Unsubsidised large-scale solar beats coal, gas in Indian & Chilean auctions

Large-scale solar energy projects continue to make extraordinary gains against their fossil fuel rivals, with two stunning auction results in India and Chile over the past week both illustrating that solar is now clearly the cheapest option compared to new coal-fired power stations.

In Chile, where the auction was open to all technologies, fossil fuel projects did not win a single megawatt of capacity. And the auction produced the lowest ever price for unsubsidised solar – US6.5c/kWh.

In India, a US company won the entire 500MW of solar capacity on auction in the state of Andhra Pradesh, quoting a record low tariff for India of INR 4.63/kWh (US7.1c/kWh). Again, this was unsubsidised. And again, it beats new coal generation, particularly generation using imported coal.

These bids follow an auction in the US last month by the Texas city of Austin, which contracted to build 300MW of large-scale solar PV at a price of less than US4c/kWh. Even after backing out a tax credit, this is still less than US6c/kWh, and still beats gas and new coal plants, if anyone was planning to build one.

As Greentech Media reported last month, and we have signalled in the past, that means utilities are choosing large-scale solar over new peaking gas plants. Solar PV is beating gas on fuel costs alone, and is acting as a safe hedge against fuel price volatility.

The significance of the India auction was not just in the price, but in the quality of the bidder. Far from being an unheard of upstart who has bid low in previous auctions, the US company that won the auction is the biggest renewable energy development company in the world.

Other close bidders are also substantial names. Second place went to Japanese firm Softbank, much-touted for its announcement of investing US$20 billion in India’s renewables market, which is thought to have offered INR 4.80/kWh.

© 2015 Solar Choice Pty Ltd

Giles Parkinson