While a global copper glut may have helped the solar industry with reduced prices for the inter-connectors needed in solar modules, it may also hurt it in some areas, causing solar power be sold off to the grid for free.
Solar power project developers in northern Chile are facing this problem. The region is home to several copper mines which were supposed to the major buyers of the solar power. Global copper oversupply and low prices mean low production at mines and low power consumption.
This scenario has forced the project developers to supply power to the grid for free.
According to media reports, developers are now struggling to generate revenue from their projects. However, the problem is more about localized demand and transmission constraints. Projects are unable to supply power to other areas of the country due to lack of transmission infrastructure.
In a bid to have their power ‘picked,’ developers may be forced to offer power for free. Until April of this year, prices in the spot market were zero on 113 days. Prices were zero for 192 days during 2015.
Chile is facing the same issue as China, which developed large-scale solar as well as wind energy projects in the interior provinces. Lack of transmission lines to supply that power to major demand centers like Beijing and Shanghai means that a large portion of that power is lost.
Chile is now planning to set up a 1,865 mile long transmission line to transfer this power to other parts of the country.
Earlier this year, Chile achieved 1 GW of installed solar power capacity with several major project developers, including Acciona, Enel Green Power, Pattern Energy, EDF and Marubeni, and SunPower, which are working on large-scale solar power projects.
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