Need to interview a subject matter expert?
Please select an expert within the following industries and contact firstname.lastname@example.org, 1-303-305-8021 to schedule and interview.
Ambitious Saudi Arabia Solar Plans Hinge on Capitalizing on Major PV Module Price Reductions
El Segundo, Calif. (Oct. 29, 2013)—As Saudi Arabia seeks bidders for its ambitious solar projects, the country stands to benefit enormously from plunging costs for photovoltaic (PV) technology—if the nation plays it smart, according to IHS Inc. (NYSE: IHS).
Momentum is building around the country’s introductory tender round for PV projects early next year. These tenders represent an important first step in the country’s goal of generating one-third of its electricity from solar power in 2032.
IHS predicts that Saudi Arabia will install 1,481 megawatts (MW) worth of PV systems from 2013 through 2017, as presented in the attached figure. This will make the country the third-largest nation in the Africa and Middle East region in terms of PV installations, with an 18 percent share from 2013 to 2017. Saudi Arabia will trail South Africa and Israel, which will account for 31 percent and 21 percent, respectively.
Saudi Arabia’s bold initiatives come at a time when PV module costs are dropping, making large-scale solar systems more affordable. The average selling price (ASP) for solar modules is expected to dive to $0.38 per watt in 2023, down nearly 50 percent from $0.73 in 2012.
The initial tender aims to procure renewable power-generation capacity in the range of 500 megawatts MW to 800 MW.
However, this tender will require bidders to strike a balance between locally manufactured content and competitive bid prices. Such an onerous condition could prevent Saudi Arabia from capitalizing on the pricing reductions going on for modules—and from attaining its goals.
“The outcome of this first tender in Saudi Arabia will serve as a benchmark for future tender rounds,” said Henning Wicht, Ph.D., senior director of solar research for IHS. “Expected technology costs are poised to play a key role in determining the success of this tender. While PV module production costs are expected to drop by half during the next decade, for Saudi Arabia to benefit from global price reductions its supply chain for modules must be transparent and not overruled by mandates for local content.“
Having announced a 16-gigawatt PV target by 2032, Saudi Arabia is emerging as a new hot spot in the Middle East and Africa region. Along with Israel and South Africa, Saudi Arabia has the most developed ambitions on renewable power in the area.
“Saudi Arabia is definitely a market to watch,” said Josefin Berg, senior analyst for solar at IHS. “However, this market is still in flux as the time frame and requirements for the planned tenders remain under consultation.”
IHS shines light on solar technology costs at conference
Dr. Wicht will detail the impact that technology costs can have on the Saudi PV market in his speech at the upcoming Desert Solar in Saudi Arabia conference on Wednesday, Nov. 13. The conference is part of the International Solar PV Trade Mission: Saudi Arabia event.
During the one-day Desert Solar conference, experts will discuss practical business cases in relation to the operation and maintenance of PV plants in the desert, an area that requires more attention than any other PV application. Other topics will explore the financial conditions for PV power-plant development in the kingdom, and lessons gained from operating PV plants in U.S. deserts.
About IHS (www.ihs.com)
IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today's business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs approximately 8,000 people in 31 countries around the world.
IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. Copyright © 2013 IHS Inc. All rights reserved.