World’s cheapest solar power contract signed for Dubai mega-project

The United Arab Emirates (UAE) has seen some of the lowest-price solar power contracts in the world, which has led to a combination of disbelief and skepticism about the viability of the projects awarded.

However, today one of these mega-projects took another step forward, with the Dubai Electricity and Water Authority (DEWA) signing a power purchase agreement (PPA) with the Abu Dhabi Future Energy Company (Masdar) for the third phase of a massive solar park in Dubai for a shocking $29.90 per megawatt-hour.

This PPA for the third phase of the Mohammed bin Rashid Al Maktoum Solar Park is the lowest price PPA globally known to pv magazine staff.

In analyzing how Masdar can make a profit on such a low PPA, Bloomberg New Energy Finance Head of Solar Analysis Jenny Chase has cited several factors, including low capital expenditures and operating costs, capacity factors of 25%, and the ability to access debt at an interest rate below 4%. (Note: This project and others in the region were examined in detail in the November print edition of pv magazine.)

And while $29.90 sets a new benchmark, bids as low as $24.20/MWh were submitted for an auction in Abu Dhabi in September.

When complete, the Mohammed bin Rashid Al Maktoum Solar Park will be 3 GW in capacity. In July developers closed on financing for the second 200 MW phase, which they expect to complete in April 2017.