London, 19 January 2011

Bloomberg New Energy Finance publishes the economic rationale for solar deployment in the Gulf: Falling costs of photovoltaic (PV) technology mean that solar energy is already a more economically attractive option for domestic power generation in the Gulf Cooperation Council Region (GCC) when compared to oil-fired electricity production. This is the conclusion of a White Paper published today by Bloomberg New Energy Finance.

• Bloomberg New Energy Finance modelled the use of a 100MW PV project built in 2011 to displace oil-fired power generation, freeing that oil to be sold at world market prices.

• The central scenario for the PV project’s capital cost is based around the 2010 global lowest price of $3.14 per Watt. We expect the cheapest bankable systems in 2011 to be developed and built for $2.73/W and prices to drop further thereafter, according to the established experience curve for PV technology.

• A PV project in the GCC would generate a real internal rate of return (IRR) of 9.4% if oil prices rise to $163/ bbl (in real 2010 terms) by 2030. This research was carried out with the help of Standard Chartered Bank’s Renewable Energy and Environmental Finance team.

• Even in the case of flat real oil prices to 2030, the project would generate a rate of return of 4.6%.

• GCC states should be replacing the use of oil-fired electricity generation with large-scale and distributed photovoltaics, and earmarking their oil for sale on international markets.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, commented "This exercise demonstrates the clear argument for large-scale deployment of PV in the Middle East region. The continued cost decline of PV will open up electricity markets in the Gulf extremely quickly.”

The Gulf Region has some of the world’s best solar resources. However, governments in the region have historically valued oil and gas at cost and provided their consumers with subsidised electricity, two factors which have impeded the development of renewable energy. Bloomberg New Energy Finance’s White Paper provides strong evidence that solar energy can compete economically for electricity production from oil.

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The White Paper is available for download at:

www.bnef.com/free-publications/white-papers/