With the cost of solar panels and associated equipment dropping rapidly while gas prices have been rising, solar PV is now competitive with fossil fuel in many Middle East/North Africa (MENA) countries for electricity generation.
According to a recent report from the Emirates Solar Industry Association (ESIA), when oil or LNG prices are above US$13 /million British thermal units (MMBtu) or around $80/barrel oil, solar PV projects become commercially viable - and without subsidies. With solar PV pricing expected to fall further, it will then become a case where harvesting clean energy from the sun becomes an even better proposition.
EISA also points out that in most MENA countries, electricity prices at the consumption end are subsidised - through financial support of the generator or regulated prices well below fuel import prices; or the price at which that fuel could be exported. An example is Saudi Arabia, where oil is supplied to power plants for as little as $2.70 a barrel. This presents an "opportunity cost" loss of around $50 billion annually - over 10% of Saudi Arabia's nominal GDP.
Given such support, solar power is viewed as uncompetitive - but the loss to the Saudi government and consequently its people through propping up fossil fuel based power generation is massive. Removal of electricity subsidies, or extension of those subsidies to solar power, would level the playing field says EISA.