Solar power Sets on Oil for Gulf Power Generation

Falling costs of photovoltaic (PV) technology mean that solar energy is already a more economically attractive option for domestic power generation in the Gulf Cooperation Council Region (GCC) when compared to oil-fired electricity production, according to a White Paper published by Bloomberg New Energy Finance.

Bloomberg New Energy Finance noted that it modeled the use of a 100 MW PV project built in 2011 to displace oil-fired power generation, freeing that oil to be sold at world market prices.

The central scenario for the PV project’s capital cost is based around the 2010 global lowest price of $3.14 per Watt. The Company said that it expects the cheapest bankable systems in 2011 to be developed and built for $2.73/W and prices to drop further thereafter, according to the established experience curve for PV technology. A PV project in the GCC would generate a real internal rate of return (IRR) of 9.4 percent if oil prices rise to $163/bbl (in real 2010 terms) by 2030.

Bloomberg New Energy Finance reported that this research was carried out with the help of Standard Chartered Bank’s Renewable Energy and Environmental Finance team. Even in the case of flat real oil prices to 2030, the Company noted that the project would generate a rate of return of 4.6 percent.

GCC states should be replacing the use of oil-fired electricity generation with large-scale and distributed photovoltaic, and earmarking their oil for