DEWA CSP PPA will be below US$8 cents

  1. DEWA CSP PPA

If you are familiar with the CSP technology and you didn’t read the DEWA announcement lately you would think I am going nuts.

We´ve been talking for a while about a possible single digit PPA for CSP sometime in the near future – so long as we don´t need to deal with it right now. However, putting out there a clear 8 cents objective changes the game.

That´s because it changes the mindsets of how things work. Right now most industry specialists are focusing in making it possible.

I was speaking a couple of weeks ago at the MENASOL conference in Dubai and the audience didn´t want to – or couldn’t – remember how much the PPAs for CSP and PV were less than 10 years ago. In 2008 the tariffs in Spain where set at 45 cents for PV and about 26 for CSP.

The renewable energy industry has had to adjust – and fast. In the recent Mexican auction wind developers were shocked to find that PV had bid cheaper than them, and by quite a bit. The lowest of the PV $35.5/MWh and an average of $45.15/MWh. In contrast, wind prices averaged $55/MWh, and the lowest was $42.90/MWh. PV will routinely be cheaper than wind in the future. And we will get used to this new reality too.

A couple of weeks later in Dubai the cost of PV came at 2.99cents Kw/h.

And although the lower price in Dubai is possible thanks to financial offsetting, this is now the new target. Granted, cost is only ONE measure and does not tell the full picture. It would be unwise to focus only on it. But undoubtedly the new figure anchors down people´s expectations. And once that anchor sets up in the collective mind-set it is hard to move.

Which is why I have full confidence that the mere fact that DEWA did their research and threw the ‘crazy’ PPA figure out there will trigger a mindset change in the whole industry to make it happen.

There is a fun case study of Takeru Kobayashi, a Japanase man who had never seen a hot dog in his life, but competed in a hot dog competition taking the 90-year record from 25.5 hot dogs in 10 minutes to 50 on his first competition. People routinely beat his 50 record these days.

He says he did it because nobody told him he couldn’t.  Sure, what we have in hand is not quite the same challenge. But industry ingenuity and hard work will take us to the next level.

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