Chile auction sees 'world-low' unsubsidised solar PPA

At less than $65/MWh, Chile is likely to have secured the world's lowest unsubsidised price for PV power through an auction that combined favourable market conditions, a clear set of tender rules and the planet's best solar irradiation, industry commentators said.

Amunche Solar, a local venture controlled by Spanish developer Solarpack, will deliver 110GWh annually for the next 20 years for $64.85/MWh following last week’s auction.

“This is by far the lowest non-subsidised price in the world,” said Adam James, senior solar power analyst at GTM Research.

James claimed that if indirect subsidies due to cheap financing from government authorities are included, the $58.50/MWh obtained for Dubai's Mohammad Bin Rashid Al Maktoum solar park in January will be higher than Amunche Solar's venture.

James also said that US cash subsidies would inflate above the Chilean price the $38.7/MWh for PPAs signed at the Austin municipal auction in July.

The auction saw Chile contract 1,200GWh a year for the next 20 years from solar and wind plants, with delivery starting in 2017.

The average price was $79.30/MWh, 27% below the ceiling price of $108.13/MWh and 26% below the $107/MWh average price of the last auction in April.

“It's not the world's lowest price, but it's very low compared to the previous tenders in Chile,” said Josefin Berg, senior solar power analyst at IHS. “This makes Chile the first country to see PV competitive with wholesale power prices without subsidies.”

In Chile's tender, other bid winners included SCB II, controlled by First Solar, which sold power in the $67 to $68/MWh range. Other companies were up in the $78 to $97/MWh range, the former offered by Spain's Abengoa, probably for a PV/CSP hybrid project.

High demand, 20-year contracts linked to the US dollar, plus the possibility of selling power only during daytime peak hours, helped make the Chilean tender competitive.