BNEF calculates that 57 GW of solar PV was installed last year, marking an increase of around 30% on 2014. Latest figures also show that, despite factors which could have impeded growth, clean energy financing reached US$329.3 billion in 2015.

    

As we anticipate the next phase of solar development in 2016 - post COP21 and collapse of oil markets, I cannot help but think of the dark side of recent solar development in MENA SWA emerging markets.

The term "tulip mania" aka "tulip fever" is now often used metaphorically to refer to any large economic bubble (when asset prices deviate from intrinsic values).

Solar fever is gripping emerging markets as multinational developers continue to outbid one another in a race for market share at any cost in an inverse manner to the Tulip Mania of 1619.

The current "solar fever" or race to the bottom in pricing by multinational solar developers in some emerging markets is not good for the market.  India, Egypt, UAE and soon Pakistan are good examples of the irrational market pricing.

While the market will ultimately always be right and will correct pricing problems over time, the current level of price competition is irrational and not healthy for solar development in emerging markets where large scale solar has a very brief history. I foresee projects in emerging marketing being delayed or cancelled due to bidder defaults.

The articles below provide some good background and insights into the current solar fever.

India's cutthroat solar auctions - behind the hype.
While India offers a very large attractive market to solar developers and manufacturers, intense competition is driving pricing down and making the risk-reward unfavourable for them. Bridge to India's report on 40% of allocated projects being delayed or cancelled over the last two years under state policies is reiterated by Kamal Maheshwari, president, smart cities, at Indian integrated utility and solar developer, Essel Infra. Projects have struggled to come up even with six rupee tariffs, says Maheshwari, so it is difficult to see how they can be commissioned at under INR5 tariffs in such a short time period. However the market is enormous and Maheshwari says that once 25-35GW of capacity has been bid out to aggressive and hungry players, capacity will be left open to more "reasonable" developers.

Dewa gets 21 qualifying requests for solar park.

Six-cent energy is not the new normal

Saudi Arabia may finally be ready (forced) to develop solar energy capacity and the timing may be perfect to take advantage of the mistakes in other emerging markets.  Saudi Arabia can secure very competitive pricing but they will need to manage the temptation to chase lowest prices.

Saudi Arabia budget deficit swells on oil price fall.

Saudi Arabia cuts spending after posting record $98 billion budget deficit for 2015.

McKinsey Report : Saudi Arabia Beyond Oil: The Investment and Productivity Transformation.

KSA to build PV plant for under $5 cents per kWh,

Next week the 2016 World Future Energy Summit begins in Abu Dhabi with the new Solar Expo showcasing the latest innovations and advancing the take-up of photovoltaic (PV), concentrated solar power (CSP) and other cutting-edge solar technologies, helping governments to meet ambitious targets for renewable energy.