Renewables clean up at Chile energy auction, including 24-hour solar

Renewable energy technologies have made a clean sweep at Chile’s latest energy auction, with five global wind and solar companies awarded 20-year contracts to supply 1,200GWh to the Chilean electricity market from 2017.

The five companies – including Abengoa, Aela Generacion, Ibereolica Cabo Leones, Amunche Solar SpA (a subsidiary of Spanish Solarpack) and First Solar (via SCB II) – offered an average bid price of $US79.3/MWh, the lowest average price per MWh for a local energy auction since 2007.

The most remarkable result came in with a bid of $US97/MWh for “overnight” solar. This came from Spanish group Abengoa. It still beat all the coal and gas alternatives. All of the bids for wind projects came in at $78-$95 per MWh, and solar PV came in as low as $US65/MWh.

And while wind projects won three-quarters of the available energy blocks, at least three developers won contracts for solar projects to supply a combined total of 237GWh annually.

Interestingly, the Abengoa bid, for a total of 39GWh solar power, was for the overnight blocks. As PV Magazine notes, it is clear that in order to supply electricity during these non-daylight hours the company will need to incorporate some form of energy storage, which means either a concentrating solar power (CSP) project with molten salt storage or battery backup.

Although this is nothing new for Abengoa, which is already building a combination of PV and CSP in Chile to meet 24-hour electricity to fulfill a previous contract to supply 950GWh, won in the South American country’s energy supply auction last December.

First Solar, meanwhile, won 20-year contracts to supply 88GWh annually through its project company SCB II. Solarpack won 110GWh as Amunche Solar SpA.

First Solar’s bids came in at US$67-68 per MWh, and Solarpack’s at $65/MWh. Solarpack has announced that it will build a 55MW project to meet its obligations, and First Solar has stated that it is reviewing its options in terms of how it will supply energy.

All the of the new energy generation will be distributed on the regulated market within the two main power systems of Chile.

The government, which presented the auction results on Monday, said the bidding process had attracted new market players and more competition than previous auctions.

The energy ministry said it expected similar or lower prices for the next auction, in April 2016, for annual supplies of 12,500GWh, for delivery 2020 and 2021.

It is hoped that this trend towards cheaper renewables could halt Chile’s increase in electricity bills within three to four years and bring a reduction thereafter.

According to Andres Romero, executive secretary of the National Energy Committee, CNE, the reduction could range from 7-10 per cent, probably from 2020.