A Japanese study has said the UAE s support for renewable energy contributed to make solar energy cheap and it is now becoming cheaper to produce, with bid prices for solar and wind power projects in Europe and the Middle East dropping to levels comparable to coal-fired thermal power.
The study, conducted by the Japan s Nikkei, said that the UAE s Dubai Electricity and Water Authority, DEWA, received bids in the range of US 2 Cents per kilowatt-hour in proposals for solar projects, with the long sunlight hours in the Middle East ensuring stable production of solar energy.
The study also noted that a Chinese-led consortium, with a bid of US 2.42 Cents per kilowatt-hour, successfully built a 350MW solar plant.
DEWA also awarded a solar project to an alliance, led by Abu Dhabi Future Energy or Masdar, at a strike price of US 2.99 Cents per kilowatt-hour, it said.
"Renewable energy has been costly in the past, but many countries began to subsidise it in the 2000s in an effort to fight global warming and diversify their energy sources. This has helped the costs of equipment and construction to decrease as the market expands, and making number of Western companies in such fields as information technology have begun buying all their energy from renewable sources as prices fall," the report said.
Besides solar energy, offshore wind power has good potential to become a stable energy source. Many wind farms are established in windy shoals in the North and Baltic Seas.
As per data from the International Energy Agency, IEA, solar energy production costs have dropped 80 percent in the last five years while onshore wind power costs have fallen by nearly 70 percent. Onshore wind power costs have fallen below US10 Cents per kilowatt-hour. Coal-fired thermal power typically goes for US 5-7 Cents per kilowatt-hour.
The study also noted that solar power from South America, Mexico or California is cheaper than coal-fired thermal power even without subsidies, according to Iberdrola, Spain s biggest energy producer. When crude oil prices rise, they raise the costs of fossil fuel energy, making renewable energy more competitive.
The IEA found that in 2015, renewable energy output capacity reached 153 million kilowatts, cumulatively surpassing coal-fired thermal power for the first time. In percentage terms, it comprises only 14 percent of the world s total energy output due to its low generating efficiency, but the IEA estimates that by 2021, it will exceed a figure "equivalent to the total electricity generation of the United States and the European Union put together today."