PÖYRY POINT OF VIEW REPORT / 7 Nov 2017
Solar in the Middle East – how to harness technological change to deliver low electricity costs?
The Middle East has had remarkable success with solar tenders in the last two years. In 2016 Dubai and Abu Dhabi’s tenders showed a large drop in the price at which projects could be developed. This has continued in 2017 with some jaw-dropping tender results for solar PV and CSP in Saudi Arabia and Dubai.
The next step is to ensure that these world record prices are used to ensure security of supply and lower the cost to consumers. There are many questions that need to be answered, including:
- What generation mix will meet demand at the least production cost?
- How should different technologies be compared and evaluated?
- What is the role for energy storage in enabling the roll out of solar?
There are a wide range of potential technology options: solar PV, solar CSP, wind, batteries, gas, coal, nuclear. Each technology is different, and not so straight forward to compare. The sector will need to move beyond simplistic levelised cost metrics and consider how each technology can contribute to reducing overall system costs. The use of simulation tools to analyse future power system dispatch and cost has become standard in more established markets and should be increasingly used in the Middle East.
As the generation mix becomes more diverse, PPA tariff structures will need to evolve to ensure that the full flexibility of new technologies can be accessed. There are a variety of possibilities which range from evolutionary change to a wholesale electricity spot market.
The Middle East electricity sector is on the right track for great improvements with handsome rewards. Pöyry offers an insight to best approach the questions now faced by the sector, backed by 25 years of experience in international market analysis and design.