The giant 700 MW project in Dubai will combine tower and trough technologies and use scale and local infrastructure synergies to set a new benchmark price of $73/MWh for CSP with storage, Andrea Lovato, ACWA Power’s Executive Director of Business Development, told New Energy Update.
ACWA Power will use learnings from its Noor CSP project in Morocco which also uses tower and trough technology.
On September 16, the Dubai Electricity and Water Authority (DEWA) awarded Saudi Arabia’s ACWA Power a 700 MW CSP project following a highly competitive tender launched earlier this year.
ACWA Power’s plant is expected to cost AED14.2 billion ($3.9 billion) and ACWA Power is to commit $750 million equity to the project. Consortium partners will include China’s Shanghai Electric and DEWA has also said it plans to invest in the plant.
The project represents the world’s largest single-site CSP plant based on the Independent Power Producer (IPP) model and will use a combination of central tower and parabolic trough technologies.
ACWA Power’s 700 MW project is far larger than the 200 MW requirement set out in DEWA’s tender criteria and establishes new cost benchmarks for the growing Middle East CSP market.
“Opex [Operational expenditure] savings can also be achieved using common infrastructure and operations and maintenance personnel in the UAE,” he said.
ACWA Power’s tower system will provide fifteen hours of storage while the trough section will provide eleven hours. The combination of technologies will help to reduce the total cost of energy, Lovato said.
“Parabolic troughs are a more mature and low-risk technology while tower technology and energy storage help reduce costs,” he said.
“Use of this [combination of] technology has allowed for increased storage capacity,” Lovato noted.
DEWA’s tender criteria did not enforce local content requirements and Shanghai Electric’s involvement in the engineering, procurement and construction of the project will help drive down costs.
Shanghai Electric is currently building CSP capacity in China as part of the country’s ambitious targets to complete 20 CSP projects of total capacity 1.3 GW by 2018. This first batch of Chinese projects is expected to accelerate deployment efficiencies and build out China’s CSP supply chain.
“In order to deliver reliable power at the lowest possible cost, ACWA Power looks to incorporate local content where possible, as well as work with our existing network of suppliers in the markets where we operate to achieve economies of scale and reduce cost,” Lovato said.
ACWA Power also expects savings in financing costs due to DEWA’s strong credit rating, the political stability of UAE, and the current low interest rate environment.
In 2016, Dubai set the world’s lowest PV price of $29.9/MWh for the 800 MW MBR phase 2 project, demonstrating the significant banking interest and cost reduction potential of Dubai’s solar program.
ACWA Power’s equity investment in the 700 MW project represents the company’s largest ever capital commitment.
The power purchase agreement (PPA) and financial closure of the project are expected to be finished “shortly,” DEWA said in a statement.
Earlier this year, Saudi Arabia’s newly-created Renewable Energy Project Development Office (REPDO) said it plans to build 1 GW of CSP capacity by 2023.