Although Portugal’s second solar energy auction is not expected to be finalized until tomorrow, financial newspaper Expresso has revealed the 700 MW procurement round secured a world record lowest bid of €0.0112/kWh ($0.0132).
If confirmed, that price would be $0.0003 lower than the $0.0135/kWh bid submitted by French energy group EDF and China’s JinkoPower in a 2 GW tender held in Abu Dhabi, which was cofirmed in July.
Portugal’s first solar auction, last summer, saw the Directorate General for Energy and Geology allocate 1.15 GW of solar generation capacity – less than the 1.4 GW originally planned despite the exercise being oversubscribed. That procurement round delivered a solar electricity price tariff of €0.0147/kWh, marking a new world record for that time.
More details on the second auction will be provided as soon as the official results will be announced.
*This article was amended on 24/08/20 to reflect the auction’s reported lowest price would be $0.0003 lower than the $0.0135/kWh bid in Abu Dhabi’s auction and not, as previously reported, $0.002 lower.
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You really need to read the fine print here, The official FAQ (pdf at https://leiloes-renovaveis.gov.pt/EnmTipoFicheiro/Download/119) describes one option thus:
“For Solar Power Plants with storage, option “General remuneration flexibility option”, the winning bidder will receive the compensation set in the tender, in €/MW/year, while providing an insurance against price spikes in the wholesale electricity market, meaning that when wholesale prices rises above the strike price, as set in the Procedure Program, the winning bidder must return the difference to the National Electrical System.”
A successful bidder is guaranteed the price they have tendered (the one in the headlines) but as far as I can see they get to keep any excess over this they can get in the wholesale spot market, up to a ceiling set by the strike price. In this complicated asymmetric contract for difference, the headline price is not what the bidder actually expects to earn.
Hi James, thanks for you comment. We expect to see official results…
What is the size of the Portuguese tender?
This procurement round is intended to allocate 700 MW of solar generation capacity across ten lots and was reportedly oversubscribed tenfold. The copy has now been amended accordingly, so thanks for your input.
This procurement round is intended to allocate 700 MW of generation capacity across ten lots and was reportedly oversubscribed tenfold.
What are the factors that influence the KWH price of solar? Is it the capacity size that allows these prices to be so low? It seems like the prices vary from country to country.
Your input on this would be much appreciated.
Hi Jack, the size of the project linked to the lowest bid (around €0.014) in the previous auction was 150 MW. So a big project, but not as big as those seen in the Middle East. As I said to James, let’s see final official results….
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