MESIA Solar Outlook Report 2017

2016 WAS A RECORD BREAKING YEAR FOR SOLAR IN THE MIDDLE EAST.

With record low tariffs on Dubai Electricity and Water Authority’s (DEWA) 800 MW Phase III project and Abu Dhabi Water and Electricity Authority’s (ADWEA) Sweihan project, we could call it a successful year for large scale solar on the Arabian Peninsula. Record low tariffs below 3 US$ cents per kWh attracted worldwide press attention.

At 2.99 US$ cents per kWh, the contract for DEWA’s phase III awarded by DEWA to Masdar was the world’s lowest unsubsidized solar power price in the first half of 2016. It was not a one-off occurrence. By September 2016, we witnessed another world record low tariff in Abu Dhabi with a new record-low levelized cost of electricity (LCOE) for large scale solar power at 2.42 US$ cents per kWh.

These low prices have changed the perception of policymakers and industry leaders. It even led to a downward revision of the Feed-in tariff in Egypt and revives the debate of the usefulness of Feed-in tariffs versus competitive bidding in the MENA region. On an unsubsidized basis, solar PV without storage is now one of the cheapest sources of electricity available – it costs less than unsubsidized nuclear, LNG, and diesel used for off-grid power. Based on IRENA’s projections, solar PV LCOEs are expected to continue to decrease going forward, but whether it will continue to drop as rapidly is subject to debate.