L R AS Published on Sunday 8 October 2017 - n° 206 - Categories:auctions, Middle East

Solar kilowatt-hour is the lowest in the world in Saudi Arabia's bidding process

Bids for the Saudi Arabian tender have lowered the solar kilowatt-hour to the lowest level in the world - less than $0.02! GTM believes that this price could only be offered because of government funding.

The auction draws attention to the Saudi economy.

It should be noted that the conditions agreed between the parties

(manufacturer-distributor) is not published. GTM estimates that Masdar cannot make money at a price of $0.0179/kWh. This auction could fail and prevent cheaper bids in future tenders.

Another commentator believes that this auction wants to make headlines but does not reflect economic reality. Indeed, nothing in Saudi Arabia encourages the development of the solar market. No conditions are being created for the industry to invest in long-term production and jobs. This can only discourage the solar market.

For the time being, these are only proposals. The offers constitute a price escalation. The offers must be refined by November. The announcement of the results is planned for January.

To reach its renewable energy targets, Saudi Arabia needs to go from almost nothing currently installed to 9.5 GW in 2023. GTM estimates that the kingdom will achieve only 5.5 GW.

The announcement of a price of less than $0.02/kWh could push in that direction, but the implications for the solar industry should not be exaggerated. For GTM, this is not sustainable.

GreenTech Media of October 4, 2017

Editor's note Each time the proposed price sets a new world record, GTM believes that the bidders will not succeed in honouring their proposal. However, in many cases, new lows are reached in other auctions .

What is true is that the specifications include various clauses (contract duration, financing, aid or subsidies, etc.) that influence the price, making it possible to achieve these records. Usually we don't know them and we only focus on the proposed prices...

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