Skip to main content

Thank you for visiting You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

Evaluating the factors that led to low-priced solar electricity projects in the Middle East


The past few years have seen the rise of large-scale, low-priced solar energy projects around the world. Oil-producing countries in the Middle East, in particularly the United Arab Emirates and Saudi Arabia, have become unexpected leaders in this movement with record-low power purchase agreement prices, below 3¢ kWh−1, for a number of new photovoltaic installations, beating the cost of fossil fuel generation. In this Analysis, we bring together technical, economic and financial information from global and local sources to study whether these prices can be replicated elsewhere and further reduced. We find that hardware costs, cost of labour, favourable cost of capital, low taxes and low, but positive, profit margins contribute to the reduction in costs. Reduced hardware prices contributed the most and also led to further reduction in cost of capital. We demonstrate how similar costs can be and have been achieved in other markets.

This is a preview of subscription content, access via your institution

Relevant articles

Open Access articles citing this article.

Access options

Rent or buy this article

Prices vary by article type



Prices may be subject to local taxes which are calculated during checkout

Fig. 1: The reduction of PV system and electricity prices around the world.
Fig. 2: Bottom-up model for PV costs.
Fig. 3: Modelled LCOE for a sample plant under Abu Dhabi’s weather conditions.
Fig. 4: Modelled CapEx for a sample plant based on assumed costs for UAE large-scale solar.

Data availability

The data that support the plots within this paper and other findings of this study are available from the corresponding author upon reasonable request.


  1. Renewable Energy Auctions: Analysing 2016 (International Renewable Energy Agency, 2017).

  2. Annual Energy Outlook 2018 (US Energy Information Administration, 2017).

  3. Energy Darwinism: The Evolution of the Energy Industry (CitiGPS, 2013).

  4. Fu, R., Feldman, D. J., Margolis, R. M., Woodhouse, M. A. & Ardani, K. B. US Solar Photovoltaic System Cost Benchmark: Q12017 (National Renewable Energy Laboratory, 2017).

  5. Bolinger, M, Seel, J. & LaCommare, K. H. Utility-Scale Solar 2016: An Empirical Analysis of Project Cost, Performance, and Pricing Trends in the United States (Lawrence Berkeley National Laboratory, 2017).

  6. 800MW Third Phase of Mohammed bin Rashid Al Maktoum Solar Park Reaches Financial Close (Dubai Electricity and Water Authority, 15 June 2017).

  7. Graves, L. Abu Dhabi plant to produce region’s cheapest electricity from solar. The National (1 March 2017).

  8. Dipaola, A. Saudi Arabia gets cheapest bids for solar power in auction. Bloomberg Markets (3 October 2017).

  9. Kenning, T. ACWA Power wins 300 MW Saudi solar project. PV Tech (6 February 2018).

  10. The SunShot Initiative’s 2030 Goal: 3¢ per Kilowatt Hour for Solar Electricity (US Department of Energy, 2016).

  11. Six-cent energy is not the new normal. PV Magazine (20 January 2015).

  12. Graves, L. Fuel for thought: there’s nothing flowery about the renewables bidding bubble. The National (9 April 2017).

  13. Weaver, J. F. How is Saudi Arabia setting solar pricing records? Is it sustainable – repeatable? Electrek (8 October 2017).

  14. Bellini, E. Chile’s auction concludes with average price of $32.5/MWh PV Magazine (3 November 2017)

  15. Deign, J. Mexican Solar Sets a Record Low Price for Latin America (Greentech Media, 29 November 2017).

  16. Spector, J. Nevada’s 2.3-Cent Bid Beats Arizona’s Record-Low Solar PPA Price (Greentech Media, 12 June 2018).

  17. Sgouris, S., Denes, C. & Ugo, B. The sower’s way: quantifying the narrowing net-energy pathways to a global energy transition. Environ. Res. Lett. 11, 094009 (2016).

    Article  Google Scholar 

  18. Bolinger, M., Weaver, S. & Zuboy, J. Is $50/MWh solar for real? Falling project prices and rising capacity factors drive utility‐scale PV toward economic competitiveness. Prog. Photovoltaics (2015).

