The last couple of years have been marked by increasingly lower prices for solar electricity<\/strong>, being bid in various parts of the world. India<\/strong> has seen prices of 8-9c\/ kWh<\/em>, which has drawn gasps around the energy community. The sharp decrease in solar prices and increasing scale of the solar industry has seen electricity prices from solar energy<\/a> drop by almost 80% in the last 5-6 years. The prices of BOS components like solar inverters have also declined propitiously, as large Chinese firms have entered all parts of the solar supply chain.\u00a0 These large companies with wafer thin margins and solid government backing have sharply reduced prices of solar equipment.<\/p>\n Now a new low in solar prices has been achieved in the recent auction of a 100 MW solar power plant in Dubai<\/strong>. This auction which has taken place over a year saw more than 40 applicants who were shortlisted twice, to 10 applicants before the final price bids were opened.<\/p>\n Large Chinese and USA firms along with some Middle Eastern power developers bid for the final phase. While most of the bids were using solar PV technology in the range of 8-9c\/kWh, a couple of Saudi firms like ACWA Power<\/strong> bid just 6c\/kWh<\/strong>. This was a new low in solar electricity prices.\u00a0 The company also stated that it would build the entire planned capacity of the new solar power park of 1000 MW at just 5.4c\/kWh<\/strong>. Note ACWA Power has built some solar power plants in association with US and Spanish firms in the past.<\/p>\n ACWA Power will use First Solar<\/em> thin film power panels as per the bid. First Solar also bid on its own but its bid was much higher at more than 8c\/kWh. The big question then is to ask is whether 6c\/kWh is the right price point to think of for solar power, or whether 9c\/kWh is the right price point<\/strong>. According to me the current price of solar power is still 8-9c\/kWh<\/strong> for large ground mounted utility solar plants using PV technology. The reason why ACWA Power bid so low was because its cost of capital is much lower<\/em>, thanks to the backing of the Saudi funds. First Solar despite having its own equipment could not bid so low because its cost of capital will be higher. ACWA Power also wants to dominate renewable energy in the MESA region and wanted to protect its turf. Surprisingly the large Chinese firms like Hareon, Huaneng<\/em> were outbid, despite Chinese solar companies<\/a> being very aggressive in solar bids outside of China.<\/p>\n