Portugal has reportedly become the country with the world’s lowest-cost solar PV contract.
The lowest tariff awarded in the country’s first solar PV auction – held in July 2019 – was just €14.76 per Megawatt Hour (MWh), or $16.54 per MWh at today’s exchange rates.
This narrowly beats the recent $16.95 per MWh contract awarded in Brazil.
“With the levelized cost of utility-scale PV in Southern Europe now well below current wholesale power prices, investors have flocked to the region to secure grid connection capacity and PPAs,” said Tom Heggarty, a senior research analyst at Wood Mackenzie.
He aded that Portugal, like Spain, has seen a project development rush and new connection licenses for 938 MW of utility-scale solar PV projects were issued until mid-2018.
In order to manage the multi-gigawatt pipeline of projects queuing behind licensed sites, Portugal took the decision to hold a series of auctions which would award both grid connection capacity and either guaranteed or general remuneration support to successful bidders.
Under the latter of the two remuneration models, developers bid for grid connection rights and are then able to sell their output into the wholesale market or via bi-lateral PPAs. A total of 862 MW was awarded under guaranteed remuneration and 288 MW under the general remuneration arrangement.
The July auction is the lowest-cost contract awarded through a public auction in Europe so far and gives a measure of solar PV‘s increasing economic competitiveness in the region.