The tender process favored by the likes of Chile and Dubai has done more than anything else to drive CSP prices to record lows, according to Ranjan Moulik, head of renewables at investment bank Natixis CIB.
The distance between Chile’s high-DNI Atacama desert and the rest of the country poses challenges for CSP developers (Image: Wikimedia Commons)
Moulik has specialized in renewables since 2003. Speaking at CSP Seville, he cited Brazil as one of the pioneers of renewables tenders, saying wind power reached price parity with electricity generated from fossil fuels by the time of the country’s second tender auction in 2009.
Natixis is one of two international banks involved in financing DEWA, the 700 MW project in Dubai for which developer ACWA Power has submitted a $73/MWh tariff. In October, SolarReserve said it bid less than $50/MWh for 24-hour solar in a Chilean auction – the lowest bid on record for a CSP project. The winners of Chile’s latest renewables auction, representing a range of technologies including wind and CV, submitted an average of $32.5/MWh.
“It is the tender system that has really managed to drive prices down, because it forces you to be competitive. It in turn forces you to make your suppliers competitive, and if the market signal that is sent out by the regulator is current, meaning the regulator can tell you in the next few years the amount of gigawatts it expects to come online, then the supply chain will adapt themselves, they will invest to make sure costs get driven down,” Moulik said.
This has been seen in various industries, including offshore wind, where the moment the market received a signal that a large number of gigawatts would be tendered, “costs came crashing down”, he added.