Acwa Power wins bid for Mohammed bin Rashid Al Maktoum solar power plant

Acwa’s current solar portfolio includes a 60 MW PV plant in Bulgaria, a concentrated solar power (CSP) plant in South Africa totalling 50 MW and a 160 MW concentrated solar power (CSP) plant in Morocco.


Dubai Electricity and Water Authority launched the Mohammed bin Rashid Al Maktoum solar energy plat two years ago as part of the emirate’s 2030 energy diversification goals.

Acwa Power made a record-low bid for the second phase of the Mohammed bin Rashid Al Maktoum solar power plant, marking its entry into the UAE’s renewable energy market.

Acwa Power bid an unprecedented, and unsubsidised, 5.98 US cents per kilowatt hour (kWh) for the 100 megawatt (MW) phase, trumping the previous lows in Brazil and India at 8 and 9 cents.

The Berlin-based global management consultancy Apricum believes this will set the standards for tenders. “The public readout of the bids provoked awe in the room and is now sending ripples through the Gulf power sector,” said Mortiz Borgmann, a managing partner at Apricum.

A joint venture between the Spanish developer Fotowatio Renewables and the Saudi newcomer Abdul Latif Jameel Energy came in a close second at 6.13 cents.

“The extremely low winning bid and the close second bid mark worldwide record lows for the cost of solar power electricity,” Mr Borgmann said.

Masdar and its partner, Isolux Corsan of Spain, as well as other industry big players First Solar, SunEdison and EDF submitted proposals in the range of 8 to 9 cents per kWh.

“The results also indicated that a few applicants were apparently out of sync with the market as demonstrated by bids as high as 14.7 cents per kWh,” Mr Borgmann said.

Dubai Electricity and Water Authority (Dewa) launched the Mohammed bin Rashid Al Maktoum solar park two years ago as part of Dubai’s 2030 energy diversification goals aimed at bringing clean energy’s contribution to the emirate’s total power generation to 12 per cent.

The first phase of 13 MW was brought online in October last year by First Solar and the second phase of 100 MW is expected to be completed by 2017. The solar park is to have a total generating capacity of 1,000 MW once complete.

Dewa issued the tender for the second phase on November 20 under a build-own-operate model, shortlisting 10 firms out of the 49 initial qualified bidders. Independent power producers (IPPs) were selected after submitting the lowest tariff on a per-kilowatt-hour basis.

Officials at Dewa and Masdar could not be reached for comment yesterday.

This solar tender is a game changer for the industry with Acwa taking an aggressive approach to go ahead and bid for the remaining 1,000 MW at a tariff of 5.4 cents under a 25-year power purchase agreement. The Saudi company also said the park could be completed in 2018, long before the 2030 date proposed by Dewa.

The alternative proposal from Acwa became public only through a glitch in the readout process, according to Apricum.

“[The bid] is a testament not only to the commercial competitiveness of solar energy in the Gulf region, but also to the confidence with which serious market players would commit to extremely fast large-scale deployment of solar PV power,” said Mr Borgmann.

In Acwa’s 2013 annual report, the chairman said that the company’s strategy was to decrease the cost of renewable energy. “In fact, we are showing considerable industry leadership by rapidly reducing the cost of renewable energy,” said Mohamed Abunayyan.

The economic viability of these rates will rely heavily on Acwa’s ability to cut costs on the components of a PV power plant while maximising performance. “You want to use as little material as possible and you want to build as fast as possible,” said Mr Borgmann.

“It’s optimisation of the construction of the plant itself and how its constructed starting from design to implementation.”

Apricum said that the tariff rates proposed by Acwa are feasible thanks to local financiers. Mr Borgmann said a number of regional banks are making statements that they are willing to support renewable energy project finance. “Banks see renewable energy project finances and they really want to position themselves as being available.”

Acwa is also said to be a front-runner, along with the Spanish giant Abengoa, in the tendering process for another Morocco CSP project totalling 350 MW.

The Saudi company said in October that it was looking to gain more than $7 billion worth of projects in the renewable energy sector, focusing on wind energy and solar power in the Mena region.