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New low for wind energy costs: Morocco tender averages $US30/MWh

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The north African country of Morocco has achieved a new low for wind energy costs, securing average bids of just $US30/MWh from its tender for 850MW tender of large-scale wind energy projects, with the lowest at around $US25/MWh.

The pricing – revealed by its energy ministry at a ministerial round table at the International Renewable Energy summit in Abu Dhabi on Saturday – sets a new low for wind energy pricing in the world, and is boosted by the remarkable wind energy resource sourced from Atlantic trade winds, and some concessional finance.

Abderrahim El Hafidi, vice minister of energy and environment, described the result as “extraordinary” and “amazing” and said it pointed to a “real revolution” in the means of producing energy. Some bids in the US have been in and around $US25/MWh, although these have been boosted by a 30 per cent production tax credit.

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Until a decade ago, Morocco sourced all its energy needs from fossil fuels, but recently set a 52 per cent renewable energy target by 2030. Apart from wind farms (it already operates Africa’s largest wind farm, pictured above), it is also investing in large-scale solar farms – a mix of solar PV, solar tower with storage, and parabolic trough technologies.

El Hafidi did not identify the lowest bidder, although reports in December said a consortium led by Italy’s Enel Green Power, and including Morocco company Nareva Holdings and turbine builder Siemens had made the lowest bid, without specifying the price at the time.

Other bidders include Spain’s Acciona, France EDF, in partnership with Qatar Electricity and Water Company (QEWC), Morocco’s Fipar Holding of Morocco, and Alstom Wind; Saudi Arabian firm ACWA, in co-operation with Gamesa, and France’s Engie (the owner of the Hazelwood brown coal power station) and Vestas.

It is the second time in two years that the IRENA summit has witnessed another step change in the costs of renewable energy technologies.

Last year, ACWA Power won a bid for 200MW of large scale solar PV with a price of $US$58.40/MWh. That was then the lowest in the world, although it has since been beaten by tenders in Chile.

Until a decade ago, Morocco sourced 98.9 per cent of its energy needs from imported fossil fuels, with oil trading at the time at around $US100/MWh.

“Things have changed a lot,” El Hafidi said. In 2009, wind and solar was much higher than fossil fuels, particularly coal, which was seen as cheap and abundant.

“Now, we have wind projects cheaper than coal. The $30/MWh bid compares to coal which is 80/MWh.” (As one observer noted following the tender result, even if the coal were free, a coal fired plant could not match those costs.)

“Isn’t that amazing that we can have confidence in renewable energy for the future of our energy and for the future of the planet,” El Hafidi said. “This is real. It is not a claim.”

Adnan Amin, the executive director of IRENA, said the Moroccan pricing achievement “indicates remarkable change and the pace of that change” in the cost of renewable energy technologies.

Amin said there was a level of cynicism about the nature of the Paris climate deal, but those views misunderstood the nature of the transformation taking place.

“Here, we have (proof that) the majority of the solution is here. The question is how do we make it happen.”

The price of $30/MWh translates into $A43/MWh -and is well below the record price bid for a wind farm in Australia, which was set at $A77/MWh in the latest tender conducted by the ACT government. That, though, was for a fixed price over 20 years, so represents a first year price well below that.

Steve Sawyer, the head of the Global Wind Energy Association, said that low prices reflected the strong wind conditions in Morocco.

“It doesn’t mean that wind will be 3c/kWh ($30/MWh) everywhere. It won’t be. But there are a lot of place where it will be. he point to the Brazil, China, and parts of US where that could happen.”

The 850MW wind tender is part of Morocco’s ambitious target of sourcing 52 per cent of its electricity needs from renewable energy, a target that was increased from 42 per cent during the Paris climate talks.

It has also started generation from the 150MW Noor concentrated solar power plant (parabolic trough) – the first in north Africa. Subsequent stages will include another parabolic trough plant, a 150MW solar tower power plant with storage, and a large solar PV array.

The Noor plant, also being built by ACWA Power, is expected to be officially inaugurated in coming days.

