Solar Insights: Utility-scale solar at 7c/kWh?

Auctions of solar power contracts in the Indian state of Rajasthan have produced some remarkably low bids, with the lowest bid coming in at Rs6.45/kWh, equivalent to A11.6c/kWh, according to press reports in India. The tender of 100MW of solar power is one of a number being held in India, both as part of the National Solar Mission, which aims to install more than 20GW of solar in the next decade, and individual state initiatives.

According to  Hindu Business Line, the lowest bid was made for a 10MW solar PV plant, while the highest bid came in at Rs8.25/kWh (A14.9c/kWh).  In all, 23 bids representing 185MW of capacity were submitted, but under the rules of the tender, all winning bids will be asked to match the lowest tender.

This is not actually the lowest result produced this year. A similar tender in Tamil Nadu saw a bidder (Mohan Breweries) quote Rs5.97/kWh, but that tender had a 5 per cent annual escalation for 10 years. The auctions are being held along similar lines as that in South Africa, which has already allocated more than 1.6GW of wind and solar energy developments, and in the ACT last year, when FRV won a tender to build a 20MW solar PV plant for 18c/kWh, which converts to around 15c/kWh when indexing is taken into account.

SunPower sees utility scale solar at 7c/kWh

While some analysts wonder if the “era of cheap solar” may be coming to end as the market oversupply corrects itself, and China aims to install 10,000MW in 2013 alone, evidence from elsewhere suggests they will continue to fall.

It was revealed earlier this months that First Solar has contracted to deliver electricity from a 50MW solar PV plant in New Mexico for US5.8c/kWh. But while that was assisted by tax credits, its biggest rival in the US-market, the California-based SunPower, is now suggesting that it can produce utility scale solar for between 7c/kWh and 10c/kWh, cost competitive with coal in areas with good sun.

In an analyst briefing with Deutsche Bank this week, the company said the production cost of panels fell 25 per cent in calendar 2012, and it expected the cost of panels to continue to fall in 2013. This echoes an earlier briefing where Chairman and CEO Tom Werner said: “I think our innovation pipeline to get cost out is as strong as it’s ever been as we look to 2013 and 2014.” SunPower expects up to half of its revenues to come from utility scale solar, where it has already installed 700MW of capacity.

Is the Australian market rebounding?

One of the key points in interest in coming weeks will be information about the state of the solar PV in Australia, as various companies produce their results fo the first six months of the financial year. Forecasts for the Australian market in 2013 vary widely, from as alow as 500MW to as high as 1,200MW – a lot will depend on the commercial market.

In a separate analyst briefing a month ago, SunPower said Australia was one of its key growth markets, along with Japan, partly due to its recent purchase of a majority stake in the green energy retailer Diamond Energy, which will allow it to sell panels directly to customers as well to the wholesale market.

Another company to make positive noises was CBD Energy, which in its quarterly report said its solar installation business had recovered in the December half and “is growing again and good gains are expected in the second half of fiscal 2013.”