Are super-cheap solar fields in the Middle East just loss-leaders?

Solar panels in a row in the desert

Enlarge / An illustration of what will become the Mohammed bin Rashid Al Maktoum Solar Park (Phase III). (credit: Acciona)

In recent years, massive solar projects proposed for the Middle East have grabbed headlines with extremely low prices. Developers have announced agreements to sell their solar energy for as low as 2.34¢ per kilowatt-hour (kWh)—lower than the US' lowest prices and much lower than the average 6¢ per kilowatt-hour that the US lauded last September.

A team of researchers from Khalifa University of Science and Technology in Abu Dhabi, UAE, and the Arctic Renewable Energy Center in Tromsø, Norway, attempted to find out whether these prices were real, simply heavily subsidized by local governments, or loss-leaders for developers looking to make splashy headlines and secure more valuable contracts down the road.

What they learned was that the numbers posted in four of the most recent Middle East solar projects were likely real, with some reasonable help from favorable government policies. Still, the numbers seem real for the region; not all cost reductions are likely to transfer to other parts of the world.

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