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EghtesadOnline: Two companies offered to build the cheapest solar power plant on record in Abu Dhabi, reflecting declining costs for photovoltaic cells and cheaper financing for clean-energy projects.

Government-owned Abu Dhabi Water & Electricity Authority received a record-low bid of 2.42 cents a kilowatt-hour for power from a planned facility in the Persian Gulf sheikhdom, state-run Emirates News Agency said. The utility on Monday opened six bids to build a solar plant capable of generating at least 350 megawatts, the agency said. JinkoSolar Holding Co. of China and Japan’s Marubeni Corp. made the lowest joint offer, according to an official from the Middle East Solar Energy Industry Association, who asked not to be identified citing policy.

The bid marks another record for solar technology prices, which have fallen almost 70 percent in the past five years, according to data compiled by Bloomberg New Energy Finance. Competition among Chinese solar manufacturers including Jinko has brought down the cost of delivering panels while more investors have become comfortable with backing the technology, reducing borrowing costs, reports Bloomberg.

“It is important to notice that these latest submissions have not been awarded yet and that even the authorities now want to understand the feasibility of these bids,” said Pietro Radoia, an industry analyst at BNEF in London. “One of the main enablers of low bids around the world over the past months is cheap financing.”

PV Plans

Adwea, as the utility is known, plans to start operations at the facility in the first quarter of 2019, according to the statement on Emirates News. The plant will use photovoltaic technology and be located at Sweihan, about 120 kilometers (75 miles) east of the city of Abu Dhabi, according to the state news agency report, which didn’t identify the bidders.

The utility is still evaluating the bids received and aims to sign a final agreement for construction and operation of the plant in the first quarter, Emirates News said. Three calls to JinkoSolar’s director of investor relations, Sebastian Liu, went unanswered. Officials at Marubeni declined to comment.

The United Arab Emirates, where Abu Dhabi is the capital, is seeking to diversify its energy supply away from natural gas, which fuels most of its power plants. The emirate, holder of about six percent of global oil reserves, and neighboring Dubai, the second-largest sheikdom, are developing solar plants as power demand rises. The trade publication PV Magazine reported the bid earlier Monday.

Lower borrowing costs have helped developers make record bids in recent months. The Abu Dhabi bid beat previous records, of 2.91 cents in Chile last month, and 2.99 cents in neighboring Dubai in May.

Falling Costs

Project developers may also be betting “that equipment costs are going to fall in the next years at the same rate they did in the past five,” Radoia said. “The low penalty fees are certainly allowing them to take this bet.”

Dubai Electricity & Water Authority plans to build 5 gigawatts of solar plants with investment of about $13.6 billion by 2030, the government-owned utility’s Chief Executive Officer Saeed Mohammed Al Tayer said at a conference in the emirate on Monday.

Abu Dhabi Future Energy Co., the emirate’s clean-energy developer known as Masdar, said in a statement that it bid for the Adwea project together with Electricite de France SA’s renewable energy unit and U.A.E.-based contractor PAL Group. Those offers were still being evaluated.

solar power plant Abu Dhabi economy Clean Energy photovoltaic cells