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Power

New Record Set for World's Cheapest Solar, Now Undercutting Coal (bloomberg.com) 164

Anna Hirtenstein, reporting for Bloomberg: Solar power set another record-low price as renewable energy developers working in the United Arab Emirates shrugged off financial turmoil in the industry to promise projects costs that undercut even coal-fired generators. Developers bid as little as 2.99 cents a kilowatt-hour to develop 800 megawatts of solar-power projects for the Dubai Electricity and Water Authority, the utility for the Persian Gulf emirate. That's 15 percent lower than the previous record set in Mexico last month, according to Bloomberg New Energy Finance. The lowest priced solar power has plunged almost 50 percent in the past year. Saudi Arabia's Acwa Power International set a record in January 2015 by offering to build a portion of the same Dubai solar park for power priced at 5.85 cents per kilowatt-hour. Records were subsequently set in Peru and Mexico before Dubai reclaimed its mantel as purveyor of the world's cheapest solar power. "This bid tells us that some bidders are willing to risk a lot for the prestige of being the cheapest solar developer," said Jenny Chase, head of solar analysis at BNEF. "Nobody knows how it's meant to work."
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New Record Set for World's Cheapest Solar, Now Undercutting Coal

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  • by turkeydance ( 1266624 ) on Wednesday May 04, 2016 @09:47AM (#52044565)
    somebody should trademark that.
  • A "bid"? (Score:3, Insightful)

    by fustakrakich ( 1673220 ) on Wednesday May 04, 2016 @09:49AM (#52044579) Journal

    Don't you mean a bet? A wager? Speculation? I think we should wait to see what is produced...

    • by tomhath ( 637240 )

      "This bid tells us that some bidders are willing to risk a lot for the prestige of being the cheapest solar developer,"

      It looks like there's still a subsidy needed to make it "cheap". In this case the builder is paying part of the cost (or expects to make up the difference by raising the price tag later).

      • by zlives ( 2009072 )

        get the bid,
        get the start money (50%)
        start the project (3-10%)
        hide the money
        declare bankruptcy
        govt gets another contractor bid to finish
        start a new company
        bid a realistic amount
        finish the project with some over runs

        • You missed the important parts:
          get caught
          put into jail
          probably tried
          probably more jail

          And who wants to be in a jail in Saudi Arabia?

  • by Pseudonymous Powers ( 4097097 ) on Wednesday May 04, 2016 @09:51AM (#52044589)

    "This bid tells us that some bidders are willing to risk a lot for the prestige of being the cheapest solar developer," said Jenny Chase, head of solar analysis at BNEF. "Nobody knows how it's meant to work."

    Well, I'm neither an economist nor an... electrician? But I have bought a lot of printers that I palmed off on the thrift store people after the original ink cartridge ran out, because it was cheaper to just buy a new one. So I'll take a shot.

    The low bidders are selling their electricity for less than it costs to produce because, at some point in the future, they hope to charge a higher price for it, after all of their competitors have had to exit the industry, and, due to inertial effects, would find it difficult to re-enter.

    No other industry does this, of course. Oh, wait, almost every other industry does this now.

    • In government projects, bid cost has only a fleeting correlation to actual costs. See, for example, any major weapons system.

      I imagine that the government of Dubai is not immune to this sort of behavior on the part of it's contractors.

      • That's not really applicable here, because the governments aren't buying kW of capacity - they're guaranteeing purchase of kWh of produced electricity. Now, there's an advantage on the builders side that they know they have a buyer for every last drop of juice they're going to produce, whether or not there is demand for it, but generally they're not going to get paid unless the taps are flowing.

      • by mspohr ( 589790 ) on Wednesday May 04, 2016 @11:24AM (#52045439)

        Contract is for 2.99 cents /kwh for energy delivered. Contractor eats any overruns. This is not the US Military pork barrel cost+ contract.

        • Note that the contract sounds like the contractor gets to sell the power at 2.99c whether or not there is a demand. In some cases cost of power can go to 0 if baseload plants are providing excess capacity into the grid cannot ramp down production. So the plant gets 0c/kwh. In this case, even when the power must be dumped somewhere at 0 value to the utility, the solar producer gets paid. Conversely, when there is demand, and the solar producer has no additional capacity, nat gas peaking plants or some other

          • by mspohr ( 589790 )

            Which part of 2.99 cents / kwh don't you understand?
            They get 2.99 cents for every kwh they deliver.

