Introduction
In a recent article Bloomberg suggests that a new low price of 2.99 cents per kilowatt hour has been set for solar power transmission. This is in respect of recent bids to provide 800 megawatts of solar power transmission for the UAE. Given that the national mining association of The USA places coal-based energy production at an average of 10.42 cents it suggests that solar is now becoming economically competitive with the old black stuff. Significant debate still exists as to - inter-alia - replicability of such prices around the world. The article reports significant bankruptcy in the solar market, partly due to extremely competitive bids taking margins to breaking point. However such developments suggest that a truly unsubsidised competitive solar-energy industry is now very much game on.
Why is this important?
Many commercial companies have understandably been reticent to consider long-term, high cost, investment decisions; with payback periods beyond their normal business cycle. Up until now such investments have came with sweeteners, subsidies and - as Northern Commercial highlighted last week - Government-backed legislation; all designed to nudge companies' contribution to Greenhouse gas reduction. What has been demonstrated here is that a commercial auction is capable of producing cheaper-than-coal energy production, with no requirement for inducement, such as a feed-in-tarrif. It means that sound environmentally-friendly business decisions can be made without factoring in government support. Good news? Northern Commercial remains cautious.
All environmental output is case and site specific. Total solar energy received by the Earth in different latitudes in different days is variable and complex; some receiving none at all. Energy transmission from source to use is still of course an issue. Nevertheless this is encouraging news and should provide confidence for energy and utlity managers that the case for solar can be made without the need or wait for further subsidies.
Northern Commercial has the knowledge and experience to assist you to make sound energy-supply decisions. Talk to us today and let us help you in making our world a more viable place to live.
