First Solar, Abengoa Bullish on Mideast, Africa Power

First Solar Inc. and Abengoa SA’s renewable energy unit are targeting the Middle East and North Africa as utilities seek to cut reliance on burning oil and natural gas in power plants to meet demand.

The providers of plants generating electricity from the sun can produce energy at a price competitive with fossil fuels when accounting for the profit oil producers forgo by burning crude at home, said Raffi Garabedian, chief technology officer for First Solar.

“That dynamic drives the economic proposition for renewables in this region,” Garabedian said in an interview in Abu Dhabi on Jan. 16. Demand for alternatives to burning liquid fuels “creates a very healthy long-term market for photovoltaics in the region.”

Photovoltaic, or PV, cells like those developed by First Solar capture sunlight and convert heat directly into electricity. Concentrated solar power, or CSP, plants, like those built by Abengoa Solar, use mirrors reflecting the sun’s rays to heat a fluid that creates steam to turn a turbine.

“The Middle East and Africa are areas where we see opportunities in the short term,” Abengoa Solar Chief Executive Officer Santiago Seage said in an interview the same day. Abengoa Solar’s CSP facilities are well suited to the region since gas is available to help run turbines at its plants, boosting generation capacity and allowing for potentially constant supply, he said.

Faster Rate

PV plants are cheaper than CSP facilities because panel prices have plunged at a faster rate than the fluid-based plants, also known as solar thermal units, Seage said. The lower-cost power the PV plants can generate has the disadvantage of being available only when the sun is shining, while solar thermal plants can store the heated fluid for future use or use gas supply to raise production levels, Seage said.

Garabedian and Seage were in Abu Dhabi for a renewable energy conference last week.

Middle East and North African states are seeking new power sources to supply domestic demand as their populations and economies grow. The countries, many of which are gas and oil exporters, use the fuel at home to supply markets where power is sold at subsidized prices. With the European benchmark Brent crude selling at more than $110 a barrel, using liquid fuel domestically costs oil producers about $90 for each barrel of crude, Adnan Amin, director general of the Abu Dhabi-based International Renewable Energy Agency, said in an interview last month.

More Competitive

First Solar has shifted to producing complete power plants for utilities from its origins as a maker only of solar modules, helping it better compete in a market in which the cost of photovoltaic cells has plunged, Garabedian said. That shift, initially made in the U.S. market, has made the company more competitive internationally where utilities want reliable power supply, he said.

Abengoa Solar is producing electricity at the Shams 1 power plant that’s completing testing in Abu Dhabi, Seage said. The 100-megawatt plant, a joint venture with Abu Dhabi’s state-owned renewable energy company Masdar, will be inaugurated this quarter and reach full generation capacity by the summer, he said.

The company is also working to complete two plants in the U.S. and has closed financing on two facilities in South Africa. Construction has started at the 50- megawatt and 100-megawatt plants in South Africa that will encompass a solar tower to beam sunlight onto mirrors mounted on the ground. Completion is seen in late 2014 or early 2015, Seage said.

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