Interview: The story behind JinkoSolar’s Abu Dhabi solar bid
JinkoSolar, the world leading renewable energy company, won bidding to build an 1117-megawatt solar plant in United Arab Emirates to produce what could be the world’s largest single site project and the cheapest power generated from the sun.
Over the last three years, JinkoSolar has undergone a profound leap by becoming the world’s largest solar module producer, in addition diversified its business at a global level, reaching major economic performance goals in all aspects. JinkoSolar is scaling on large power stations and increasing its footprint across the world.
Following the inauguration of the world’s largest single solar project in Abu Dhabi, XXXX caught up with Mr. Xiande Li, Chairman of JinkoSolar, to find out more about the record-breaking tender.
What does this project mean to JinkoSolar?
It was not our first participation in a large international bid of the highest level, we already won the 250MW project in Mexico and 94MW in Argentina. Our vision is to be the world’s lowest-cost producer of solar energy. This result shows us that we are on track. This will enable us to build credible international development partnerships and will have shown that we are capable of competing with the best in the world.
It is the largest single-site solar project in the world and also with the world’s most competitive bidding of 2.42 US cents per kilowatt.
What was JinkoSolar’s participation in the tender?
The volume of the project has attracted the world leaders in the sector, which made the process even more selective, but very few big players left in the last phase of the bid. We believe that the track record of the JinkoSolar in realizing large solar projects puts the company in a strong position. We have already successfully delivered over 2GW large scale solar plants in China. We therefore feel ready to now seize more opportunities worldwide.
How does JinkoSolar finance its energy projects?
Speaking in general terms, JinkoSolar already has a proven track record of leveraging international and domestic financial resources. In fact, JinkoSolar is a pioneer in terms of establishing a sustainable independent power production business across the world. We were the biggest winner in China’s Top Runner Program in 2016 awarded with 400MW Top Runner Projects. Now we have connected , owned and operated over 2GW solar plants in China, including 63 utility scale ground-mounted plants and 100 decentralized commercial rooftops covering close 20 provinces, in addition to 7.7 GW in pipeline. In emerging market,JinkoSolar obtained 250MW project in Mexico with investment of 250 million US$ and 94MW in Argentina of 94 million US$. The combination of its strong track record and financial stability makes JinkoSolar an attractive proposition for lenders looking to participate in our renewable energy projects.
Investing overseas offers many potential benefits, but it also comes with risks, how JinkoSolar overcomes these risks?
We have a professional overseas development team covering legal, commercial, financing, also we committed to foreign influential consulting firms for consultancy of local laws and regulations, to handle and mitigate these risks. We fully understand that variances in legal culture and thinking may breed differences between a Chinese company and its foreign counterparts in a consortium or between the Chinese entity and the foreign government regulatory body, so the communication before project kickoff is necessary.
What do you think the key factors for JinkoSolar to win the final bidding?
There is no doubt that as the world largest solar module producer, we have a substantial competitive advantage on the pricing. The challenge to bidders was to maximize the power output from the site. We put forward solutions with more power than our competitors based on our leading Mono PERC technology.
Furthermore, other key items that drive the LCOE levels are usually the EPC costs, the financing conditions and irradiation. In this particular Abu Dhabi case, module prices and highly competitive financing terms have played a crucial role. We got the best financing support from our partner Marubeni. And Abu Dhabi, and the UAE in general, is a fantastic location for solar, thanks to the natural advantage given by an attractive solar irradiation of more than 2,240 kWh/sqm.
How about the profit margin of this project?
Cheaper costs of solar energy are creating new growth opportunities, even as the profit margins of generating companies may narrow in the low-price environment. Regarding the earning of the project, I think it should be still attractive, or as a sustainability and business oriented company, we will not do it just out of reputation. This is in incredible time for both the industry and JinkoSolar.
Can you provide us a broad overview of JinkoSolar’s international development business?
As one of the country’s first renewable energy companies to “go global”, JinkoSolar has actively tried high-end project cooperation mode of direct investment. In recent years, our international business has experienced rapid development and completed milestone projects, such as 250MW solar plant in Mexico and 94MW in Argentina, which are the largest project in both countries respectively. Recent 1117MW project in Abu Dhabi crown the world largest single site solar plant was won by JinkoSolar again with world’s lowest tariff. It is also the largest overseas solar energy project undertaken by a Chinese company so far in terms of contract value.
While solidifying and enhancing its strong presence in China, the Company is expanding its international development, construction and financing operations to capture opportunities in the overseas market brought by China’s “going out” strategy such as the “One Belt and One Road” initiative. As of May 20, 2017, we had won three mega-scales international bids of total capacity of 1.52GW, in additional to 5GW in pipeline. Our overseas business operations are focused on Middle East, Southeast Asia, Africa and Latin America.
What will this project impact the GCC regions? Will it boost the deployment of solar energy in the region and beyond?
This result will further increase the development of solar power globally, particularly in sun-rich countries with growing energy needs. Dubai and neighboring emirates and Gulf countries will build on the now proven approach to procure solar power plants on a similar scale to conventional power plants. Its neighboring Saudi Arabia should finally also take note of the compelling nature of solar power, hence the announcement of a 9.5 GW renewable-energy pipeline.
The quality of tender and the pitching processwas fair, transparent and efficient. Abu Dhabi Water and Electricity Authority (“ADWEA”) has done a fantastic job putting together a world class tender, which only allowed the very best players to compete.
Such strict requirements, transparent process, and focus on pure competitive mechanism of the Sweihan project tender, has made it a new benchmark for the industry and for the region, and created a template right for other GCC countries who have similar scenario. UAE has now firmly established itself as the forerunner of solar energy in the Gulf region.
How can the governments including Chinese government learn from Abu Dhabi experience and further include private foreign investors in its solar energy plan?
Now, solar PV is fully capable of competing with conventional power generation on an IPP basis,especially for those heavily energy importing countries. Indirect incentives, such as tax credits, should also be considered,as they will further improve PV solar’s cost competitiveness. Lower cost land, grid access, priority in being connected and transmitted, etc., are all crucial factors to enable the project commercial feasible.
What is the potential for solar energy in emerging market?
Quite a number of emerging market for example Africa, Middle East, Latin America, has limited coal or gas resources at its disposal, but has richest solar irradiation. Meanwhile, increasing demand of energy stimulates them to harness the potential for solar energy. In my view, the ambitious targetswill be achievable if the government, in collaboration with private sector, succeeds in establishing a suitable regulatory framework to develop its rapidly evolving solar energy market.
How you view the riskiness of investing in these emerging markets?
U.A.E.has natural potential with their plentiful sunshine, and they have stability that is perceived as better than other regions. It is less risky, and therefore, I see no problem with looking at it also and Saudi Arabia, these countries as a great investment.
By: Saumya Gupta