OVERVIEW - How low will solar prices go in 2015?

How low did solar prices go in 9-mo 2015? SeeNews Renewables. All Rights Reserved.

November 4 (SeeNews) - Auctions held this year in India, Germany, Brazil and several other countries have shown that the age of expensive solar electricity is definitely over. In the US, a solar power purchase agreement (PPA) was struck this summer at a rate of just USD 38.7 per MWh, marking a new record.

“Wind and solar technologies are mainstream now, and are cost-competitive with coal today. It is very likely that they will overtake the coal industry in terms of jobs and energy supplied within the next decade,” said Sven Teske of Greenpeace. He is lead author of a report showing that solar photovoltaics (PV) can reach 844 GW of installed capacity globally by 2020.

USD 38.7/MWh for Nevada Power

In 2013, the average residential US price was USD 121.2 per MWh, according to data by the US Energy Information Administration (EIA). The lowest prices were found in Washington, at USD 86.7 per MWh, and the highest was in New York, at USD 188.4/MWh. In the mountain states, including Nevada, prices were somewhat below the average for the country.

For Nevada Power, a unit of NV Energy Inc, the average cost per MWh of solar electricity was about USD 137.65 in 2014. In the summer of 2015, however, it said it is seeking approval for two 100-MW solar PPAs at “very reasonable” prices. The utility will be paying USD 46.00 per MWh for the output of SunPower’s Boulder Solar park and just USD 38.70/MWh for power from First Solar Inc’s Playa Solar 2 farm.

“Overall, the two projects are very reasonable priced when compared to existing solar contracts and to other, fossil-fuel driven generation,” Nevada Power said in a filing.

Earlier in the summer Texas-based community-owned utility Austin Energy also said it had received record-low, firm solar power bids of under USD 40 per MWh in a 600-MW request for proposals (RFP).

Less than USD 60/MWh in Dubai tender

At the start of 2015, ACWA Power International and partners won a tender to build a 200-MW solar park in Dubai, after making one of the lowest bids for solar electricity ever. The consortium comprising ACWA and Spain’s TSK bid an unprecedented USD 0.0598625 per kWh as part of the tender.

In October, the Dubai Electricity & Water Authority (DEWA) said the 800-MW phase III of the Mohammed bin Rashid Al Maktoum solar project had attracted 95 expressions of interest. By the end of the year, the body plans to launch the tender for the right to build the park.

About USD 61.3/MWh offered in Jordan

In May it was announced that Greek firm GI Karnomourakis SunRise PV Systems had made the lowest bid of USD 0.0613 per kWh in a 200-MW solar tender in Jordan. The four companies offering the lowest power sale prices -- JOD 43.441, JOD 45.9784, JOD 48.949 and JOD 54.3 per MWh -- are to get a 50-MW contract each. The Middle East Solar Industry Association (MESIA) noted that the average of the four winning bids was more than 50% lower than the solar power sale tariff achieved in Jordan’s Round 1 solar tender.

USD 77/MWh in UK -- too low to be true

Тhe clearing price for two of the winning solar photovoltaic (PV) projects in the UK’s first Contract for Difference (CfD) auction came near the market price for electricity and was notably below the average rate for onshore wind. As announced in February, the 19-MW Wick Farm solar project and the 13.78-MW Roston solar scheme won the right to sign CfDs at a strike price of GBP 50.0 (USD 77.7) per MWh.

Both solar farms were planned to be completed in the 2015-2016 period, but in April it was confirmed they would not be built. Two other solar projects, with a combined capacity of 38.7 MW, won CfDs at a strike price of GBP 79.23/MWh and will be installed in 2016-2017.

A bit more realistic bids in Brazil

In October 2014, Brazil also held its first auction targeting solar power. The average sale price at the time -- BRL 215 per MWh -- proved unrealistic, especially after the depreciation of the Brazilian real. In a new auction in August, 833.8 MW of solar projects won contracts at an average price of BRL 301.79 (USD 84.7) per MWh.

Another Brazilian wind and solar auction is coming this month, with a maximum bidding price of BRL 318 per MWh for solar projects.

Solar plants offer USD 65/MWh in Chile

In Chile the price offered by solar power producers came below that in Brazil. In an auction last month, three solar parks offered to sell their output at between USD 65 and USD 68 per MWh. Their bids were even lower than these for onshore wind.

Andhra Pradesh in India reaches new low for solar

According to sources of consultancy Bridge to India, Canada’s SkyPower Global has made the lowest bid of INR 5.17 per kWh (USD 0.081) in Telangana’s 2-GW solar tender. US renewables major SunEdison Inc, meanwhile, was the top bidder with 580 MW. The tender received bids for 4,988 MW in total.

Early today came the news that SunEdison has won 100% of a 500-MW tender in another Indian state - Andhra Pradesh. It has offered a record-low tariff of INR 4.63 (USD 0.071) per kWh.

Solar prices in Germany fall with auctions

Germany completed its first two auctions for solar power this year, showing that competition for sure results in more attractive pricing. The first tender resulted in an average power sales rate of EUR 0.0917 (USD 0.10) per kWh. The winners in the second tender secured contracts at EUR 0.0849 (USD 0.096) per kWh. Each of the two auctions targeted 150 MW and were three to four times oversubscribed.

By December 1 developers can submit bids under the country’s third solar power tender for 200 MW of capacity.

All-time low solar bids in France

In June 2015 closed the bidding process for a 400-MW solar power tender in France. It attracted high demand and prices hit an all-time low coming very close to current onshore wind tariffs, according to a statement by the energy ministry. These results have encouraged France to offer an addition 400 MW for ground-mounted capacity.

The solar future

Just several years ago, solar energy was one of the most expensive electricity generation options in many locations. It has now reached grid parity in key markets and is well on the way to becoming one of the cheapest power options in global locations offering some sunshine. The only question is how soon will that happen.

In the fourth quarter we are expecting results from the auction in Brazil and Germany, and more news on more-than-reasonably priced solar PPAs such as these struck by Nevada Power.

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Browse all articles from Tsvetomira Tsanova

Tsvet has been following the development of the global renewable energy industry for almost nine years. She's got a soft spot for emerging markets.

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