Portugal Awards World’s Lowest Cost Solar Contract

Portugal has for now become the country with the world’s lowest-cost solar PV contract. After it offered contracts worth just €14.76/MWh

Portugal has for now become the country with the world’s lowest-cost solar PV contract. After the European nation offered the lowest ever contracts worth just €14.76 per Megawatt Hour (MWh), or $16.54 per MWh in the country’s first solar PV auction which was held on July 2019. This narrowly beats the recent $16.95 per MWh contract awarded in Brazil.

“With the levelised cost of utility-scale PV in Southern Europe now well below current wholesale power prices, investors have flocked to the region to secure grid connection capacity and PPAs,” said Tom Heggarty, a senior research analyst at Wood Mackenzie.

He added that Portugal, like Spain, has seen a project development rush and new connection licenses for 938 MW of utility-scale solar PV projects were issued until mid-2018.

In order to manage the multi-gigawatt pipeline of projects queuing behind licensed sites, Portugal took the decision to hold a series of auctions which would award both grid connection capacity and either guaranteed or general remuneration support to successful bidders. 

Under the latter of the two remuneration models, developers bid for grid connection rights and are then able to sell their output into the wholesale market or via bi-lateral PPAs. A total of 862 MW was awarded under guaranteed remuneration and 288 MW under the general remuneration arrangement.

The July auction is the lowest-cost contract awarded through a public auction in Europe so far and gives a measure of solar PV‘s increasing economic competitiveness in the region.

Recently, we had reported that Akuo Energy, one of the leading French renewable energy independent power producer and developer, had been awarded 370 MW project capacity under the latest 1,400 MW solar PV energy auction call for the tender organised by Portugal. The 370 MW awarded to the group comprises of three solar projects with a capacity of 150 MW, 120 MW and 100 MW respectively. 

The other big winners in the auction were Spanish giant Iberdrola, which when combined with the capacity won by Akuo account for nearly half of the 1.15 GW total awarded in the auction.