Low solar tariffs coexist with public participation and uneven disclosure in Saudi Arabia and the United Arab Emirates
This study analyzes 23 utility-scale solar projects in Saudi Arabia and the UAE to reveal that while exceptionally low electricity tariffs coexist with significant public equity participation, their true interpretability is hindered by uneven disclosure of contractual terms, financing milestones, and risk allocation.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the vast, sun-drenched deserts of the Arabian Peninsula, a quiet revolution is taking place in how electricity is made. For decades, the region relied heavily on burning oil and gas to power its cities, but the sky above offers a different, cleaner fuel. Solar panels, which turn sunlight directly into electricity, are now being built on a massive scale. When these projects are built by private companies rather than the government, they are called independent power producers. To make sure these companies can afford to build such huge plants, governments hold auctions where companies bid to sell their electricity at the lowest possible price. The winner gets a long-term promise, known as a power purchase agreement, that the government will buy their electricity for many years. This system has produced some of the cheapest electricity prices ever recorded, leading many to believe that solar power has become the most affordable energy source on Earth. However, a price tag on a piece of paper is only part of the story. It does not tell you who owns the project, how the money was borrowed, or whether the government has promised to protect the company if the sun doesn't shine as expected.
A team of researchers set out to look behind the headlines of these record-breaking low prices in Saudi Arabia and the United Arab Emirates. They gathered public records for twenty-three large solar projects built or planned between 2015 and 2025. Their goal was not to calculate new numbers, but to see what information was actually available to the public and how it connected to the reported prices. They found that while the prices were indeed remarkably low, the full picture of how these projects were financed and protected was often hidden. In Saudi Arabia, the reported prices for electricity ranged from 1.04 to 2.34 US cents per kilowatt-hour. In the United Arab Emirates, the range was wider, from 1.35 to 5.84 cents. When the researchers looked at the average, Saudi projects came in at about 1.55 cents, while the United Arab Emirates average was higher at 2.55 cents. But this difference was misleading. The higher average in the United Arab Emirates was driven by older projects from before 2018. When the researchers compared only the projects awarded between 2018 and 2025, the average price in the United Arab Emirates dropped to 1.52 cents, making it almost identical to the Saudi average. This showed that the apparent gap between the two countries was not a fundamental difference in their solar markets, but simply a result of comparing different groups of projects over time.
The study also revealed that these low prices did not exist in a vacuum of private competition. In many cases, the government was a direct partner. For eighteen of the projects, the researchers found clear evidence that a public entity, such as a state-owned utility or a sovereign fund, owned a share of the company building the solar plant. In the United Arab Emirates, this public ownership was consistent, with the government holding a 60 percent stake in every project where this information was known. In Saudi Arabia, the government's share varied, ranging from 20 percent to as high as 65 percent. This means that the low prices were often achieved with the help of public money and public partners, yet the public records rarely explained exactly how much that public support lowered the cost. The researchers noted that having a government partner is not the same as a government guarantee. A guarantee would mean the government promises to pay the bills even if the project fails, but the public documents did not always clarify if such guarantees existed or if the government was simply a shareholder expecting a return on its investment.
Perhaps the most significant finding was how much information was missing. The researchers examined the contracts and public announcements for details on risk, such as who pays if the electricity grid is full and cannot accept more power, or if the laws change in a way that hurts the project. They found that for the vast majority of these risk categories, the public records were silent. In their analysis, 95 percent of the entries for these critical risk protections were marked as unknown. While some documents mentioned that the government would buy the electricity, they did not specify what happens if the grid operator tells the solar plant to stop producing power. Without these details, it is impossible to know if the low prices are truly sustainable or if they rely on hidden protections that the public cannot see. The researchers also found that the dates used to report progress were often confusing. A project might be announced as "complete" on one website and "under construction" on another, or a financial milestone might be celebrated without a clear date for when the plant actually started selling power.
Ultimately, the study concludes that the famous low prices of the Middle East are real, but they are only half the story. They coexist with strong government participation and long-term contracts, yet the specific details that would prove these projects are financially safe and fully protected remain largely undisclosed. The researchers argue that for these prices to be truly understood, governments and companies need to share more than just the final number. They need to explain the terms of the loan, the exact nature of the government's involvement, and the specific rules for handling problems. Until that information is available, the low prices remain a promising sign, but not a fully verified solution. The true test of whether these projects will succeed over the next thirty years depends on the fine print that the public has not yet been allowed to read.
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