El Habidi said the first stage of the solar parabolic trough plant would deliver electricity at around three times the cost of coal, but it was a critical first step towards storage and flexibility, which was crucial for high levels of renewables.

Indeed, ACWA Power’ president and CEO Paddy Padmanathan, told RenewEconomy on the sidelines of the summit that solar thermal technology woud fall into “single figures” – meaning below 10c/kWh, or $100/MWh) within a few years. (More from that interview in coming days).

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The 850MW Morocco tender includes five projects — the 150MW Tanger 2 in the northern part of the country, 300MW at Tiskrad, Laayoune, 200MW at Jbel Lahdid,100MW near Boujdour, and 100MW at Midelt.

Commissioning of the wind plants is expected between 2017 and 2020.

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  • eliboston

    News such as in this article maybe the reason that explains why dozens of coal companies have gone bankrupt recently resulting in over one hundred coal mine closings in the US. It may explain why recently price of oil is running at 30 cents on the dollar of where it was only a short while ago and oil producers are pumping it out as fast as they can with no regard that overproduction is severely depressing prices.

    Is it possible that oil is pumped as if there is no tomorrow because indeed there may be no tomorrow? Are we witnessing severe discounts in a going out of business clearing inventory sale? Are oil producers about to close the doors for business as increasingly dirty and dangerous fossil fuels are becoming valueless commodities to be left for ever undisturbed in the ground?

    • Doug Cutler

      “dangerous fossil fuels are becoming valueless commodities to be left for ever undisturbed in the ground”

      Not forever, just another 60,000 years when burning fossil fuels will become useful again to ward off the next ice age indicated by the Milankovitch Cycles.

      • Chris Fraser

        Ice Age postponed …. indefinitely … in the Anthropocene.

        • eliboston

          This great news guys! Fossil fuels are ending so is the epidemic of childhood asthma and bronchitis. It is not just about the measurable health savings but also about stopping the immeasurable human suffering.

          No more putrid air for our children’s tender lungs.

        • eliboston

          Humbug!! see above.

      • eliboston

        If dirty and dangerous coal, oil, and fossil gas are more expensive than wind and now solar, in increasingly more markets, so that in a decade fossil fuels will become totally unaffordable anywhere on Planet Earth, what makes you think they will become less costly and less putrid in 60,000 years?

        I have heard the exact same line of unreasoning from Rex Tillerson, Exxon CEO, Vladimir Putin, former KGB agent and currently “President” of Russia, “King” Salman of Saudi Arabia, and also from the candidate for US President Donald Trump. They are all anti-science and deniers that global climate change is the result of the CO2 greenhouse effect from burning fossil fuels. Are you a denier as well?

        • Doug Cutler

          Clearly you’ve missed the irony and main thrust of my comment.

          Humanity needs to transition off fossil fuels and onto renewables ASAP. All of my commentary takes this position. I also believe it may already be too late to avoid terrible consequences. I’ve been aware of the climate issue since the 70’s and have never flown in a jetliner so as to minimize my carbon footprint.

          And while its true there’s a whimsical sci-fi slant to my remark its also completely grounded in science. If humanity can somehow muddle through the current climate crisis to full sustainability there is a great silver lining on the other side: the possible ability to ward off otherwise inevitable new ice ages arising from the periodically compounding effects of long cycle variations in the earth’s orbit known as the Milankovitch Cycles – this accomplished by one way or the other controlling the level of CO2 in the atmosphere. In other words, we’ve discovered a thermostatic control for the entire planet which may be tremendous good news long term. (Hopefully in the future we would figure out a way to do this while avoiding all the present day deleterious air quality health effects you so rightly condemn.)

          Of course, my argument assumes many things such as humans remaining in the far future both prolific and in a similar biological form to today. But warding off futures ice ages I would put in the same self-preserving macro manipulation category as deflecting large earth crossing asteroids and comets.

          Finally, I love science, Neil deGrasse Tyson rocks.

          • eliboston

            OK thank for clarifying – I too enjoy fantasy, but given the toxicity of fossil fuels in 60,000 years there has to be a better way of making SO2 than burning coal, oil, or fossil gas.

