Record-Low Solar Bid <2¢ For Saudi Tender

• Eight companies have offered technical bids for the 300 MW Saudi Arabia tender
• Lowest bid of 0.0668 halalas ($0.01785) per kWh has been offered by Masdar and EDF Energies Nouvelles
• Other bidders were ACWA Power, Marubeni Corporation, Engie, JGC Corporation, Mitsui & Co., Total and Cobra
• These bids will undergo legal, financial and technical evaluation post which the final winner will be announced in early 2018

A total of eight companies have offered technical bids for the 300 MW PV capacity in Saudi Arabia, ranging between a world-record low $1.79 cents per kWh up to $3.37 cents per kWh.

The lowest bid at 0.0668 halalas ($0.01785) per kWh has been offered by Abu Dhabi Future Energy Company (Masdar) and EDF Energies Nouvelles (EDF EN) for the entire 300 MW, which is nearly 25% below the second-lowest bid from local developer Acwa Power at 0.0878 halala ($0.0234) per kWh.

The other 6 bidders were Marubeni Corporation, Engie, JGC Corporation, Mitsui & Co., Total and Cobra, whereas 7 of the 8 bidders offered solar tariffs below 3 cents/kWh.

The 300 MW tender was launched by the country's Renewable Energy Project Development Office (REPDO) in February 2017, along with a 400 MW wind power tender (see Saudi Arabia Launches 300 MW Tender).

However, it remains to be seen if 'only' 300 MW will be awarded, now that the bids are so low. The original tender for the lowest solar PPA so far – the 2.42 cents/kWh 1.177 GW Sweihan plant in Abu Dhabi, which was won by Jinko & Marubeni in early 2017 – was originally only slated for 350 MW. With this in mind, several consortia in the Sakaka tender had bid for larger capacities, such as JGC/Trina for 355 MW or Engi for 381 MW.

What speaks for the transparence of recent big Middle Eastern solar tenders is that the winners were not necessarily local companies. In the Abu Dhabi Sweihan tender Jinko/Marubeni won against Masdar, now in Saudi Arabia, Masdar is ahead of local company ACWA.

The Saudi Arabian PV project will be developed on a build, own and operate basis under one special purpose company. It will be owned 100% by the successful bidder.

All these bids will be assessed on technical, financial and legal criteria. It will be a three month long process. The PPA is expected to be signed by January 27, 2018, according to Reuters.

Many experts questioned the low bids. Jigar Shah, Co-Founder of General Capital, for example, wrote on LinkedIn, "I don't believe it, I don't think solar can be done in a high quality manner at these prices." And is indeed a good question what's the margin the bidders are looking at.

However, as long as the bidding details are not known, it is not clear if these are the exact and average prices. The Abu Dhabi tender PPA level, for example, is widely reported at 2.42 cents/kWh, but actually that is only one part of the tariff, the average is 2.92 cents/kWh.