the Middle East

The Gulf states have had more than their share of record-low solar prices of late. 

The race of solar energy is not limited to Abu Dhabi. In November, Dubai claimed the title with a 1.7 U.S. cents deal with ACWA Power for the next 900 megawatts of its Sheikh Mohammed bin Rashid al Maktoum Solar Park. The project was started in 2013 with 13 megawatts of First Solar panels and is planned to generate 5 gigawatts by 2030.

Then in January, Qatar started the project with French oil firm Total and Japanese conglomerate Marubeni and went even lower with a bid of 1.6 cents per kilowatt-hour.

Three months later, United Arab Emirates again set the record of lowest offering.

There are numerous factors behind the ever-lower prices for solar in the Middle East, including great solar resources, large and flat sites, cheap-to-zero land costs, massive scale, and the cheap finance that comes with a 30-year PPA with a petrostate as the offtaker.

EDF has teamed up with UAE energy company and investor Masdar on a variety of projects, from solar thermal deployment in North Africa to an energy services company serving the whole region.

Big orders for the coronavirus-hit solar sector

So far, large solar tenders in the Middle East have motored on despite the current crises hitting the energy sector. Saudi Arabia is currently holding a 1.2-gigawatt solar energy tender of its own. First Solar, ACWA Power, Jinko, EDF and Marubeni are among the participants.

For module suppliers, such monster deals can fill a significant hole in their order books. The global module market is moving towards an oversupply situation, as Chinese factories ramp back up even as many key markets remain in lockdown. 

Coronavirus Lockdown Speeds India’s Shift from Coal to Solar Power

India is under lockdown like other countries and experiencing a speedy switch from coal to renewable energy. As a result, the country, which is the second largest coal consumer in the world, has seen its energy demand collapse by nearly 30% during.

In 2018, it was forecasted by the International Energy Agency that Indian coal demand would more than double by 2040. Thus, a major challenge to international efforts to prevent climate breakdown.

However, with the right policy framework in place, coal generation in India could peak much sooner, analysts have told Climate Home News.

Some argue that there was political backing for renewable energy prior to the Covid-19 crisis, emboldened by rapidly falling costs.

It can also be result of Prime Minister Narendra Modi speech at the UN Climate Action Summit in New York last year, where he promised to double India’s renewable target to 450GW by 2030, up from around 87GW installed capacity today. The bulk will come from solar panels.

The competitive cost of renewable energy is not the only reason for the sector’s resilience in a period of low demand. The cost of adding coal capacity is around 4.5 rupees which is much expensive that solar electricity which stands at about 2.5 rupees per unit generated, according to analysts. Even coupled with more expensive batteries to store electricity for after dark, solar energy was auctioned at a cheaper price than new coal earlier this year.

Meanwhile, the coal sector has been faced with cash flow issues over the past few years, with most plants running well under capacity.

According to an analyst, renewables delivered more than two-thirds of India’s new generating capacity additions in the 2019-20 fiscal year.

There are different factors for the increase use of renewable energy in India

1.     The sector benefits from a “must-run” status compelling power distribution companies to use solar or wind energy whenever it is generated.

2.     Powered by sun and wind, renewable generators are not exposed to the same supply chain disruptions as fossil fueled plants.

3.     In recent years, private investors have also been increasingly reluctant to invest in Indian coal infrastructure with much new finance coming from state-backed banks and companies. On the contrary, global investors are ready to invest “aggressively” in new renewable infrastructure

For Dangra, 2027 could mark the peak in capacity when India “will likely not need any new coal plants”.

Despite the favourable conditions for boosting renewables, Dsouza did not rule out an uptick in coal generation and new capacity once the lockdown lifts, saying coal will continue to meet baseload demand. “Renewables have not been a substitute for coal,” she said. None of the new coal plants in the pipeline for construction have so far been cancelled.

The pace of renewable deployment and the growth of the Indian economy will remain key factors in determining the shape of the transition. It will also depend on the grid being ready to match variable solar and wind generation with consumer demand.

Despite much hype of the renewable energy, no one can assure the status of it in the future. With a looming global recession and an Indian government strapped for cash while fighting the pandemic, there can be no trillion-recovery package expected to accelerate India’s clean energy transition.

This Trend Will Reshape Power Generation in the Coming Decades

The trend of energy production is changing, where consumers are comfortable and do not care about the production as long as it is economical and accessible. This trend has compelled the large energy production companies to introduce small-and-less complicated forms of production. As a result, the production of electricity on a commercial or wholesale scale is moving away from big-and-complicated machines.

The decarbonization of electricity production around the world today is part of a technological shift, where majority of the people wants electricity or its immediate benefits like cell phone charging. 

Therefore, it can be assumed that no more gigantic projects that take 10 years to complete will be considered in the coming years. This is interesting to witnessing a reversal of the idea of economies of scale with respect to both production of electricity as well as the optimal size of the distribution grid itself. The trend will fairly shape the industry for decades.

After having a discussion with the engineers of the last centuries, a few questions were asked, such as “If economies of scale really prevail was that a good reason to upsize electric power plants?” The response was economies of scale did in fact prevail and utilities should go forward with big projects as long as they were certain about four key aspects relating to the project: 

• Ultimate completion costs; 

• Duration of construction; 

• Total capital costs (equity plus debt); and 

• Expected market or demand for electricity at time of completion. What this asks, to borrow a phrase is, if you build it will they come—at the prices you ultimately have to charge?

The concept of economies of scale for utilities might be ripe for revision. Sextet of European and Canadian academics has conducted a recent study which supported this view (Science, 3 April 2020) by examining the trade-offs of costs versus complexity concluding that in their terms granularity has advantages over lumpiness.

If we translate these findings into concrete business policy, we understand two key benefits of decarbonization technology. First, it’s cleaner and cheaper (with zero fuel costs). And there is the possibility of reaping these benefits at far smaller, less capital intensive scale. Second benefit is the bigger and better/economy of scale thinking still pervades much utility industry thinking and capital planning. 

This is changing slowly. What we believe accelerates this change is a growing understanding that the traditional concept and hub grid system is simply no longer necessarily an optimal business model.

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https://www.reonenergy.com/our-projects

The Citizens Foundation (TCF) School

Objective

Reon aims to enhance educational experience through energy. The Solar for Schools project targets community schools located in off-grid and poor-grid areas in accordance with the UN Sustainable Development Goal Number 7¹.

Background

The Citizens Foundation (TCF) provides primary and secondary level education on a low-cost model. The school operates a network of 1,567 school units mostly located in semi-urban and rural communities across Pakistan. Approximately 94% of the Foundation’s expenditure is allocated to the Education program.

The community schools face high energy costs, significant load shedding hours (that could go up to 48 hours), and energy unavailability especially in the rural segments.

Solution

Reon implemented a 3 kW Solar pilot project for TCF Dadabhoy campus situated in Malir, Karachi. The plant currently powers 15 fans, 13 lights, Television, and a Water Pump. Moreover, the design has been done so to store energy for night time use. The use of top-tier technology and equipment keeps the system running under all weather conditions. The technical details are illustrated in the table beneath:

The pilot project was followed by two Solar Hybrid 15 KW installations at TCF Waleed Sheikh Campus, Dadu and TCF Taga, Dadu.

Impact

The pilot project saw a jump in enrollment at the TCF Dadabhoy Campus by up to 30%2. Also, the non-attendance rate is lower and the school enrollment rate for children grades 9-11 is higher in the electrified areas compared to unelectrified areas.

The results for the pilot will be simulated for other school projects to understand the effect of electricity on grade progression, attendance, and enrollment.

1.     UN Sustainable Development Goals 7 suggests ensuring universal access to affordable, reliable and modern energy services

2.     30% enrollment increase was based on a qualitative and quantitative measure as calculated by The Citizens Foundation (TCF)

The original article was published on The Citizens Foundation (TCF) School.

Wind and solar energy capacity catching with nuclear power

The Worldwatch Institute, an independent research organization based in Washington, D.C. works on energy, resource, and environmental issues, quantifies the steady decline of nuclear energy’s share of global power production, and renewable energy’s increased share. Renewables have been capturing a larger and larger portion of the total global energy infrastructure pie, while the portion nuclear energy has not just been stagnating but actually shrinking somewhat.

More interesting than that observation, though, is the fact that solar and wind energy have been gaining fast on nuclear — and are now, more or less, on the same trajectory that nuclear power was on in the 1970s and 1980s, in its heyday.

In the Worldwatch Institute’s Vital Signs Online analysis, senior researcher Michael Renner wrote:

“Advocates of nuclear energy have long been predicting its renaissance, yet this mode of producing electricity has been stalled for years. Renewable energy, by contrast, continues to expand rapidly, even if it still has a long way to go to catch up with fossil fuel power plants.”

It seems like, some analysts who have been babbling about “nuclear renaissance for the last several years need to wait for at least another couple of years or more likely forever. Without a doubt, solar and wind energy will no doubt continue growing at a fair rate (at the least) in the years to come.

Since the rapid rise from the beginning of mid-1950s, global nuclear power generating capacity peaked at 375.3 GW in 2010. Capacity has since declined to 371.8 GW in 2013, according to the International Atomic Energy Agency. According to Worldwatch, the nuclear energy’s share of global power production has declined steadily from a peak of 17.6 percent in 1996 to 10.8 percent in 2013.

Wind and solar power generating capacities are now on the same soaring trajectory that nuclear power was on in the 1970s and 1980s.

While the surge in recent years by renewables has certainly been impressive is of course down to the fact that renewables have been attracting far greater investment — owing to their superiority in almost every regard, from development costs, to safety, to operating costs. You can probably pretty much count on it to continue at an increasingly rapid rate as fossil fuel extraction becomes more and more expensive and as the effects of global warming become more and more obvious.

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