Overview of trends in the global renewable energy sector between the start of 2015 and March 2016.
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Abu Dhabi, 19 June 2016
Have you noticed a subtle shift in the media’s coverage of renewables over the past few months? Whilst COP 21 and the international community’s commitments to reduce GHG emissions sets the policy backdrop, and of course the need to decarbonise the global economy remains as pressing as ever, it seems to us that renewables are increasingly being profiled in a new light: one with a much greater emphasis on clean energy’s cost competitiveness where its role in the energy mix of the future is as much based on sound economics as on environmental imperatives - Irena says renewable energy costs set to tumble as UAE plays major role.
This shouldn’t surprise us in the GCC. Dubai’s last two forays into utility scale solar projects have brought world record low tariffs (albeit the sub 3 cents per kWh levellised cost for Dubai’s latest project hasn’t yet been confirmed). Many in the industry expect an even lower tariff for the Abu Dhabi Sweihan solar project which is currently in procurement.
So what is driving this?
In the photovoltaic sector, up-sizing projects allowing economies of scale has accelerated the ever-reducing cost of solar unit costs and cyclically low commodity prices have helped to minimise the costs that make up the balance of plant. But other drivers have been important, such as the availability to GCC states of low cost and long tenor capital and the emergence of a super-competitive market of regional renewable developers.
DEWA - Dubai’s state-owned utility - has announced plans for the procurement of a concentrated solar power project and has already set out its expectation that the project’s tariff will be a new low.
Can Dubai achieve a hat trick of world records for its renewables projects? Given its track record, we certainly wouldn’t bet against this.
To find out more on NBAD’s view, read our Financing the Future of Energy Report.
Nathan Weatherstone, Head of Sustainable Business
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