Portugal has completed its second national solar auction where contracts to build and operate new solar energy capacity were auctioned off. And the government has revealed some of the preliminary results: the event achieved the world’s lowest bid for a large-scale PV project ever – beating the previous world-record from the country’s first auction in 2019.
Environment Minister Joao Pedro Matos Fernandes said:
The auction was a success, even greater than it was a year ago.
According to Antonio Delgado Rigal, the chief executive of energy forecasting service Aleasoft, the combination of 15-year contracts and the guaranteed rights for land and grid connection were the reasons for such low prices.
The record lowest winning bid was for output costing only €11.14 ($13.16) per megawatt-hour (MWh), or €0.01114 ($0.01316) per kilowatt-hour (kWh). The previous record (from Portugal’s 1500 MW solar auction last year) was €14.6 per MWh. The winners were those who offered the highest discount to the bidding tariff of about €41 per MWh.
This year’s auction was for 700MW of solar capacity, which was divided into 12 projects of capacities ranging from 10 MW to 109 MW. The categories included PV projects without storage systems, concentrated solar power (CSP), PV with battery energy storage system (BESS), PV+CSP, and other combinations. A single entity was not allowed to win over 50% of the sum of all lots (total capacity) put to auction.
Of the 35 entities that competed, 6 won. Hanwha Q Cells, a South Korean solar panel manufacturer, grabbed the most: 6 allotments equaling 315 MW. Follow-up winners included Germany’s TAG Energy (two allotments), electricity group Endesa (one allotment), and Spanish utility Iberdrola (one allotment).
In total, 670 MW of power generation capacity was allocated, of which 483 MW went to PV projects linked to storage, 177 MW to projects under the “system compensation” remuneration option, and 10 MW for the “contract for difference” regime.
The purpose of these licensing auctions is to help Portugal reach its ambition of having 7,000 MW of renewable energy by 2030. The country is among Europe’s sunniest nations; therefore, new solar farms will be a significant boost to reach climate goals.
Matos Fernandes said:
We are in a position to reach 2030 with 80% of the energy we consume produced by renewable sources. Auctions show that this is a clear and positive way to generate gains for consumers.
The solar projects will be located in the Algarve and Alentejo regions. The full capacity is set to come online by June 30, 2024.
And this record-breaking auction is but more good climate-related news coming from Portugal. Earlier this year, the country’s electric utility EDP announced plans to close its Sines coal-fired power plant two years ahead of schedule – from 2023 to 2021.
