Auctions cutting solar costs to P1.00/kwh equivalent

By Myrna M. Velasco – March 24, 2018, 10:00 PM
from Manila Bulletin

Cancún, Mexico – In Latin America and elsewhere in the world, the prevailing auction or bidding systems for solar power projects – including those underpinned by policy of Renewable Portfolio Standards (RPS), had been bringing down solar prices to eye-popping US$20 per megawatt-hour (MWh) level or in the Philippine peso equivalent that is already at the scale of P1.00 per kilowatt-hour (kwh).

This has been among the key discussions of the global energy regulators in this year’s World Forum on Energy Regulation (WFER) here, with spotlight on Mexico’s solar sector, which in recent months had cornered an impressively striking bid of US$20.57MWh on its offered solar capacity – an equivalent of US$0.02 per kwh or P1.06 per kwh if prospectively referenced on a Philippine scenario.

In Latin America, that was the lowest tender logged so far after the record solar cost in Chile’s auction last year at US$21.48 per MWh or the equivalent of US$0.021 per kwh (or P1.092 per kwh in equivalent Philippine price).

The reigning champion in terms of lowering solar power costs though is still Saudi Arabia with the drastically cut-rate tender it cornered October last year at US$17.86 per MWh or US$0.014 per kwh (which is just about P0.77 per kwh in Philippine price equivalent).

It is worth noting that these auction-anchored prices are even way lower than the P2.98 to P2.99 per kwh solar price offers already being cheered in the Philippines.

The radical decline in solar technology prices globally, according to energy regulators, would make it possible and viable for any market to attain the marked down solar price tenders already achieved in other parts of the world.

In an interview, Jaime Hernández, director general of Mexico’s state-owned power utility Comisión Federal de Electridad (CFE), has cited the crucial facets which ensured favorable outcome of the competitive auction on solar projects – key of which is having a designated capacity off-taker or buyer of generated electricity.”

Mexico’s state-owned CFE is a bulk buyer of the capacity of solar installations in this country, of which renewable energy capacity has been on exponential rise in recent years.

CFE is the designated buyer in the country’s first solar auction, but in the next ones, Mexico’s energy ministry had intended it to be more flexible so other industry players could also be off-takers of the tendered capacity.