Sun sets on oil for Gulf power generation
Bloomberg New Energy Finance publishes the economic rationale for solar deployment in the Gulf
London and New York, NY, 19 January 2011 - Falling costs of photovoltaic (PV) technology mean that solar energy is already a more economically attractive option for domestic power generation in the Gulf Cooperation Council Region (GCC) when compared to oil-fired electricity production. This is the conclusion of a White Paper published today by Bloomberg New Energy Finance.
• Bloomberg New Energy Finance modelled the use of a 100MW PV project built in 2011 to displace oil-fired power generation, freeing that oil to be sold at world market prices.
• The central scenario for the PV project’s capital cost is based around the 2010 global lowest price of $3.14 per Watt. We expect the cheapest bankable systems in 2011 to be developed and built for $2.73/W and prices to drop further thereafter, according to the established experience curve for PV technology.
• A PV project in the GCC would generate a real internal rate of return (IRR) of 9.4% if oil prices rise to $163/bbl (in real 2010 terms) by 2030. This research was carried out with the help of Standard Chartered Bank’s Renewable Energy and Environmental Finance team.
• Even in the case of flat real oil prices to 2030, the project would generate a rate of return of 4.6%.
• GCC states should be replacing the use of oil-fired electricity generation with large-scale and distributed photovoltaics, and earmarking their oil for sale on international markets.
Michael Liebreich, chief executive of Bloomberg New Energy Finance, commented "This exercise demonstrates the clear argument for large-scale deployment of PV in the Middle East region. The continued cost decline of PV will open up electricity markets in the Gulf extremely quickly.”
The Gulf Region has some of the world’s best solar resources. However, governments in the region have historically valued oil and gas at cost and provided their consumers with subsidised electricity, two factors which have impeded the development of renewable energy. Bloomberg New Energy Finance’s White Paper provides strong evidence that solar energy can compete economically for electricity production from oil.
The White Paper is available for download at http://www.bnef.com/free-publications/white-papers/.
For further information, please contact:
ABOUT BLOOMBERG NEW ENERGY FINANCE
Bloomberg New Energy Finance (BNEF) is the world’s leading independent provider of news, data, research and analysis to decision makers in renewable energy, energy smart technologies, carbon markets, carbon capture and storage, and nuclear power. Bloomberg New Energy Finance has staff of more than 180, based in London, Washington D.C., New York, Tokyo, Beijing, New Delhi, Singapore, Hong Kong, Sydney, Cape Town, São Paulo and Zurich.
Bloomberg New Energy Finance serves leading investors, corporates and governments around the world. Its Insight Services provide deep market analysis on wind, solar, bioenergy, geothermal, carbon capture and storage, smart grid, energy efficiency, and nuclear power. The group also offers Insight Services for each of the major emerging carbon markets: European, Global Kyoto, Australia, and the U.S., where it covers the planned regional markets as well as potential federal initiatives and the voluntary carbon market. Bloomberg New Energy Finance’s Industry Intelligence Service provides access to the world’s most reliable and comprehensive database of investors and investments in clean energy and carbon. The News and Briefing Service is the leading global news service focusing on clean energy investment. The group also undertakes applied research on behalf of clients and runs senior level networking events.
New Energy Finance Limited was acquired by Bloomberg L.P. in December 2009, and its services and products are now owned and distributed by Bloomberg Finance L.P., except that Bloomberg L.P. and its subsidiaries (BLP) distribute these products in Argentina, Bermuda, China, India, Japan, and Korea. For more information on Bloomberg New Energy Finance: http://www.bnef.com
Bloomberg is the world’s most trusted source of information for financial professionals and businesses. Bloomberg combines innovative technology with unmatched analytics, data, news, and display and distribution capabilities, to deliver critical information via the Bloomberg Professional service and multimedia platforms. Bloomberg's media properties span television, radio, digital and print, making up one of the world’s largest news organizations with more than 2,300 news and multimedia professionals at 146 bureaus in 72 countries.