1.5 euro cents per kilowatt-hour is the new record low for solar energy produced. Prices are falling so quickly that they are undercutting last year's prices.
Electricity produced by new solar energy plants around the world is so cheap that the record-low prices at which it was sold in 2016 have now become the maximum prices at which it can be sold. In the past month, in Saudi Arabia, the lowest price bid for electricity produced by a solar plant was 1.5 euro cents per kilowatt-hour ($0.0179/kWh).
In April of last year, Bloomberg New Energy Finance had highlighted that the lowest price for unsubsidised solar energy had been reached in March, in Mexico. On that occasion the auction price achieved was 3 euro cents per kilowatt-hour. A price not far from that of electricity generated from fossil fuels, and in any case below the generation costs recorded at new-generation gas and coal plants. Just over a year has passed and the Mexican record price was beaten last October by Saudi Arabia. Every bid the Middle Eastern country received for its 300-megawatt solar energy project at Sakaka, in the north of the kingdom, was more competitive, and the lowest price bid was 1.5 euro cents per kilowatt-hour.
A rock-bottom price, considering that the average price of residential electricity in the United States is six times higher, reaching 12 cents per kilowatt-hour. The €0.015/kWh is not, however, a record destined to trigger a new phase of competition for even lower bids, at least according to some analysts. The solar energy market in Saudi Arabia is unique, and analysts are sceptical about how the bidding company, Masdar — a renewable energy company founded in 2006 and owned by the United Arab Emirates as part of an effort to diversify its economy — together with its French partner EDF, can realistically make a profit selling energy at the proposed price.
In the same auction, as many as seven of the eight bids came in below three cents, and the two lowest bids reached "the lowest prices ever recorded worldwide," reported PV Magazine. "We believe that the value of $0.03 per kilowatt-hour can be considered the maximum value for the Middle East region given its large volume and low financing rate," commented Aymen Grira, an international energy expert. In other words, three cents has become the new maximum price for solar in the region.
The facts confirm just how far solar energy has managed to drive down the price of electricity produced, and how quickly all of this has happened. Within the space of a few months, prices moved from 3.6 cents in March 2016 to the 2.99 cents recorded in May on a bid for an 800-megawatt project promoted by the Dubai Electricity and Water Authority. But already by August, this time in Chile, prices had already reached 2.91 cents. A price that, once again, demonstrated the potential of solar and had drawn satisfaction from industry figures such as Michael Liebreich, chairman and founder of Bloomberg New Energy Finance, who had acknowledged solar's unchallenged role as the driving force behind renewables.
