Portugal government confirms record low solar energy price

Portugal’s government has officially confirmed that its second solar PV tender included one lot awarded at a new world record low solar energy price of €11.14/MWh, or around $A18.17/MWh, and 25 per cent below its previous record.

As we reported earlier this week, quoting Portuguese financial newspaper Expresso, the country’s second large solar PV tender was destined to make history with another world record for the lowest price for photovoltaic energy.

Official numbers were finally released on Wednesday. The tender, which was for 700MW in total, awarded a total of 670MW, of which 483MW would be delivered with energy storage capacity.

South Korean solar module manufacturer Hanwha Q Cells walked away with six of the twelve lots up for grabs, totalling 315MW, which were won with a solar plus storage scheme based. In total, six entities were awarded contracts, half of which will be newcomers to Portugal’s production market.

In its own statement on Thursday, Q Cells said it had secured the grid capacity in return for paying a set yearly price-per-capacity to the Portuguese national grid operator for 15 years.

The company said that thanks to the flexibility offered by coupling solar with storage, it would be able to sell the electricity produced by the solar plant to merchants, undertake energy arbitrage by time-shifting, and participate in ancillary services markets.

“This strategy enabled Q Cells to be highly competitive at this auction,” the statement said.

It was not revealed which company made the offer for the 10MW lot at the world record low of €11.14/MWh, which is “equivalent to a 73.3% discount on the reference rate initially set by the government.”

The solar tender awarded contracts for projects across three different modalities, including projects with storage, as well as the country’s system compensation and contracts-for-difference modalities.

A total of 483MW was awarded in the storage modality, with 177MW for the country’s system compensation and 10MW in the contracts for difference modality.

The 10MW awarded in the contracts for difference modality was to a single project, and it was this that secured the world record low solar price.

Nevertheless, the contracts in the other modalities were also awarded at significantly low prices, with a weighted average discount in the storage modality in excess of 200%.

Portugal’s government explained that this means that winners in the storage capacity auctions have foregone being awarded a capacity prize – defined initially by the Government as €33,500/MW per year – and that the winning groups would pay a capacity premium of €37,100/MW per year.

The government also noted that local consumers will benefit from gains through projects awarded in this tender amounting to €559 million over a 15 year period.