Latin America Report: Uruguay, Future Home of the World's Cheapest Solar Energy

By Renewable Energy World Editors
March 7, 2013 

 

New Hampshire, USA -- Uruguay is about to offer contracts to buy power from 200 megawatts of solar farms at $90/MWh, which is barely half the cost of power in China and Germany.

President Jose Mujica is expected to sign a decree requiring national power utility Administración Nacional de Usinas y Transmisiones Eléctricas to buy electricity from projects at that rate. Developers will have four months to submit proposals, with contracts handed out on a first-come-first-served basis.

The question then becomes, who will respond? "Most countries where solar is being built offer higher rates than that, or extra tax incentives, as in the U.S.," said Bloomberg New Energy Finance analyst Jenny Chase. Nevertheless, Ramon Mendez, director of energy at the Ministry of Industry, Energy and Mining, claims several prospective bidders have indicated they can sell at that price. If this round doesn't pan out "we just wait another couple of years for equipment prices to come down and we try again."

Uruguay is already at the forefront of offering rock-bottom renewable energy prices. Hydroelectric plants produce about 80 percent of the nation's electricity, with costs averaging $80/MWh, according to Mendez. A 2011 auction saw 17 wind project developers offering prices as low as $63/MWh for new capacity.

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Brazil Wind-Farm Rule on Power Cables May Scuttle Projects: A new decree from Agencia Nacional de Energia Eletrica will require wind energy companies in Brazil to shoulder costs for transmission lines, potentially adding 10 percent to their project costs. That could reduce by half the field of project developers in the next government auction slated for May, while other firms will narrow their focus to only projects that utilize existing infrastructure. The measures are intended to avoid delays in grid-connecting completed wind farms, as happened to utility Cia. Hidro Eletrica do Sao Francisco which missed a deadline for 26 wind farms.

Why the need for updated transmission line T&D rules? Partly because developers are keen to take advantage of one of the hottest energy markets in the region. Data from Brazil's wind power generation association Abeeolica indicates newer wind farms produced around 50 percent of their installed capacity last year. Mean wind power generation in 2012 averaged 56.26 MW (MWa), with peak production of 771 MWa registered in October.