Solar projects in the Middle East are competitive with natural-gas-fired generators in some markets because of falling technology prices and more expensive fossil fuels, an industry group said.
With oil prices trading at more than $80 a barrel and the cost of liquefied natural gas, or LNG, above $13 per million British thermal units, solar power is competitive without any government subsidies, the Emirates Solar Industry Association said in a report co-authored with Price water house Coopers LLP.
“The key question in determining whether solar power is commercially viable is ‘Can it replace some gas generation,’” Robin Mills, who wrote the study for ESIA, said in an interview in Abu Dhabi yesterday. The group released the report at the World Future Energy Summit being held in Abu Dhabi this week.
Crude gained 8.2 per cent last year, a third annual rise, pressuring global economic recovery. Crude for February delivery gained as much as $1.06 to $101.65 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.56 at 9:07 a.m. London time. The contract, which expires tomorrow, is up 2.4 per cent this year.
Power produced by renewable technologies such as solar and geothermal costs more than coal and gas generation, according to data compiled by Bloomberg New Energy Finance. Utilities and power producers receive government subsidies to promote investment in renewable power.
Energy versus solar
The rise in energy costs makes solar power viable even without subsidies in countries that are themselves dependent on costly fuel imports, Mills said. To run generators, Dubai and Kuwait both import LNG, gas that’s cooled to liquid form and loaded on ships for transport over distances not covered by pipeline, making them candidates for solar power.
Qatar, the largest LNG exporter, is currently charging about $16 per thermal unit for its gas, according to the report. Solar technology advances are set to cut costs for such plants to the point where they can produce power more cheaply than generators using gas sold for $10 per thermal unit, according to the report.
Saudi Arabia, the world’s largest crude exporter, forgoes oil revenue by burning the fuel in power plants, also making it economically sensible to pursue solar power there, said Mills, who works as an analyst at Manaar Energy Consulting in Dubai.
