2.

5 CENTS/KWH
ENABLING CONDITIONS REQUIRED TO LOWER SOLAR PV PPA PRICES
Abu Dhabi 2016 PV Tender
350MW bid
City of Swaihan
Marubeni/Jinko Solar Consortium won with 2.42 cents/kWh
40% consortium ownership, 60% ADWEA (Abu Dhabi Water and Electricity Authority)
Land close to high voltage lines/substation, no connection fee, no wheeling cost, HV already built
Free land, low taxes, low expected finance cost, low forward pricing of EPC
Irradiation over 2200kwh/m2/day
Government guarantee of revenue (including connection delay or change of law)
Take or pay PPA (payment during curtailement)
No permitting risks
No income tax, no dividend tax
24 year loan at less than 3%
Expedited and government backed permitting processes
7% IRR expectation
Abu Dhabi 2016 PV Tender
Abu Dhabi - References
http://taiyangnews.info/markets/abu-dhabi-solar-plant/
http://www.adwec.ae/Documents/160919%20Sweihan%20PV%20Bid
s%20Opening%20Summary.pdf
https://www.pv-magazine.com/2016/09/20/abu-dhabi-three-world-
record-bids-entered-for-sweihan-solar-project_100026191/
http://www.eqmagpro.com/tender-results-maharashtra-abu-dhabi/
Jinko Solar presentation to DEN
Dubai Info and history
Location Mohammed bin Rashid Al Maktoum Solar Park
Over 2200kWh/m2/day irradiation and 25% expected capacity factor
1st phase 13MW
2nd phase 100MW (5.98 cents/kWh by ACWA power but DEWA settled on
a 200MW(AC)/260MWp(DC) variant at 5.85 cents/kWh);
US$344 million loan; 86% loan/14% equity
27-year loan at 4% by Abu Dhabi-based First Gulf Bank and the National
Commercial Bank and Samba Financial Group, both of Saudi Arabia
DEWA owns 51% of the SPV (Shuaa Energy 1) and ACWA/TSK (EPC
Company for the project) owns 49% of the project
Payment guarantee from the Dubai government
Dubai Phase III
Phase III 800MW
Winner Masdar (UAE SoE)/FRV (from Spain acquired by Saudi Arabias
Abdul Latif Jameel ) at 2.99 cents/kWh
Not yet achieved financial close
Expected commissioning of 200MW by April 2018
Stringent requirements (and also high costs) of submitting a bid for DEWAs
Phase III meant that from 95 EOI, 14 were invited, and only 5 submitted
2nd JinkoSolar at 3.69 cents/kWh;
3rd Saudi Arabian Acwa Power/First Solar at 3.96 cents/kWh;
4th Engie/Japanese Marubeni at 4.44 cents/kWh;
5th utility EDF/Qatars Nebras Power at 4.48 cents/kWh
Dubai References
http://www.apricum-group.com/dubai-shatters-records-cost-solar-earths-largest-solar-power-plant/
http://www.pv-tech.org/news/dubais_200mw_solar_farm_reaches_financial_close
https://renewablesnow.com/news/dewa-reaches-financial-close-for-200-mw-solar-project-in-dubai-484710/
https://www.zawya.com/mena/en/story/ACWA_Power_led_consortium_achieves_Financial_Close_for_the_
landmark_Shuaa_Energy_1__260_MWp_Solar_PV_IPP_transaction-ZAWYA20150727100941/
https://cleantechnica.com/2015/07/21/worlds-cheapest-solar-power-project-dubai-achieves-financial-
closure/
https://energytransition.org/2016/05/understanding-record-low-3-cent-solar-in-dubai-in-context/
https://pv-magazine-usa.com/2016/11/29/worlds-cheapest-solar-power-contract-signed-for-dubai-mega-
project/
https://cleantechnica.com/2015/03/04/acwa-power-secures-344-million-loan-solar-pv-project-lowest-tariff/
Financial Modeling Base case (Indonesia)
System size 10MWp
Annual irradiation 1850 kwh/m2/year
System performance ratio 85%
Contract length 25 years (expected new PPA length after Permen 10,11, 12
/ 2017)
Equity 30% @ 15% cost of equity
Loan 70% @ 7% interest for 12 years
O&M, overhead, insurance 3% annual
Total project cost (EPC, land, permits, development) $1.3/Wp
Target project IRR = Weighted Average Cost of Capital = 11.6%
EXPECTED PPA TARIFF USD 0.142/kWh
Financial Modeling Effect of loan
Everything else the same except:
Equity 14% @ 15% cost of equity
Loan 86% @ 4% interest for 27 years (same as Dubais Phase II)
EXPECTED PPA TARIFF
EFFECT: REDUCED PPA TARIFF BY /kWh to meet Project IRR of %(same
as Weighted Average Cost of Capital)
Financial Modeling Effect of Capacity Factor
Everything else the same except:
Annual irradiation 2430 kwh/m2/year
System performance ratio 90%
Capacity Factor based on the above changes 25% (same as Abu
Dhabis PV project)
EXPECTED PPA TARIFF USD /kWh
EFFECT: REDUCED PPA TARIFF BY /kWh to meet Project IRR of %(same
as Weighted Average Cost of Capital)
Financial Modeling Effect of Capital Expense
Everything else the same except:
Total project cost (EPC, land, permits, development) $0.65/Wp
EXPECTED PPA TARIFF USD /kWh
EFFECT: REDUCED PPA TARIFF BY /kWh to meet Project IRR of %(same
as Weighted Average Cost of Capital)
Financial Modeling Effect of O&M Expenses
Everything else the same except:
O&M, overhead, insurance 2% annual
EXPECTED PPA TARIFF USD /kWh
EFFECT: REDUCED PPA TARIFF BY /kWh to meet Project IRR of %(same
as Weighted Average Cost of Capital)
Financial Modeling Overall Enabling Effects
Everything else the same except:
Loan 86% @ 4% interest for 27 years (same as Dubais Phase II)
Capacity Factor 25%
Total project cost (EPC, land, permits, development) $0.65/Wp
EXPECTED PPA TARIFF USD /kWh
EFFECT: REDUCED PPA TARIFF BY USD /kWh to meet Project IRR of
5.02% (same as Weighted Average Cost of Capital)
Financial Modeling Getting to USD.025/kWh
Everything else the same except:
Equity 14% @ 6% cost of equity (Risk free rate of UAE)
Loan 86% @ 4% interest for 27 years (same as Dubais Phase II)
Contract length 25 years (typical to other UAE PPAs)
Capacity Factor 25% (similar to other UAE sites)
Total project cost (EPC, land, permits, development) $0.45/Wp (forward
pricing 2019)
O&M, overhead, insurance 1.2% annual
5% corporate tax on the project revenues
EXPECTED PPA TARIFF USD 0.025/kWh to meet Project IRR of 4.50%
(same as Weighted Average Cost of Capital)
Government Support Mechanisms
Government guarantee of revenues lowers risk and reduces cost of
capital
Government supported expedited permitting process lowers risk and
costs
Reduction or elimination of taxes lowers operating costs
Transparency of generation costs targets development where costs are
high
Transparency of grid data equal access to grid data enables many project
developers to compete for Indonesian projects
Increasing block tariff for PLN consumer tariff structure increases cost for
high energy users but does NOT affect low income users. Encourages
energy efficiency and renewable energy use
AES Clean Energy Consulting
https://id.linkedin.com/in/andresusanto