Chile's National Energy Commission (CNE) has awarded 15-year power supply contracts to SunEdison for solar PV projects totaling 350 MW in the nation's latest energy supply auction. The company will invest roughly $700 million in building these projects.
While 18 renewable energy projects bid into the supply auction, SunEdison reports that it was the largest winner, with contracts to supply 190 gigawatt-hours (GWh) annually to the nation's Central Grid (SIC) starting in 2016, and another 350 GWh in 2017.
The prices here are notable. SunEdison bid at $0.089 per kilowatt-hour (kWh) for its 2016 projects, with the 2017 projects closing at $0.085 per kWh. The 2017 supply contract will be met through multiple projects.
The low PPA pricing in the auction shows how competitive the region has become — but unlike in other Latin American countries with low contract pricing, GTM Research thinks that these projects have a high likelihood of getting financed and built, GTM Research Solar Analyst Adam James told pv magazine. This is due to low country risk, the strong economic profile of the off-takers, and the high insolation levels.
SunEdison and GTM Research both note that a recent change in bidding conditions implemented by CNE has allowed renewable energy generators to participate for the first time. Under the new rules, 1,000 GWh of contracts were offered for projects which will supply electricity on an hourly basis, and SunEdison's projects were chosen for the 8AM-6PM block.
"Chile has a very limited supply of fossil fuels, and as a result they are quite expensive," SunEdison Chile CEO Alfredo Solar explained to pv magazine. "Even without incentives and subsidies, renewables are around 10-25% less expensive than fossil fuels."
"Because of the new auction process which revises the power supply schedule, SunEdison is well positioned to supply Chile with plenty of cost effective, clean solar energy."