The world has become somewhat immune to the repeated news chatter of a new record low in solar prices. Given last year, almost every month used to bring another record in solar auctions conducted around the world (Mexico, Saudi Arabia, USA, etc.), solar auction prices had become run of the mill with no one paying too much attention. But now Portugal’s new 1150 MW solar tender has caught the fancy of the media with the price of USD 1.6 cents per unit being seen. This was a much lower price than the reserve price of more than 5 cents and showed how far the industry has come in terms of reducing its cost and price structure.

Solar panel prices have kept coming down defying gravity while prices of other components have shown a similar trend of downfall at a rapid pace. With the bond yields in Europe edging towards the negative territory, this has made the cost economics of solar projects infinitely more lucrative as compared to a fossil fuel project.

The Portugal tender which was conducted after a long time saw the presence of major conglomerates such as EDF and Iberdola who bid aggressively in the auction. Europe after a massive boom in early 2010 had clamped down on solar energy installations as the subsidies being given were very high and the capacity installed was quite a lot. But now those countries are benefiting from the early largesse given to the renewable energy developers. The prices of RE have come down drastically in the last five years making them not only economically at par with gas or coal, but in fact much cheaper.  Most of the world has moved to reverse auctions to develop RE capacity and has moved away from feed-in tariffs with China being the most recent convert.

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Besides Portugal, Brazil also saw prices of less than 2 cents per unit in a recent auction though the size was much lower. The average price in the Portugal tender was around 2.2 cents per unit which is still quite low as compared to other energy sources. Portugal’s PV auction series is meant to increase the installed capacity of solar energy from 572MW (2018) to 1.6GW by 2021  and to 8.1GW-9.9GW by 2030.

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