Tuesday, October 13, 2020

World record low solar price of $0.01316/kWh recorded at Portuguese Auction

In an auction, which took place on August 24th and 25th, licenses to produce 670 megawatts (MW) were awarded, of which about 75% were linked to Storage (483 MW) and the rest linked to "System Compensation" (177 MW) and "Contract for Differences" (10MW).

The 12 lots submitted for auction were awarded to six entities, half of which are not present in the Portugal production market. Eight lots were awarded for storage, four lots for the Compensation System, and one for the Differences Contract modality (price fixed).

Hanwha Q-Cells was the big winner of this second solar auction both in number of lots (6) and in awarded capacity (315 MW).

After the auction is concluded, gains for consumers are estimated at 559 million € (euros) over 15 years, which is equivalent to about 37.2 million  € per year.  This value corresponds to a unit gain of approximately 833,000  € for each MW awarded (15 years), which represents an increase of about 80% compared to the gain of 464 thousand  € for each MW awarded in 2019.

For the Storage modality, a weighted average discount was obtained at the reference value greater than 200%. This means that:

• Winners have abdicated from receiving a capacity prize (defined initially by the Government at 33,500  € per MW/year), highlighting that were available to pay a capacity premium system (about 37,100  € per MW/year on average);
• In addition to this amount (equivalent to a fixed and guaranteed revenue for the around 17.9 million  € / year, the winners will still have to insure the system against high price events in the market, thus ensuring a second revenue component for consumers;
• In addition, the National Electric System will have a capacity (minimum) storage capacity of almost 100 MW, contributing to absorb excesses of renewables in the network and giving the necessary flexibility to the in these periods.

In the System Compensation Modality a weighted average contribution of approximately 73,700€ per MW / year, which translates into a fixed and guaranteed revenue for the System in the order of 13 million euros / year. This figure is about 73% higher than weighted average contribution obtained in the 2019 auction.

A solar farm in Portugal [@PerEnergia Twitter] via https://tinyurl.com/y5frf4xn

In the Contract for Differences only one lot was awarded at a fixed price. It was in this modality that reached the lowest tariff in the world, in the amount of € 11.14 / MWh (equivalent to a 73.3% discount on the reference rate initially set by the Government). This tariff is about 25% lower than the lowest tariff obtained in the 2019 auction, considered to be the lowest in the world (€ 14.76 / MWh).

Competitors in the Contract for Differences modality proved to be very engaged in the bidding of the respective lots, resulting in discounts to the tariff reference values ​​above 80%. In one of the lots, an offer was even registered equivalent to a tariff of € 4.54 / MWh. In all these cases, the lots ended up be auctioned off by competitors.

Finally, it should be noted that the tenderers for the 2019 auction have already completed the first phase of the Specifications, regarding the choice of land and presentation of the respective documents attesting to the right of them to be able to install photovoltaic plants.  At the moment, the contractors are already in the process of obtaining corresponding production licenses for their plants.

For example, for the Santas photovoltaic plant, the contractor Akuo Renov├íveis ​​Portugal, has just entered public consultation in the scope of of the environmental licensing process. This plant, which will have an installed power 180 MW, corresponds to the lot awarded to the lowest auction price in 2019 (€ 14.76 / MWh).

Government of Portugal Press Release https://www.portugal.gov.pt/pt/gc22/comunicacao/comunicado?i=leilao-portugues-regista-preco-de-energia-solar-mais-baixo-do-mundo August 26, 2020

According to PV Magazine at https://www.pv-magazine.com/2020/08/27/portuguese-government-confirms-world-record-solar-price-of-0-01316-kwh/  the price was lower than the previous record of $0.0135/kWh bid submitted by French energy group EDF and China’s JinkoPower in a 2 GW tender held in Abu Dhabi

The article also noted that Antonio Delgado Rigal, chief executive of energy forecasting service Aleasoft, said that the 15-year contracts awarded in the auction were the key to understanding the reason of such a low price. This, combined with the rights for land and grid connection guaranteed by the auction, makes attractive bidding at low prices.  He also said that “Notwithstanding, the low prices of this Portuguese auction should not have an impact on the price of the peninsular electrical market nor on the prices of bilateral PPAs over the long term. “However, €0.01114 / kWh is not the price of PV,” he concluded.

No comments:

Post a Comment