The price of solar energy: Comparing competitive auctions for utility-scale solar PV in developing countries (original) (raw)

Outcomes from the first large-scale solar PV auction in Brazil

Renewable and Sustainable Energy Reviews, 2018

Auctions have been used to promote renewables and introduce new technologies, and Brazil has a tradition in this field. The Brazilian government designed a framework with the goal of introducing solar PV into the power mix that includes contracts to reduce the risks for investors. The first large-scale auction for this technology was held in October 2014, and the process achieved an average price reduction of 17.26% below the starting price. The auction process was also successful with respect to new contracted capacity, with 31 new power plants and 889.7 MW (AC) of new capacity. Observed capacity factors of winning bids were high, but they were in accordance with new technologies and recent studies. Nonetheless, the regulatory agency must monitor generation performance. Higher investments are likely related to the deployment of tracking technology, reflecting a higher capacity factor. Furthermore, the Brazilian case is unique due to long-term experience and large scale in using auctions for renewables, such as wind and biomass. Lastly, Brazil's example is relevant in international debate given that the country replaced its Feed-in-Tariff program for auctions in 2005, a point that is worth studying in its own right.

Renewable Energy Auctions in Developing Countries Acknowledgement

The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports countries in their transition to a sustainable energy future, and serves as the principal platform for international cooperation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy in the pursuit of sustainable development, energy access, energy security and low carbon economic growth and prosperity.

Renewable Energy Auction Prices: Near Subsidy-Free?

Energies

The latest trend of low record bid prices in renewable energy auctions has raised concerns on the effective deployment of the winning projects. A survey of recent auction data from several countries, technologies and remuneration designs is analysed and compared with the corresponding levelised costs of energy (LCOEs) to draw first insights on their viability. A critical assessment of the ability of the LCOE for determining the adequate bid level is then performed and the preliminary unviable results of selected mature technologies are further investigated using improved profitability metrics as the project and equity net present value (NPV) and internal rate of return (IRR). As representative examples, the analysed Danish 2019 onshore wind and photovoltaics (PV) auctions require very specific scenarios to become viable, which cast doubts on their effective implementation. Under the assumptions of a realistic base case, the sensitivity analysis revealed that either 59% of decrease i...

Renewable energy auctions in South Africa outshine feed-in tariffs

Energy Science & Engineering

South Africa's Renewable Energy Independent Power Producer Procurement Program has run four competitive tenders/auctions since 2011, which have seen US$19 billion in private investment, and electricity prices of wind power falling by 46% and solar PV electricity prices by 71%, in nominal terms. Competitive tenders were introduced after an unsuccessful attempt to implement feed-in tariffs. The tenders incorporated standard, nonnegotiable contract documents, including 20-year Power Purchase Agreements and an Implementation Agreement whereby the Government of South Africa back-stops IPP payments by the national utility, Eskom. All of these projects have reached financial close to date and some are already delivering power to the grid. The financing success has been due in part to the requirements for commercial banks to undertake a thorough due diligence of projects prior to bids being offered. The details of the policy package described may be useful for other policy makers in countries developing policies for renewable energy deployment.

Performance of Renewable Energy Auctions: Experience in Brazil, China and India

Policy Research Working Papers, 2014

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Re-considering the economics of photovoltaic power

Renewable Energy, 2013

We briefly consider the recent dramatic reductions in the underlying costs and market prices of solar photovoltaic (PV) systems, and their implications for decision-makers. In many cases, current PV costs and the associated market and technological shifts witnessed in the industry have not been fully noted by decision-makers. The perception persists that PV is prohibitively expensive, and still has not reached "competitiveness". We find that the commonly used analytical comparators for PV vis a vis other power generation options may add further confusion. In order to help dispel existing misconceptions, we provide some level of transparency on the assumptions, inputs and parameters in calculations relating to the economics of PV. The paper is aimed at informing policy makers, utility decision-makers, investors and advisory services, in particular in high-growth developing countries, as they weigh the suite of power generation options available to them.

A Review of Solar Energy: Markets, Economics and Policies

World Bank policy research working paper, 2011

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Lessons learned from solar sector infrastructure development in Africa and Asia

The development of a viable and sustainable private sector infrastructure is crucial for any market based implementation of renewable energy in rural areas in developing countries. In existing markets like Kenya, a complex and diverse network of intermediary actors take part in the distribution chain between manufacturers and the end-users. In this network, buying decisions are based on a wide variety of criteria; often intangible factors such as trust are more important than price. Starting from these insights, we have developed innovative approaches to solar market development, which have been tested in real market settings in Tanzania and Western China. There appears to be a wide potential for innovative market based interventions to strengthen and accelerate solar market development in a sustainable way. This paper highlights the lessons learnt from our sector infrastructure development work and translates them to the policy level.

The First Auction of Non-Conventional Renewable Energy in Colombia: Results and Perspectives

International Journal of Energy Economics and Policy

In Colombia, as a historic milestone, the first long-term auction of non-conventional renewable sources was held in 2019, with the aim of the National Government to take a major step in the energy transition policy. The auction organized by the Ministerio de Minas y Energía (MME) defined the objectives, rules and type of auction. The results of the first auction indicate that eight project were selected by a pay-as-bid auction scheme, five wind and three solar projects will imitate operations at 2021accounting for 1298.8 MW. This paper presents a review of auction in various countries of South America in order to compare final prices for technology. Finally, this paper discusses perspectives for the energy sector in Colombia according to the implications of this auction.