Evaluating the factors that led to low-priced solar electricity projects in the Middle East

The past few years have seen the rise of large-scale, low-priced solar energy projects around the world. Oil-producing countries in the Middle East, in particularly the United Arab Emirates and Saudi Arabia, have become unexpected leaders in this movement with record-low power purchase agreement prices, below 3¢ kWh −1 , for a number of new photovoltaic installations, beating the cost of fossil fuel generation. In this Analysis, we bring together technical, economic and financial information from global and local sources to study whether these prices can be replicated elsewhere and further reduced. We find that hardware costs, cost of labour, favourable cost of capital, low taxes and low, but positive, profit margins contribute to the reduction in costs. Reduced hardware prices contributed the most and also led to further reduction in cost of capital. We demonstrate how similar costs can be and have been achieved in other markets. In the Middle East, new solar projects are being launched where developers have agreed to provide solar energy at record-low costs to utilities. Here, researchers analyse the key factors contributing to the low cost, showing that it is possible to replicate similar costs in other parts of the world.