THIS MATERIAL IS A MARKETING COMMUNICATION.
Video: Solar Grid Parity
Q1: When will solar grid parity be achieved?
It was very astonishing to see the world’s lowest tariff for a solar power plant in the United Arab Emirates recently. Abu Dhabi Power Corporation says it has received a bid of just 1.35 US cents per kilowatt-hour for the project, which is definitely competitive compared with oil-fired thermal power in the region. It is dramatically less than one-third of the projects built five years ago in the same area. Initiatively, we would like to ask why it could be so low.
Q2: Why is the solar power cost so low in the Middle East?
The lowest levelized cost of energy (“LCOE”) in solar projects of the Middle East markets can be attributed to a number of key factors.
Firstly, the Middle East area is home to excellent solar resources. The UAE’s yearly irradiation currently achieves over 2,000 kWh per square meter, which is almost twice that of most of Europe.
Secondly, large swathes of cheap desert land with few trees or vegetation provide near-lossless solar radiation. The countries also offer very low borrowing rates, low cost labor and tax discounts to attract solar installations.
More importantly, cheap module products from China significantly help with cost drop. Module cost that accounts for half of the total cost was more than half cut in the last three years.
Q3: What is the implication on solar industry? Can the case in the Middle East apply to other regions?
Actually, photovoltaic projects have achieved end-user side grid-parity in most places in the world, compared with electricity generation from oil, gas and coal. We expect as technology innovation continues to push module cost decline, citing the experience in the Middle East, regions with great irradiation or land or borrowing cost cut, are more likely first to achieve cost side grid-parity and we will see solar installation acceleration hereafter. For example, solar power cost currently declined to only 0.062 USD/kWh1 in China, quite close to coal-fired cost of 0.0492. In Europe, solar energy is even more competitive. We have seen solar energy enjoyed over 20% growth in the last 10 years globally, and we believe the trend accelerates in the coming years.
Q4：Who will benefit from the trend?
China is absolutely the key manufacturing center of photovoltaic products in the world from the very upper stream polysilicon to downstream module and inverter. We believe China will fully utilize their cost advantages and the fast growing demand globally. The cost-competitiveness of Abu Dhabi’s solar project is a push factor, driving the growth of the Chinese solar markets in the foreseeable future.
Staying Ahead with Mirae Asset’s Latest Insights
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature/ . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary/.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Copyright 2022. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.