From pv magazine global
It’s official, almost. Portugal attracted the lowest ever solar power electricity price bid in its latest generation capacity procurement auction – €14.8/MWh (€0.0148/$0.016 per kilowatt-hour).
After a three-day auction which saw 1.4 GW of solar generation capacity allocated in Portugal concluded on Monday, the country’s minister for environment and energy, João Pedro Matos Fernandes, appeared in front of the cameras of public broadcaster RTP to announce the achievement.
Portuguese newspaper Expresso had on Friday reported bids as low as €20/MWh had been received for significant parts of the capacity on offer. Government officials declined to comment at that point, as the auction was still under way.
With the tender concluded, however, a proud minister was happy to share the preliminary results with a smile. And well he might, as a few weeks earlier Fernandes was criticized in some quarters for setting a bid price ceiling of €45/MWh which some analysts believed was too low. The minister said the 1.4 GW auction had attracted 10 GW of project applications and he felt the high level of competition would severely undercut his price ceiling.
Winning bids must commission solar projects within 36 months. While €14.8/MWh is likely to prove a speculative price the developer in question hopes to be able to achieve within three years, it is indicative of the energy price trajectory for solar. Reports of €20/MWh bids in the Portuguese tender confirm such low prices appear to be the new normal.
Keep ’em comin’
At the start of the month, Brazil’s most recent A-4 renewables auction saw 211 MW of PV capacity secured at a record-breaking $0.0175/kWh. That project took the crown from a 200 MW facility in Los Angeles which undercut the two-cent mark when it was contracted for $0.01997/kWh just a week before the project in Brazil, although the latter’s claim to the world title is somewhat controversial. Tomorrow the PV world could see another record, as Saudi Arabia carries out part of a wider 1.4 GW tender.
The 211 MW of Brazilian capacity comprises five projects with 30 MW of output each plus a 61 MW facility. The smaller projects in the protfolio prompted one bid of BRL64.99/MWh ($16.88/MWh) and the average price came in at BRL67.48/MWh ($17.52/MWh) breaking the magic two-cent per kilowatt-hour sound barrier.
Skeptics noted the two record-setting projects concerned will sell at least half the power they generate to the Brazilian Free Electricity Market – the Mercado Livre de Energia Eléctrica – where electricity is traded among generators and off-takers free of the contracted rates set at the auction. The world record price applies only to the proportion of energy generated by each project which is supplied to the Regulated Electricity Market – the Mercado Regulado de Energia Eléctrica.
Has Portugal moved the goalposts too?
Something similar may be happening in Portugal. Developers in the tender could present two kinds of offer: one with a fixed price below €45/MWh and another with a variable tariff which includes a requirement to pay compensation to the electricity system depending on spot market power prices. When a project price is higher than the market price, the Portuguese government will pay the project the difference. When the market price is higher, the project owner makes up the gap. The second option offers developers the chance to get a little more speculative as they have the floor price insurance offered by the government.
According to Expresso, at least one 200 MW slice of the Portuguese capacity has been allocated under the variable tariff scheme at a price of €23/MWh and several other allocations reportedly received bids for the fixed tariff scheme of around €20/MWh.
The results will be formally published by August 10, by the Directorate-General for Energy and Geology.