            Deflecting an asteroid maybe a much bigger threat to the survival of our species (super remote as it is) then some future ice age.

          • Doug Cutler

            Future ice ages are a certainty . . . unless we prevent them. No fantasy. All science. Nothing wrong with thinking in deep time.

            In the present context climate change is still a big threat along with others like evolving bacterial resistance in part facilitated by antibiotic overuse. Scientists are now tracking new forms of e-coli bacteria resistant to all known antibiotics.

          • eliboston

            Future ice ages are a certainty but it is nonsensical and wrong to assert future Ice Ages are a threat and that present day technology will be used to prevent them. Solving “deep” time “problems” with present day technology is outrageously ridiculous.

            How perverse is it to think homo sapiens of 60,000 ago trying to figure out how to go to the moon with the tools of 60,000 years ago? Paleolithic tools are so crude it takes a true expert to distinguish them from natural unworked stones. It is totally unscientific and grotesque to think one can control the temperature with toxic fossil fuels when a slight change of the earth’s orbit or something equally unpredictable may “solve” the “problem” in 60,000 years from today? Who cares what happens in 60,000 years?

            It is a humongous distraction from the real threat to life from man made greenhouse gases thinking of irrelevant non-threats of the “deep” future. In the even more distant future Africa will collide with Europe squeezing out the Mediterranean sea. Is this a threat? Who cares what happens in 50 million years?

            Also it is grotesque to liken the global climate change threat to life from man made greenhouse gases with the immensely smaller problem of resistant bacteria:

            “…is still a big threat along with others like evolving bacterial resistance in part facilitated by antibiotic overuse…”

            Humbug!!! are you hallucinating?

            The history of epidemiology shows that virulent microorganisms stop killing their hosts otherwise they may become extinct and evolve to be less virulent organisms. This is what happened with the bubonic plague in the Middle Ages that killed up to 50% of the human population in certain regions. This pales by comparison to real threats such as the pre-cambrian extinction when entire ecosystems containing more than 75% or all species were wiped out from the face of the earth.

            So you were NOT sarcastic but slyly anti-scientific defending putrid fossil fuels.

            Fortunately fossil fuels will be extinct by 2025 at the rate we are going:

            VIVE L’ACCORD DE PARIS!!!!

          • Doug Cutler

            Wow! Dude, or dudette, whatever, we’re on the same side here … but somehow arguing anyway.

            If there’s a point to continuing the debate its this: support for science based policy and renewable energy advocacy is best served with clear, logical arguments and not muddled ones.

            You said: “It is nonsensical and wrong to assert future Ice ages are a threat and
            that present day technology will be used to prevent them.”

            The first part of that statement is demonstrably false. If planet earth does achieve full sustainability – as we both hope – then the continued existence of homo sapiens in present form for thousands of years is entirely possible. The reality of the Milankovitch Cycles and future ice ages then becomes a problem not for the life itself but rather for the ongoing carrying capacity of the planet. In any event, to be avoided if at all possible.

            The second half of your statement evokes yet to be discovered amazing future technology. Rather speculative for my own debate parameters but I’ll have a go:

            Example, you suggest tweaking the earth’s orbit instead of providing a blanket of C02 for future ice age mitigation. Have you considering the daunting physics? Perhaps with fusion energy we could alter the earth’s orbit with calibrated launches of large mass projectiles from the earth’s surface with huge electric rail guns. Said objects would have to leave earth’s orbit to create the desired reaction. The amount of total mass and velocity required to create even a small effect in earth’s orbit would be, well, massive. People of the future might have better uses for their energy zigawatts – or mountains.

            We could also “tweak” earth’s orbit by redirecting very large asteroids into near-misses of the planet. A bit risky with current tech but thousands of years in the future, who knows? It would require much less energy, though.

