Local newspapers in Portugal and much of the industry press this week have made a big deal about its solar auctions beating all previous low price records for LCOE, with some of it rumored to be well under €20 per MWh. It is likely to be a while before all the successful bids are ratified, but one condition of the bidding was that there was a ceiling price of €45 per MWh.
Reuters subsequently said only 1.15 GW was awarded. The plan had already fallen from 1.75 GW to 1.4 GW at the start of the auction. There were supposed to be offers up to 10 GW of capacity, but these may have been at rates that were too high.
Quotes in the local Portuguese newspaper Expresso claimed to have had access to inside information on the tenders, claiming that large chunks of awards were at or below €20 per MWh.
This means that Portugal has smashed the “going rate” of around €55 per MWh in South West Europe, by almost 64%. By contrast Greece has recently allocated 143 MW of solar capacity at €62 per MWh. The Greek authorities will be kicking themselves. The nearest prices in Southern Europe have previously been in the Iberian peninsula, which has gone as low as €27 per MWh.
We know that each award of capacity is at an individual price, and there were two ways to bid 1) at any fixed price below €45 per MWh and 2) At a variable tariff which receives a subsidy or pays a premium based on spot market rates for electricity. Basically when the price is higher than the market rate the government pays the difference and when it is lower, the project owner makes up the difference.
The result of the Portuguese auction has to be ratified and can be contested, before they are set in stone which happens on 10th of August.
Contract winners are said to include Iberdrola and France’s Akuo Energy, but apparently there were no successful bids from local players EDP, Galp and Finerge, according to a Reuters report. This report said that one or two of the auction prices were even lower than €20 with one coming in below €15 per MWh, which is even below Brazil’s recent A4 auction also closed in July, making it a world record low price.
The Secretary of State for Energy Joao Galamba, has said that there were 13 auction winners who secured 24 Licenses. It was the largest auction of any kind of energy in Portugal and will double the current installed capacity of solar in the country.
Portugal detailed the auction in February and initially wanted to offer 1.75 GW and is just the first in multiple auctions supposed to take Portugal to over 8 GW of solar by 2030.
One of the reasons for the auction prices will be the amount of sunlit days there are in Portugal and how close to peak the installations are likely to perform at, in sun conditions where it will generate more energy for the same cost compared to some other European countries. Only Turkey is cited as having a similar number of sun days. Originally the auction was supposed to be over by April, but was delayed.
The build outs will have to be installed over the next two to three years, and the country had a lesson with many of its previous 1.2 GW of awards not yet making it to the light of day due to time limits not being tight enough.