Technological advances have increased the proportion of solar energy that a solar cell can transform into electricity, while manufacturing economies of scale have cut costs. Yet the pace of this transformation has increased beyond all expectation during the course of this year.
Many governments have held tenders for long-term contracts to develop and operate large solar PV projects in order to secure the best possible prices. When the second phase of the Mohammed bin Rashid al-Maktoum Solar Park attracted a winning bid of $58.5/MWh at the end of last year, this was the lowest rate ever achieved in the Middle East.
Yet a consortium of Abu Dhabi’s Masdar, Fotowatio Renewable Ventures and Gransolar Group both of Spain, and Saudi Arabia’s Abdul Latif Jameel submitted a bid almost 50% lower, of just $29.9/MWh, in the third, 800 MW phase in May. The world record for low PV prices was broken yet again in September in neighbouring Abu Dhabi, when Marubeni Corporation of Japan and China’s JinkoSolar Holding Company submitted the lowest bid of 88.8 dirhams/MWh ($24.0/MWh) for 350 MW.
The Gulf states enjoy huge solar and financial resources, but this trend is being replicated elsewhere in the world. Chile’s PV auction attracted the lowest bid of $29.1/MWh in August and Latin America as a whole has emerged from almost nowhere as an important destination for solar power investment. The region accounted for a paltry 0.2% of the global PV market in 2011, yet this figure is projected to reach 9.3% in 2018 by analysts GTM Research. In addition, solar PV has already reached price parity with gas-fired power plants in Italy and other parts of Southern Europe.
The implications of this trend for Africa are profound, as the continent enjoys some of the best solar resources on the planet. An estimate 585m Africans have no access to electricity in their homes, relying on wood, charcoal and kerosene, which all have environmental and safety problems.
Solar PV has already begun to take off in East Africa, with companies such as M-Kopa and Juabar providing solar panels to hundreds of thousands of homes since the start of last year, while solar kiosks are springing up across the region to enable customers to charge their mobile phones. What is most impressive is that this capacity is being added without any financial incentives.
Concentrated solar power (CSP) is already beginning to take off on the continent. CSP involves using solar energy to heat a liquid that is then used to produce steam to drive turbines in the same manner as coal, gas and oil thermal power plants and geothermal renewable energy schemes. Two of the four biggest investors in CSP in the world are in Africa: South Africa and Morocco. The South African government has assumed an average price of R930/MWh ($66.4/MWh) in its energy calculations for 2016, half the rate that had originally been proposed and the figure is likely to be cut again next year.
Africa has the solar resources and ability to develop large-scale commercial solar power projects. It is therefore a matter of time before huge PV schemes begin to spring up across the continent. It would be no surprise, within five or ten years, if all discussion of new traditional thermal power plants were to cease as attention turns fully towards renewables – not on environmental grounds but mainly because of commercial considerations...Read More