THE ENERGY INDUSTRY TIMES - OCTOBER 2016 8 International News Record low bids submitted for Abu Dhabi project iPAD RWANDA ENERGY INFRASTRUCTURE FORUM QUOTE CODE: MP Siân Crampsie Abu Dhabi could expand its Sweihan solar power project to over 1 GW after record low bids were submitted last month. Abu Dhabi Water and Electricity Authority’s procurement arm received six bids for the upcoming 350 MW solar photovoltaic (PV) plant in Sweihan, with the lowest bid at 2.42 cents/kWh coming from an Asian consortium. A local firm bid secondlowest at 2.53 cents/kWh, according to reports. The bids are lower than the last record low bids received earlier this year for solar projects in Chile. However the Asian consortium reportedly submitted a second offer, proposing to expand the plant to 1170 MW at 2.3 cents/kWh, local media reported. The bids are a further indication of the falling costs of renewable energy in markets around the world, and renewables are already the cheapest option in a number of markets around the world, according to research by Carbon Tracker Initiative. A new sensitivity analysis of power generation costs by Carbon Tracker Initiative shows that renewable power generation costs are already lower on average worldwide than those of fossil fuels and clean energy plants will become even more cost-competitive by 2020. The firm compared the power-generation costs of four new-build coal, gas, wind and solar plants. The paper applies a Levelized Cost of Electricity (LCOE) sensitivity analysis across three scenarios: the 2016 reference case scenario, an updated 2016 scenario and a 2020, 2˚C pathway setting, where investment decisions take into account decarbonisation trends. “Policy-makers and investors really need to question out-dated assumptions on technology costs that do not factor in the direction of travel post- Paris. Planning for business-as-usual load factors and lifetimes for new coal and gas plants is a recipe for stranded assets,” said Carbon Tracker’s head of research James Leaton. The LCOE study shows that reduced load factors and shorter lifetimes for coal and gas plants in a world that is decarbonising, significantly undermine plant economics. Few models to date have factored in this kind of dynamic when calculating future LCOE. Meanwhile, the combination of lower cost capital with cheaper technology for solar and wind improves the relative competitive position of renewables. “This analysis explains why renewables are already the cheapest option in a number of markets. This trend is only likely to spread as the growth of renewables undermines the economics of fossil fuels,” said Paul Dowling, co-author of the report. Independent power producers (IPPs) will play a key role in the future of Gulf countries but they should be made a key part of market reforms, rather than just seen as a short term solution to capacity needs, according to a new report. The latest Apicorp Energy Research published by Arab Petroleum Investments Corporation indicates that over the next five years, the private sector will add more than 20 GW of generating capacity in GCC countries. IPPs will help Gulf countries to meet rising energy demand without placing a financial burden on governments, many of which are facing increasing deficits and lower budgets because of lower oil revenues. However, with structural reforms in many Gulf states imminent, IPPs should be included in planned changes in order to avoid distortions and inefficiencies created by long-term power purchase agreements. Estimating that GCC power capacity needs to expand at an average annual pace of 8 per cent between 2016 and 2020, Apicorp said to meet rising demand, the GCC will need to invest $85 billion to add 69 GW of new capacity over the next five years. Highlighting that the region still relies on the single-buyer model where a state-owned entity is the only wholesale purchaser from power generating companies, Apicorp said the current market structure in the GCC has served IPPs well as governments assume most of the risks. In addition, IPPs have numerous other advantages, including fast execution and a lower cost of capital compared with government-run projects. Oman is leading efforts in the region to unbundle the power sector and privatise key assets. It will become the first GCC country to introduce spot trading in the electricity market by the end of the decade. In Saudi Arabia, state utility Saudi Electricity Company (SEC) has recently announced plans to break-up into four independent power generating bodies and an independent transmission company by the end of 2016. The single-buyer model is likely to remain, says Apicorp, but governments are likely to want to reduce risks associated with IPPs. Toshiba is to help Uganda develop its geothermal energy sector after signing a memorandum of understanding with the government. The firm will collaborate with the Ministry of Energy and Mineral Development (MEMD) on power generation projects in the geothermal sector. The collaboration will focus on the development and supply of major equipment for a geothermal power plant, framing operation and management guidelines, and cooperating in personnel development. Toshiba will also provide services for the early construction phase of the plant as well as supply geothermal power generation equipment in the future. Uganda Ministry of Energy and Mineral Development Permanent Secretary Dr Fred Kabagambe-Kaliisa said: “The development of Uganda’s geothermal energy resources is in line with our energy policy objectives of increasing power generation capacity and diversifying our energy mix in order to achieve least-cost, affordable and stable energy supply. Uganda has an estimated 500 MW of geothermal potential. It currently generates about 60 per cent of its power from hydropower. Fast economic growth is causing energy demand to grow at 10 per cent per year. South Africa is preparing to launch a request for Proposals (RFP) for a nuclear new build programme. Energy Minister Tina Joemat-Pettersson told the country’s parliament that the RFP would be issued at the end of September and would give an indication of the costs of nuclear energy. The move has sparked debate in South Africa about the need for nuclear energy. The government has yet to formally adopt an updated Integrated Resource Plan, which gives projections on energy demand and plans the generation mix. The last IRP was published in 2010 and calls for the construction of 9.6 GWe of new nuclear capacity, with the first reactor coming on-line in 2023. The government says it will provide an update by the end of the year. The Nuclear Industry Association of South Africa (NIASA) welcomed the plans but called for transparency and an emphasis on localisation and local skills development. “The nuclear project will not only support industry and create much needed employment, it will also create a platform upon which our economy can grow and develop. NIASA is committed to working with all stakeholders to ensure that the next nuclear build project is transparently and professionally managed through all phases of its development,” said Knox Msebenzi, NIASA Managing Director. The South African cabinet gave the Department of Energy permission to issue the RFP in December 2015. Five reactor vendors are expected to be invited to submit proposals: China’s SNPTC, France’s EDF/Areva, Russia’s Rosatom, South Korea’s Kepco, and the USA’s Westinghouse. Proposals are to specify reactor design, the degree of localisation, financing and price. n Renewables cheapest option in several markets n Abu Dhabi bids beat Chile bids IPPs key to GCC future Toshiba and Uganda partner in geothermal development South Africa prepares for nuclear new build
Energy Industry Times October 2016
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