Abu Dhabi's solar tender attracts lowest bids
The 2.42 US cents per kWh bid reflects declining costs for photovoltaic cells and cheaper financing for clean-energy projects.
Government-owned Abu Dhabi Water & Electricity Authority (Adwea) has received a record-low bid of 2.42 cents a kilowatt-hour (kWh) for power from a planned solar facility in Abu Dhabi. The utility opened six bids last month to build a solar plant capable of generating at least 350MW, with JinkoSolar Holding Co. of China and Japan’s Marubeni Corp. making the lowest joint offer.
A local firm bid second-lowest at 2.53 US cents per kWh. The bid marks another record for solar technology prices, which have fallen almost 70% in the past five years, according to data compiled by Bloomberg New Energy Finance.
Competition among Chinese solar manufacturers including Jinko has brought down the cost of delivering panels while more investors have become comfortable with backing the technology, reducing borrowing costs.
“It is important to notice that these latest submissions have not been awarded yet and that even the authorities now want to understand the feasibility of these bids,” said Pietro Radoia, an industry analyst at BNEF in London. “One of the main enablers of low bids around the world over the past months is cheap financing.”
Adwea, as the utility is known, plans to start operations at the facility in the first quarter of 2019, according to the statement on Emirates News. The plant will use photovoltaic technology and be located at Sweihan, about 120 kilometres (75 miles) east of the city of Abu Dhabi, according to the state news agency report, which didn’t identify the bidders.
The utility is still evaluating the bids received and aims to sign a final agreement for construction and operation of the plant in the first quarter, Emirates News said. Three calls to JinkoSolar’s director of investor relations, Sebastian Liu, went unanswered. Officials at Marubeni declined to comment.
The UAE is seeking to diversify its energy supply away from natural gas, which fuels most of its power plants. The emirate, holder of about six percent of global oil reserves, and neighbouring Dubai, the second-largest sheikdom, are developing solar plants as power demand rises.
Lower borrowing costs have helped developers make record bids in recent months. The Abu Dhabi bid beat previous records, of 2.91 cents in Chile last month, and 2.99 US cents in neighbouring Dubai in May.
Project developers may also be betting “that equipment costs are going to fall in the next years at the same rate they did in the past five,” Radoia said. “The low penalty fees are certainly allowing them to take this bet.”
Dubai Electricity & Water Authority plans to build 5 gigawatts of solar plants with investment of about $13.6 billion by 2030, the government-owned utility’s Chief Executive Officer Saeed Mohammed Al Tayer said at a conference last month.
Abu Dhabi Future Energy Co., the emirate’s clean-energy developer known as Masdar, said in a statement that it bid for the Adwea project together with Electricite de France SA’s renewable energy unit and U.A.E.-based contractor PAL Group. Those offers were still being evaluated.
In the beginning, 90 companies expressed an interest, with that number dwindling to only 34 becoming pre-qualified. Big names such as Italy’s Enel, TSK and Acwa, and Abdul Latif Jameel all pulled out over the summer, leaving a competition among seven. In the latest move the French firm Engie called it quits.