Non-subsidized Solar Power Plant in Chile

Chile has been one of the biggest drivers of solar demand in South America beating other bigger countries such as Brazil and Argentina. The country has got one of the sunniest regions on earth and good demand from its remote mines where the electricity grid is not reachable. Chile is now going to see a 70 MW solar power plant develop without any subsidies. This plant will be built by Sunpower with debt funding to be provided by a US government lending agency. The power will be sold on the spot market. Total will take a stake in this venture along with a Spanish company.

Also read on GWI Sunpower continues its Innovative Streak.

Sunpower is thriving mostly due to the strength of its parent Total which holds a 66% stake in the company. Solar power has become a capital intensive business, where developers can earn big returns provided they have the balance sheet. Large companies have a big advantage here as their cost of capital is lower than the smaller companies and they can get better debt deals as well. This is a big source of competitive advantage in capital heavy projects such as utility scale solar power plants. These plants require a large initial investment and most of the cost is during the starting stage as fuel costs are zero. Solar demand in 2013 is expected to touch another record of 35 GW as solar electricity prices have become equal or even lower than retail electricity prices in a large number of places.

Sunpower would have been in Chapter 11 without China and Total Support.