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Jinko Solar/EDF make record low bid for UAE solar project
CHINA
CHINA’S Jinko Solar is part of a consortium that has made a record-breaking low bid for the Emirates Water and Electricity Company’s (EWEC) 1.5GW Al Dhafra solar project.
Jinko Solar and its partner EDF made the lowest of five bids for the independent power producer (IPP) project, offering a reported AED0.0497 ($0.013533) per kWh.
This offer beats the existing low solar price of $0.0156 per kWh offered by Total and Japan’s Marubeni Corp. in Qatar’s 800-MW solar tender in January.
The other four bidders for the Al Dhafra pro- ject included Saudi Arabia-based ACWA Power, Engie, Marubeni Corp./Total and SoftBank/Eni.
EWEC launched the tender in July 2019, with bids submitted by November 2019.
EWEC will now begin talks with EDF and Jinko, Bloomberg reported, although if nego- tiations break down then ACWA Power, as the second-placed bidder, will take their place.
The deal involves EDF and Jinko taking a 40% stake in a special purpose vehicle created for the project, with EWEC’s parent, Abu Dhabi Power Corp., and other government bodies controlling the rest.
Indeed, government-owned utilities are expected to provide grid connections and logis- tical support for the project.
“It’s very likely that the land and grid connec- tion are being provided by the state, and with a very large project, economies of scale in build- ing and operation will be optimised,” said Jenny Chase, an analyst at BloombergNEF. Al Dhafra could have a total equity value of about $240mn, she said.
The Al Dhafra project is expected to cover an area of 20 square km and will be the world’s largest solar PV IPP project. It will be larger than
EWEC’s 1.2GW Noor Abu Dhabi solar plant, the current largest operational single-project solar PV plant in the world, which commenced its commercial operation in April 2019.
Once opened, the Al Dhafra plant will lift Abu Dhabi’s solar power capacity to 3.2 GW, further reducing the emirate’s CO2 emissions by more than 1.6mn tonnes per year (tpy).
The UAE and other Gulf oil producers are now investing in renewables in a bid to diversify their energy supply and to reduce their reliance on crude oil, especially given the current drop in oil prices.
Meanwhile, Abu Dhabi plans to issue a request for proposals (RfP) in the last quarter of 2020 for another 2GW solar development.
The tariff reflects the global trend of falling costs for solar and wind projects.
BloombergNEF said in a recent report that solar projects had reduced LCOE costs by 4% over the last six months to $50 per MWh.
The best newly financed solar projects are coming in at $23-29 per MWh in markets such as Australia, China, Chile and the UAE.
Tifenn Brandily, lead author for BNEF, said: “There have been dramatic improvements in the cost-competitiveness of solar and wind. Part of it is due to photovoltaic and wind technology getting better at extracting renewable resources. But our analysis also suggests that since 2016, auctions are forcing developers to realise cost savings by scaling up project size and portfolios.
“Larger scale enables them to slash balance- of-plant, operations and maintenance expenses – and have a stronger negotiating position when ordering equipment.”
“On current trends, the LCOE of best-in-class solar and wind projects will be pushing below $20 per MWh this side of 2030.”
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