  19. Goodrich, A., James, T. & Woodhouse, M. Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices in the United States: Current Drivers and Cost-Reduction Opportunities (National Renewable Energy Laboratory, 2012).

  20. DEWA’s rock-bottom solar bids: the real story (Solar GCC Alliance, 13 January 2015);

  21. Bintcliffe, J. Dubai attracts lowest solar tariff, again. Global Project Finance and Infrastructure Journal (11 May 2016).

  22. Feldman, D, Lowder, T. & Schwabe, P. P. V. Project Finance in the United States, 2016 NREL/BR-6A20-66991 (National Renewable Energy Laboratory, 2016);

  23. Utility-Scale Solar Photovoltaic Power Plants: A Project Developer’s Guide (International Finance Corporation, 2015).

  24. Fu, R. et al. US Solar Photovoltaic System Cost Benchmark Q12016 NREL/PR-6A20-66532 (National Renewable Energy Laboratory, 2016).

  25. Fu, R. et al. Economic competitiveness of US utility-scale photovoltaics systems in 2015: regional cost modeling of installed cost ($/W) and LCOE ($/kWh). In Proc. 2015 IEEE 42nd Photovoltaic Specialist Conference (PVSC) 1–11 (IEEE).

  26. Trube, J., Fischer, M. & Metz, A. International Technology Roadmap for Photovoltaic Materials, Processes and Products Relevant for Strategic Decisions Report 0947-076× (Wiley-V, 2016).

  27. Fahy, A. & Bouyamourn, M. Wages in Abu Dhabi’s construction sector jump 17 per cent in 12 months. The National (17 August 2015).

  28. Bouyamourn, A. Construction workers returning to India as UAE living costs soar and wages rise back home. The National (9 March 2015).

  29. Tuomiranta, A., Abdul Aziz, M. & Ghedira, H. Zoning Study for Deployment of Photovoltaic Power Stations in the UAE (2017).

  30. Šúri, M., Cebecauer, T. & Skoczek, A. SolarGIS: Solar data and online applications for PV planning and performance assessment. In Proc. 26th Eur. Photovoltaics Solar Energy Conf. (2011).

  31. Molina, A., Falvey, M. & Rondanelli, R. A solar radiation database for Chile. Sci. Rep. 7, 14823 (2017).

    Article  Google Scholar 

  32. Scott, A. Bank financing falls short of UAE’s green economy ambitions. The National (31 May 2015).

  33. Saudi’s ACWA Power gets $344 mln loan for Dubai solar project. Rueters (1 March 2015).

  34. Bellini, E. Chile’s auction concludes with average price of $32.5/MWh. PV Magazine (3 November 2017).

  35. Carvalho, S. Abu Dhabi closes $872 financing on world’s larges solar power plant. Rueters (24 May 2017).

  36. Munsel, M. 10 Trends That Will Shape the Global Solar Market in 2018 (Greentech Media, 31 January 2018).

  37. Mark, B. & Joachim, S. Utility-Scale Solar 2015: An Empirical Analysis of Project Cost, Performance, and Pricing Trends in the United States (2016).

Download references


We note the valuable contribution of our colleagues with whom we have discussed this work, in particular I. Almansouri and A. Tuomiranta. We thank M. Kissamitaki for designing the figures.

Author information

Authors and Affiliations



M.C. conceived and proposed this analysis, which was further elaborated in collaboration with S.S. and H.A. H.A. carried out the analysis and drafted the manuscript in consultation with M.C. and M.S. S.S. provided insights into the financial aspects of the projects and M.S. provided a utility company perspective on the project development process.

Corresponding author

Correspondence to Matteo Chiesa.

Ethics declarations

Competing interests

The authors declare no competing interests.

Additional information

Publisher’s note: Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Supplementary Information

Supplementary Information

Supplementary Notes 1–3, Supplementary Figures 1–2, Supplementary Tables 1–2, Supplementary Discussion, Supplementary References

Rights and permissions

Reprints and Permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Apostoleris, H., Sgouridis, S., Stefancich, M. et al. Evaluating the factors that led to low-priced solar electricity projects in the Middle East. Nat Energy 3, 1109–1114 (2018).

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI:

This article is cited by


Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing