Market Insight

World Future Energy Summit 2018: tenders, technology and local content

January 29, 2018

Josefin Berg Josefin Berg Research & Analysis Manager, Solar & Energy Storage

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IHS Markit attended the World Future Energy Summit in Abu Dhabi on 15 to 18 January 2018. Here are four takeaways from the trade show.

  • Utility-scale PV is the main attraction for PV companies that enter the Middle East. The continued expansion of large PV tenders in the region has attracted international developers and suppliers. Many were busy seeking partners for upcoming tenders in Oman and Abu Dhabi. There was also excitement around the 3.25 GW that Saud Arabia plans to award in 2018. Despite the excitement among prospecting bidders, it is clear that many will be left empty-handed. The large size of the tenders has created binary opportunities: a small number of very large projects will be shared between a small number of developers, creating a win or lose situation.
  • Bifacial module technology came up in several conversations as the solution to lowering the LCOE of PV plants both in the Middle East and in Latin America. The main challenge currently is to convince financiers and off-takers that are reluctant to experiment with a less proven technology. Also, price may also not be the only factor for winning tenders, as was seen in the pre-selection of ACWA Power and a Marubeni-led consortium for the Sakaka tender in Saudi Arabia, in early January. The lowest bidding consortium (Masdar and EDF) was excluded from the bid process; one suggested reason has been the proposed use of bifacial technology.
  • Local content is resurfacing as a factor for PV developers to consider in the region. In contrast to the region’s first tenders in markets like Jordan and United Arab Emirates, upcoming markets like Saudi Arabia and Oman are exploring how tenders can support local manufacturing. The bidders in the Sakaka tender will be examined in detail on the compliance with the 30% local content requirement. As for Oman, the exact local content rules have not been announced, which remains a concern for developers planning to bid.
  • On a general note, there was a wide concern among developers regarding module prices. The general assumption of steadily decreasing prices has proven not to hold true on a quarterly basis. Short term fluctuations complicate the bid setting for tenders. EPC companies are also adding module price indexing into their contracts to hedge the procurement risk.

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Power & Energy Technology
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