Saudi Arabia’s First Solar Auction

The low bids submitted for a 300 MW solar PV project planned for Saudi Arabia surprised everyone recently when the lowest submitted bid for the levelized cost of energy (LCOE) came in at just 6.69 halalas/kWH ($0.0178/kWh).

The Sakaka project will be both the country’s first-ever utility-scale solar plant as well as its first project under the National Renewable Energy Program (NREP). It is set to be developed in the city of Sakaka, in the Al Jouf Province.

A total of eight bids ranging from 6.69736 to 12.62521 Halalas/kWh were received from pre‑qualified companies for the Sakaka project.

The low LCOE bid of 6.69 halalas/kWh ($0.0178/kWh) was jointly submitted by Abu Dhabi Future Energy Company (Masdar) and EDF Energies Nouvelles. Included in the LCOE was the cost of a special electrical facility.

Saudi-Arabia based Acwa Power came in second, with a bid for an LCOE of 8.78 halalas/kWh ($0.0234/kWh), according to a Reuters report.

Solar Tariffs are Falling Globally Due to the Proliferation of Auctions

However, these bid results – which were announced and displayed during a recent bid-opening ceremony – do not necessarily reflect final bidder rankings or bidder compliance with the requirements of the request for proposal (RFP). The Energy Ministry’s Renewable Energy Project Development Office (REPDO) has not yet made a final determination on the outcome of the bidding process and now it must begin the process of evaluating all the bids received to verify their compliance with RFP requirements.

Successful bidders will be shortlisted by November 28, 2017, and the project is expected to be awarded to the winning consortium on January 27, 2018. The resulting power purchase agreement (PPA) is set to be signed for a 25-year period and carry a financial closing date of February 28, 2018. Project commissioning is set for 2019.

“The bid opening represents a significant milestone for the NREP and an important step on the way to diversifying Saudi Arabia’s domestic energy mix and building a cutting-edge domestic renewable energy sector, which will create new jobs and opportunities. The commercial viability of utility-scale solar energy projects is a cornerstone of the program and the bids opened today will set the benchmark for this burgeoning new industry in the Kingdom and beyond,” said His Excellency Khalid Al Falih, Minister of Energy, Industry, and Mineral Resources for Saudi Arabia.

The Kingdom launched its first requests for qualifications (RFQs) for the NREP program in February 2017. NREP is targeting the installation 9.5 GW of renewable energy by 2023 in support of the Vision 2030 program. It also has an interim target of 3.45 GW of installed renewable power capacity by 2020 under the National Transformation Program (NTP).

The tariff quoted is almost 50 percent lower than the lowest solar tariff in India.