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Published on June 20th, 2016 | by Glenn Meyers


Zambia Solar Auction Sees Record Low Bid Of 6.02 ¢/kWh

June 20th, 2016 by  

Originally published on Planetsave.

Solar auction bids in Zambia reached record low prices on Monday.

According to pv-tech, this nation has set a new benchmark for low-cost solar electricity in Africa, posting a competitive auction under the ‘Scaling Solar’ program, which saw winning bids as low as 6.02 cents/kWh. Green and clean electricity is look highly price-competitive on a continent missing a functional power grid in many locales.

Auction winners were France’s Neoen SAS and American PV manufacturer First Solar. The two concerns jointly bid at just 6.02 cents/kWh. Enel SA bid 7.84 cents/kWh.

“These are the lowest solar power tariffs seen to date in Africa, and among the lowest prices for solar power anywhere in the world—a game changer for Zambia and other countries in the region facing electricity shortages,” said Philippe Le Houérou, International Finance Corporation (IFC) CEO in a statement. “Scaling Solar is paving the way for governments to deliver fast, cheap, and clean energy – even in relatively small and untested markets—and setting a new regional standard for procuring large-scale solar power.”

As reported by pv-tech, the bids compare with recent solar contract prices of over 7 cents/kWh in South Africa and up to nearly 12 cents in India.

Under those bids, the winning solar companies already have commenced project designs.

“According to a First Solar spokesperson who spoke with PV Tech, First Solar bid for a 47.5MWac project that is scheduled to be completed by mid-2017. The power plant, named after Zambia’s West Lunga National Park, will cover an area of just over 52 hectares. The plant will be located in the Lusaka Multi-Facility Economic Zone, with the International Data Corporation (IDC) retaining a 20% stake in the project.”

Produced electricity will be sold to ZESCO, the state-owned utility company, under a 25-year power purchase agreement. First Solar estimates the facility will be powered by around 450,000 modules.

“By partnering with Neoen and First Solar, Zambia stands to gain from over 14 gigawatts of global renewable energy experience,” said Nasim Khan, First Solar’s VP of business development for Africa, in a statement. “And it is this combined experience that will deliver a world-class power generation asset. Significantly, this project shatters the misperception that low-cost energy cannot be delivered with high quality, high performance modules.”

In addition to the offering from Neoen and First Solar, Enel will build a 28MW plant. The new facilities are expected to expand the country’s generating capacity by 5%, providing a clean power source for the country, where a prolonged period of drought had triggered a nation-wide energy crisis, according to the IFC, who have partnered with the World Bank to create the Scaling Solar programme.

Solar power is a welcome solution to Zambia’s recent drought and accompanying energy shortage issues, as the 47.5MW plant alone will “displace the need for 125 million litres of water that would have been consumed by conventional generation,” said the First Solar spokesperson.

The IFC Scaling Solar project, which aims to develop 1GW of solar power in the next three years, is supported by IFC’s debt financing and the World Bank’s insurance products.

“Scaling Solar brings together a suite of World Bank Group services under a single engagement aimed at creating viable markets for solar power in each client country. The “one stop shop” program aims to make privately funded grid-connected solar projects operational within two years and at competitive tariffs. When implemented across multiple countries, the program will create a new regional market for solar investment.”

Current Scaling Solar engagements

  • Zambia
  • Senegal
  • Madagascar

Launched at the Powering Africa: Summit in Washington DC, in late January 2015, the IFC reports, “Scaling Solar aims to create a viable market for private solar power projects in Africa that will help governments increase the supply of energy for millions of residential and commercial consumers across the continent.”

Reprinted with permission.


About the Author

is a writer, producer, and director. Meyers was editor and site director of Green Building Elements, a contributing writer for CleanTechnica, and is founder of Green Streets MediaTrain, a communications connection and eLearning hub. As an independent producer, he's been involved in the development, production and distribution of television and distance learning programs for both the education industry and corporate sector. He also is an avid gardener and loves sustainable innovation.

  • Brunel

    Come on Iran. Do a solar power auction!

  • Brunel

    As if the price of solar power in India is 12c/kWh.

    I think it is below 7.5c/kWh.

  • John Norris

    Why is this twice the 3c/kWh PPA in Dubai? Or the 3.7c/kWh in Palo Alto?

    Anyway, still good news for the planet 🙂

    • Bob_Wallace

      The Palo Alto PPA included subsidy so that’s not a “pure” price.

      It was also (IIRC), a 30 year contract rather than the normal 20 year PPA. I don’t know if they spread financing for the solar farm out over 30 years or took less profit up front and deferred until year 21. It would be interesting to know more about the financials of that deal.

      “These are the lowest solar power tariffs seen to date in Africa, and among the lowest prices for solar power anywhere in the world…”

      The last claim is clearly wrong. But seeing prices drop to 6c/kWh in Africa is a good thing. That means that the industry will likely build up there and prices will fall further.

      I’m looking forward to the next NREL solar report. US unsubsidized solar has likely dropped below 6c. It would be nice to get conformation and to be able to start guessing as to when we drop below 5c.

      • John Norris

        Agreed, including the 30% ITC would make the Palo Alto PPA 5.3c. So the question becomes, how come rich Americans get a 30% investment tax credit and poor Africans get 0%? Where’s Bill Gates when you need him?

        Seriously, is there a charity which subsidises renewables in Africa? I’d be interested…

        • Bob_Wallace

          John, do you have a simple way to get from a subsidized price to a price minus the 30% ITC?

          I generally take the route of assuming everyone takes the 2.3c/kWh for the first ten years PTC and divide it in half in order to allow for a typical 20 year PPA. 5.3c + 1.15c = 6.45c. In the Palo Alto case I suppose I’d divide by 3 and end up with 6.1 cents as my best estimate of the unsubsidized price.

          As for Africans and investment tax credits, other countries have used various subsidy programs to bring solar (and wind) into competitive price ranges. The rest of the world will benefit by their spending.

          • John Norris

            Hi Bob, simplistically, I just divide the subsidised price by one minus the subsidy. Palo Alto’s 3.7c / (1- 30%) = 3.7/0.7 = 5.3.

            In other words, 5.3c – 30% = 3.7c

            Note, wind has a PTC of 2.3c/kWh. Solar has an ITC of 30%.

        • Harry Johnson
          • John Norris

            Thanks Harry 🙂

          • John Norris

            Solar Aid don’t do PayPal and wanted my address. No thanks. So went with Unite to Light instead 🙂

    • neroden

      I think there’s more sunlight in Dubai than in Zambia (really, more sunlight than probably anywhere in the world). Look at the latitudes. That makes the Dubai bid have more kwh/kw, which makes it “naturally” cheaper.

      There’s probably a shipping premium and a security/anti-thievery premium on the Zambia project which isn’t present in Dubai, too.

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