The economics for solar energy in Qatar are challenged by some of the lowest natural gas prices on Earth, combined with a local and subsidized electricity tariff with retail power prices of $0 to $27.40/MWh, commercial prices of $24.66 to $41.10/MWh, and industrial power prices of $19.18/MWh.
Notwisthstanding, there is still a solid business case for solar energy in Qatar given the rapid decline in capital costs since 2009, and the ability to generate revenues from displaced domestic gas demand that results following the introduction of renewable energy capacity.
At present, the ability to capture synergies between renewable energy and natural gas markets is not official state policy or QP strategy. However, increased revenue from displaced domestic gas demand offers the potential to create a self-funding subsidy for solar energy in Qatar. The result can be:
- A significant reduction in the leveled cost of energy (LCOE) from solar power systems,
- Grid parity with the local tariff for commercial and government end-users,
- Improved gas market efficiency
- Diversified and zero emission power supplies, and
- Expanded infrastructure development opportunities.
In practice, the ability to monetize displaced gas as a self-funding subsidy for renewable energy will require a policy framework and production targets. This idea was discussed at the Solar Qatar Summit, which took place on the 17th & 18th November 2014 under the patronage of H.E. Essa bin Hilal Al-Kuwari, President of Qatar General Electricity & Water Corporation – Kahramaa.
The discussion made clear that renewable energy potential under a production target depends on long-term forecasts of total power demand and dispatch from all sources of generation. The production target can also be used to estimate natural gas demand displaced by RE and the potential cash flows from displaced gas. The following download shares the slides that were publicly presented.
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