SolarReserve reports that it has signed a contact to supply electricity from a 20 MW solar PV project which it will build in El Salvador. The 20 MW Acajutla PV project is larger than any that have been built in Central America to date, and was awarded in June through a competitive solicitation.
Other projects awarded include a 60 MW solar PV plant which UDP Neoen-Almaval will build. The ceiling price of the bidding process was set at US$0.165/kWh, and both plants came in under this, with SolarReserve's bid at $0.123/kWh and UDP's at $0.102/kWh. In total five projects have been awarded 20-year contracts to sell electricity, which begin on October 1st, 2016.
The five PPAs which were awarded in this auction are part of at least nine recently awarded recently in Central America, including projects in Honduras, representing over 200 MW of capacity. Central America as a region has pretty incredible growth prospects, notes GTM Research Solar Analyst Adam James.
However, James notes these projects are largely seeking to tap into the same pool of financing from development banks, and that PPAs do not ensure that a project will necessarily move forward.
There's a limited pool of capital available for financing projects that have PPAs, and it is not just about the price of the PPAs, notes James. (Financiers) are taking a broader risk profile into account, so it is about comparative investment opportunities between different countries in the region.
Regardless, GTM Research is forecasting that the 94 MW of solar PV projects including SolarReserve's Acajutla project will be completed between 2016 and 2017.
James also says that El Salvador is one of the most promising markets in Central America. El Salvador has a potential across all of their different market segments, as opposed to just one or two, and there is a willingness to sign PPAs, he observes.