            • which part of whether there is a demand for the power or not do you not understand?

              • by mspohr ( 589790 )

                The contractor is just responsible for generating the power, not managing the grid. That's a problem for Dubai to handle.

          • baseload plants are providing excess capacity
            Base load plants never provide excess capacity.
            Perhaps you should read what a base load plant actually does.
            Hint: they provide base load, hence the name. However: I have the sad feeling you don't grasp what I just wrote.

            2.99c whether or not there is a demand
            We are talking about solar power, obviously it is daytime, obviously there is always demand.

            Solar plants never get 0c price as they always provide power when there is high demand. Your reasoning is idiotic.

        • It's not like they are right next to major oil fields where natural gas is currently flared off at prodigious rates.

          I suspect they will be getting at least some of the first 'solar' power that is generated at night.

    • Not likely they can get (much) more for their power, I guess they're counting on reducing cost through advancing technology or economies of scale, something like that. Just like your typical dotcom.

    • In this case, very low per MWh bids are most likely going to have a requirement to purchase 100% of the output for a very long period. But low bids often come with other terms that can easily show up as change-orders or cost adders. Things like riders for covering costs for maintenance or natural events come to mind, but contract writers can be quite clever.

      But if they can use the power that time of day, which is likely, it might be a very good deal. Considering they have very high costs for coal, which
    • by AmiMoJo ( 196126 )

      They are doing it to get in with the Dubai Electricity and Water Authority, which has a large budget and will likely keep paying them to build more stuff and maintain it maintenance for decades to come. Happens in every industry, companies with capital buy contracts by making an initial loss on them in the expectation that it will reward them later.

      For example, in my own industry (water) a company lost a couple of million supplying data loggers to a large French company, but how they have an installed produ

  • power plants (Score:5, Interesting)

    by phantomfive ( 622387 ) on Wednesday May 04, 2016 @10:08AM (#52044735) Journal
    Note that these prices are for solar power plants, not for household solar. Here's a comparison with prices for some other types of electricity generation [eia.gov].
    Still solar plants have been popping up all over, and this will only encourage more of them, which is a good thing because coal pollution sucks.
    • because coal pollution sucks.

      If there is anything we can hope for with this, and renewables in general, is that it will bring the end of extracted carbon based energy systems sooner.

      • And even if you aren't worried about AGW, the other pollutants from coal (like mercury) make it worth avoiding if possible.

        Solar won't do that alone because it's intermittent, but it can definitely play a part.
        • Re:power plants (Score:4, Insightful)

          by Sir_Eptishous ( 873977 ) on Wednesday May 04, 2016 @10:41AM (#52045071) Homepage
          About fifteen years ago, when I started hearing the warnings about fishing in certain lakes because of the mercury levels, thats what really did it for me. I'm talking very remote lakes out in the booneys of the west(where I live). The coal pollution travels hundreds and thousands of miles(Seattle gets Chinese coal pollution).
          How someone could defend burning coal is beyond me...
          • About fifteen years ago, when I started hearing the warnings about fishing in certain lakes because of the mercury levels, thats what really did it for me. I'm talking very remote lakes out in the booneys of the west(where I live). The coal pollution travels hundreds and thousands of miles(Seattle gets Chinese coal pollution).

            How someone could defend burning coal is beyond me...

            With proper filters, coal could be perfectly clean. The problem is that the government has been loosening the pollution rules instead of tightening them. People want cheaper power from plants that are owned by for-profit corporations.

        • Thank you. I'm not concerned about AGW but I am concerned about pollutants.
    • Here's a comparison with prices for some other types of electricity generation.

      In that document, what is a "Mill"? Is it 1/1000 of a dollar?

  • Are they trying to make sure all of their petroleum is available for sale to others, or do they really feel that they need something cheaper than petroleum to improve the lives of their citizens?

    Probably not the second one. Now - give me back my mod point . . . it was a bad moderation to begin with.

  • This is truly excellent news that solar can compete and win on a cost basis, since short term $$$ is apparently literally the only thing that decision makers ever care about.

  • That's like saying a Hydro plant has been built on Niagara Falls, forever proving Hydro's dominance over Coal!

    Unless of course you don't have a massive water source.... or you live in the freaking desert.

  • http://economictimes.indiatime... [indiatimes.com]

    How it works is you underbid a bunch of stuff, build half of it, then go bankrupt.

    It's a proven model.

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