            But blanketing the earth’s atmosphere with just the right amount of CO2 far in the future, why do does it upset you so? Remember, CO2 itself is not inherently toxic; rather the problem is CO2 levels “out of balance” to the desired effect. Indeed, as the deniers remind us (while playing the devil’s role in speaking the truth inappropriately) CO2 is necessary for life. And since you yourself raised the spectre of amazing future technology, who’s to say the far future won’t also possess a cure for all cancers or “clean coal” that actually works. Also deliberately “adjusting” CO2 levels in the far future need not involve massive, smog generating burn-offs as in present day but a gradually build-up spread over many hundreds or thousands of years. Meanwhile, the energy from such a fossil fuel burn would help offset its certain high cost, especially considering that far future solar power will likely be well below 1c/kWh in today’s dollars.

            I will agree this whole line of argument addressing ice ages 60,000 years hence is speculative and peripheral to the current crisis – but hardly perverse as you suggest. Indeed, my method is one and the same as the philosophy behind the Star Trek franchise: creating a positive idea of the future.

            But back to the present crisis: Today, yes, fossil fuel burn involves high collateral toxicity leading to tens of thousands of annual deaths in N. America from cancer, emphysema and heart disease and millions more such annual deaths in Asia where standards are lower. Just one reason you and I both advocate for wind and solar and EVs.

            But increasing bacterial resistance is no small matter. You dismiss the threat as “hogwash”, implying a loss of up to 50% of population – millions or even billions of lives in the modern context – would be insignificant. Clearly, such a wild swing of an argument is out of order. Meantime, you would do well to examine the new warnings being sounded by the Center for Disease Control. An outbreak of a modern day superbug is now entirely within the realm of possibility and could devastate modern civilization long before the more dire effects of climate change ever do. Also tell me, are you a vegan or at least vegetarian, as I am, or at least non-consumer of big ag meat where antibiotic overuse is rampant? In a further side point, climate change and the over-consumption of meat are also related with the latter being a significant contributor to green house gasses.

            Finally, you also said: “Fortunately fossil fuels will be extinct by 2025 at the rate we are going: . . .”

            This painfully obvious wishful thinking – one might even mistake it for trickster troll talk. We will be lucky to be moving TOWARDS a full phase out of FF by mid century. Bring on the electric car, yes man. But there is currently no clear replacement for fossil fuels in long haul trucking and aviation. That would require an extremely high cost for carbon such that bio-fuels are made competitive and the current global policy mindset, including the Paris Accords, is not even close to this yet.

  • Russell

    That seems almost too good to be true, what are the details of “and some concessional finance.”?

    • eliboston

      Even if concessional finance means very low or even 0 interest financing it can never account for the huge difference in cost between $30/MWh for wind with the more than twice more expensive 80/MWh for coal.

      There is nothing too good to be true about these numbers that are consistent with what is going on all over the world. And we have not even factored in health cost savings from averted air pollution.

    • Jens Stubbe

      The average 2014 US wind PPA over 20 years was $0.023/kWh so included with PTC at $0.023/kWh over the first 10 years the average unsubsidized wind PPA was $0.035/kWh in 2014, which means that countless projects was below $0.03/kWh. If you extend the wind cost calculation to include the 25 year design lifetime then the average cost of US wind capacity installed in 2014 on an unsubsidized basis is $0.03/kWh.

      The industry expectation is 40% lower cost within the next decade (4,6% annual cost drop) but the price drop could be much higher and this is probably needed as solar at utility scale dropped 17% in US last year and in just one year doubled the total installed capacity.

      The cost drop in wind PPA contracts was just 6% between 2013 and 2014, which is a big contrast to the the preceding years where the annual drop averaged 15% annually. With 4,6% cost drop PPA contracts will be below $0.02/kWh unsubsidized by 2026. With 6% by 2023. With 15% by 2018.

      Hidden in the impressive progress there are other significant advantages. The capacity factor is rising and the design life is rising. Higher capacity factor means that wind becomes less intermittent and easier to integrate into grids. Longer design life limit maintenance and extent the life time.

      Coal is dying and so is unconventional oil and tracking gas. If the huge direct and indirect subsidies for fossils was removed they would die away globally as fast as the renewable capacity and infrastructure could be built.

      Coal will never again return to grid parity.