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.