Source: Institute for Energy Economics and Financial Analysis
Record-low solar prices at Brazil’s latest auction have cast fresh a spotlight on the industry’s global journey to cost-competitiveness, with experts arguing it further weakens the case of fossil fuels.
The average solar prices of BRL67.48/MWh (around US$17.5/MWh) at last Friday’s A-4 auction would make PV the “cheapest power from any technology ever…in the history of the planet assuming it is confirmed subsidy-free,” Michael Liebreich, founder of BloombergNEF, remarked after the results were published.
The auction – where PV secured over half of all 401.6MW awarded to renewables – marks the first time solar achieves lower prices than wind at a tender in Brazil, noted Maurício Tolmasquim, professor at Rio de Janeiro’s COPPE and former head of the country’s energy regulator EPE.
Assaad Razzouk, CEO of clean energy developer Sindicatum, pointed at the “incredible” drop of solar prices between auctions in 2017 ($35.2/MWh) and this week (US$17.5/MWh). Fossil fuels “can’t compete” despite the “trillions” in support they receive every year, Razzouk argued.
As several onlookers pointed out, the solar price breakthroughs mask the circumstance that PV winners will remain largely exposed to free-market dynamics, once auction contracts expire.
“We noticed a tendency of solar and wind projects to allocate about 70% of their physical guarantee to the free market,” said Rui Altieri, who chairs the board of directors at distribution regulator CCEE. He urged developers to consider “commercial strategies” beyond the support of auction prices.