US solar PV manufacturer SunEdison has been awarded two 15-year contracts to supply 190 gigawatt-hours to Chile’s central SIC grid by 2016 at $US89 per megawatt-hour and another for 350GWh by 2017 at $US85/MWh.
The prices for the two projects are free from any additional subsidies. Such prices suggest that given high solar radiation (such as in Australia), the technology is now competitive with wind and gas power at utility scale. Also, given expected future cost reductions in manufacturing of solar PV modules the technology is likely to be cheaper than these competing options within five to 10 years.
This announcement is likely to send shockwaves around the global power sector. These Chilean projects act to prove that the sub-$US90/MWh prices achieved under solar power procurement auctions a few months ago in India and Brazil were no fluke.
Under the Indian auction, another experienced utility-scale solar farm developer and module manufacturer, First Solar, committed to build a 40 megawatt project at $US86/MWh and another at $US87/MWh. In Brazil their auction cleared at $US87/MWh for 1048 MW from several solar projects.
Adding to the credibility of the Chilean bid is that SunEdison has extensive experience building and financing utility-scale solar farms and is vertically integrated across the entire solar production chain – so they have a thorough understanding of what can and can’t be delivered economically.
The combined capacity of the solar power plants will be 350MW, with SunEdison stating it would spend around $US700 million developing them.
Power equipment giants Siemens, GE and Mitsubishi Heavy Industries have been only small players in solar PV while building significant wind turbine businesses on top of their conventional thermal power generation business. The costs solar PV are now achieving, in addition to its rapidly falling trajectory, will have them now feeling decidedly uncomfortable. It also puts the latest UK government contract with EDF for the Hinkley Point C nuclear power plant into stark relief – it involves a strike price of $US144/MWh (£92.50).