Chilean President, Michelle Bachelet, has been looking for some sort of magic for a long time to ignite her country’s sluggish economy. The spell may finally be cast in the form of solar energy.
Bloomberg reports that a host of electricity supply contracts have been auctioned off that decrease the average price for customers by 40 percent compared to last year. Among these contracts is one deal with Solarpack Corp. Tecnologica to sell power from a 120-Megawatt (MW) solar farm for only 29.1 dollars per MW-hour. That corresponds to 2.91 cents per kW-hour, less than the previous record of 2.99 cents per kW-hour for a Dubai project! Many of the other contracts also involve renewable energy projects.
Experts are hopeful this is just the beginning. A renewed emphasis on machinery investment has helped to create this energy boom. “Many of these investments are projects that will have to be built,” Bachelt said. “We are talking about $3 billion in investment that will generate 3000 new jobs, so this is good news for the economy.”
Good news for the economy as well as the environment. This 2.91 cents per kW-hour contracted price is completely unsubsidized, an incredibly hopeful sign that solar can compete in certain climates now. Chile has natural advantages to be a world leader in this regard, with some of the world’s highest solar radiation that makes solar panels more efficient.
It should also be noted that this low price for solar is contracted for 2021, when the plant construction is expected to be completed. Therefore, the low price is agreed upon based on expected improvements in technology, like inverters, that will continue to reduce manufacturing costs between now and then. Therefore, we shouldn’t necessarily interpret this price as where solar is now, but rather where it is clearly heading in the near future. Still great news for solar!
Sanders, P. “Chile energy auction gives Bachelet a success to boast about.” Bloomberg Markets, accessed August 29, 2016.
Romm, J. “Solar delivers cheapest electricity ‘ever, anywhere, by any technology.’ ” Think Progress, accessed August 29, 2016.