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Solar Forges Ahead in Jordan

The Hashemite Kingdom sees tariffs tumble to near record levels in round 2

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Jordan, Solar, ANALYSIS

The Hashemite Kingdom sees tariffs tumble to near record levels in the second renewable energy procurement round

Jordan received 24 bids in the second round of its solar energy procurement programme with the lowest bids not far off the record levels seen in Dubai earlier this year.

The average of the top four tariffs in Round 2 is over 50% lower than the tariffs achieved in Round 1, reflecting a dramatic improvement in the cost of solar in Jordan.

Subject to a detailed commercial and technical evaluation of their bids, the top four will each be awarded a 50MW solar PV project and sign a 20-year power purchase agreements (PPA) with the National Electric Power Company (NEPCO).

“The winning tariff is within 10% of the record-low tariff in the DEWA 200MW IPP project, suggesting that a tariff of $6-8 cents is the new benchmark for utility-scale solar projects in the stable markets within the Middle East,” said Vahid Fotuhi, president of the Middle East Solar Industry Association (MESIA).

GI Karnomourakis SunRise of Greece submitted the lowest bid of JOD 4.3441 cents ($6.13 cents) per kWh, close to the bid that secured ACWA Power the contract to develop Dubai’s 200MW first expansion phase.

On this occasion ACWA’s bid of JOD 6.5831 cents ($9.29 cents) per kWh was well off the pace and only good enough for 18th place.

The identity of the winning bidder comes as a major surprise given that the company was only established in 2006 and has never undertaken a project of this magnitude.

In second and third place were two of ACWA Power’s Saudi Arabian compatriots. Saudi Oger’s bid came in at JOD 4.59784 cents ($6.49 cents) per kWh while Abdul Latif Jameel and its newly acquired partner Fotowatio of Spain bid JOD 4.8949 cents ($6.91 cents) per kWh.

This is a first success for the ALJ/Fotowatio partnership which came within a whisker of winning the DEWA contract earlier this year.

In fourth place, but somewhat behind the first three, was Hareon Swiss Holding with a bid of JOD 5.43 cents ($7.67 cents) per kWh.

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A sigh of relief
The result will surely come as a relief to the Jordanian government which must have watched with bemusement as Dubai attracted world record bids for its 200MW solar PV plant earlier this year.

ACWA Power’s winning bid of just below $5.9 cents per kWh was a huge improvement on what Jordan received during its first procurement round just three years earlier, when 12 projects shared 200 MW of PV capacity.

The largest of those projects by far, the 52.5MW Shams Ma’an, received a tariff of just under $15 cents per kWh under a 20-year contract. The other eleven smaller projects each achieved a tariff of $16.9 cents per kWh. Even the lowest of the 24 bids Jordan received in the second round was an improvement on that. Suncore PV Technology offered JOD 9.4 cents ($13.27 cents) per kWh.

Experts point to the fact that DEWA’s 200MW project was far bigger than the 10MW projects tendered in the first round in Jordan, which would have had a significant baring on the bids. Bigger projects attract a larger pool of investors willing to offer more attractive terms on everything from construction to lending.

However the main reason for the difference in tariffs achieved between the first and second rounds is the gains in cost and efficiency the industry has made during the three year time lapse. The fact that offers for a 50MW project in Jordan are now in the same ball park as (or even anywhere near) a 200MW project in Dubai is testament to how quickly the cost of solar PV continues to fall.

It remains to be seen whether Jordan will now revive plans for a third procurement round. The Ministry of Energy and Mineral Resources (MEMR) shelved plans last July to tender for projects of up to 100MW due to concerns over the development of the grid infrastructure needed to transmit the several hundred megawatts of renewable energy capacity coming onstream.

However with news of the Round 2 tender result breaking within days of Spain’s Ennera announcing the start-up of Jordan’s first utility scale, grid connected solar PV project., it appears that solar power in Jordan is now truly up and running.

A Message to KSA
One of the key questions now is whether the apparent success of the latest Jordan tender, combined with the recent shift of gear in Dubai will hasten Saudi Arabia’s move towards a solar power procurement programme of its own.

“The results in Jordan will send a strong signal to other solar markets, notably Saudi Arabia, who are sitting on the sidelines of the region’s solar market,” says Vahid Fotuhi.

“Riyadh can now see that solar is extremely competitive compared to conventional sources of power generation. If they decide to follow in Amman’s footsteps, we will see the Middle East solar market take off like never before.”

Bids in $cents/kWh
1- GI Karnomourakis - 6.13
2- Saudi Oger - 6.49
3- ALJ/Fotowatio - 6.91
4- Hareon Swiss Holding - 7.67
5- Evolution Solar/AMP - 7.89
6- Philadelphia Solar - 7.91
7- SolaireDirect - 8.02
8- Neoen - 8.1
9- Linuo Group - 8.27
10- Activ Solar - 8.47
11- Mainstream - 8.68
12- Kawar-First Solar - 8.8
13- Alten - 8.86
14- Al Sanad - 8.89
15- SkyPower-FAS - 8.98
16- SunEdison - 9.04
17- Elecnor - 9.05
18- ACWA - 9.29
19- SECI - 9.32
20- ELF-ENEL - 9.32
21- Scatec - 9.46
22- Hanergy - 9.88
23- Spectrum - 10.31
24- Suncore PV - 13.27

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