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The 200-megawatt second phase of the Mohammed bin Rashid Al Maktoum solar park began producing electricity on Monday with enough capacity to power 50,000 homes in Dubai, and at the world’s cheapest rate for an operating solar plant at 5.84 US cents per kilowatt hour (kWh).

That price, under a 25-year purchase power agreement, not only covers the investment needed to build and operate the plant but also the cost of finance.

However, developers with projects in the pipeline may find it difficult to achieve similarly low prices following last week’s interest rate rise in the United States and the expectation of more to come this year.

“The recently implemented increase in the US dollar base borrowing rates will inevitably mean an increase in tariffs in absolute terms,” said Paddy Padmanathan, chief executive of Acwa Power, which led the consortium that built the 200MW Dubai plant. “With construction methodologies continuing to improve, we look forward to the increasing the cost of capital hopefully at least being countered to keep the tariff levels we have seen for renewables, if not continuing the downward trajectory.” Read the full article here

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