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

This paper examines the viability of low PV prices in developing countries from recent competitive auctions and discusses the sustainability of these low prices for further market expansion. Our analysis of utility-scale PV projects procured through major auctions in developing countries between 201...

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Bibliographic Details
Published in:Energy policy 2018-07, Vol.118, p.133-148
Main Authors: Dobrotkova, Zuzana, Surana, Kavita, Audinet, Pierre
Format: Article
Language:English
Subjects:
Auction
Auctions
Capital
Comparative studies
Cost analysis
Deployment
Developing countries
Energy policy
Equipment costs
Investments
LDCs
Levelized cost of electricity
Markets
Photovoltaic cells
Photovoltaics
Prices
Pricing
Pricing policies
Solar energy
Solar power
Sustainability
Tender
Viability
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Summary:This paper examines the viability of low PV prices in developing countries from recent competitive auctions and discusses the sustainability of these low prices for further market expansion. Our analysis of utility-scale PV projects procured through major auctions in developing countries between 2013 and 2016 reveals that low PV prices are viable. PV prices of $0.06–0.08/kWh are consistent with market fundamentals and prices lower than $0.03/kWh are viable under exceptional conditions in some countries. Maintaining low prices while ensuring deployment of quality projects requires a combination of high capacity factors, low equipment prices, low cost of capital, de-risked investment environments, e.g., through the presence of guarantees, and other factors such as particular project developer strategies. Overall, developing countries with abundant local solar resources are well-positioned to drive the global expansion of PV capacity. Well-designed auctions offer a unique opportunity to expand solar PV capacity to many markets in a cost-effective manner. •Analysis of prices in utility-scale solar PV projects from auctions in developing countries.•Well-designed auctions brought high-quality competition and low prices to developing countries.•Low bid prices are viable under favorable project-, auction-, or country-specific conditions.•Expansion of PV in new markets is possible at low prices, if process is well-designed.
ISSN:0301-4215
1873-6777
DOI:10.1016/j.enpol.2018.03.036