UPDATED: Cheapest electricity on the planet is Mexican (actually) wind power at 1.77¢/kWh

I’ve made a mistake – I’m sorry. In my haste and excitement to see show off solar power – I’ve given it undue credit. Wind Power got these bids and I initially misinterpreted a piece of ambiguous information. While solar power did amazingly get a bid at 1.97¢ – it did not break below the recently set Saudi Record. Anything written in this article hereafter has been updated.

Per a press release from the Centro Nacional de Control de Energía (Cenace) of Mexico, the department received bids for 3TWh of solar wind electricity, with the lowest bids being 1.77¢/kWh coming from Italian multinational ENEL Green Power.

This record low price of green electricity on earth, just beats out the 1.79¢/kWh from Saudi Arabia, and is part of a pattern marching toward 1¢/kWh bids that are coming in 2019 (or sooner).

Mexico’s Department of Energy along with Cenace announced the results of the country’s ‘Third Long Term Auction.’ Fifteen bids were accepted from eight wind and solar power companies. ENGIE bid as Solar and Wind companies, Mitsui alongside Trina, ENEL and Canadian Solar were some of the better known names.

ENEL won bids on four projects total with tariffs of 1.77¢, 1.77¢, 1.94¢ and 1.80¢/kWh. The projects were sized 167MW, 122MW, 277MW and 116MW, respectively – totaling 682MW total. These four bids are the two lowest, and 4th/5th lowest bids ever for solar power projects.

The average bid price of all 5.5TWh of power of wind and solar, totalling 2.3GW of capacity, was 2.05¢/kWh.

These projects are due to deliver power to the grid by 2020. The last two auctions, held last year, received average prices of 4.49¢/kWh and 3.17¢/kWh. More details on the bids will be released November 22nd.

The world has seen solar power fall from a record price of 8.3¢/kWh in 2013 in the USA, to 5.84¢/kWh in 2014 in the UAE, then 4.97¢/kWh in Saudi Arabia in 2015 before settling at 2.42¢/kWh in 2016. So far in 2017 we’ve seen seven bids below 2016’s record price. 2016 and prior data for this chart came from this CleanTechnica research.

Electrek’s Take

Solar power (and wind) is fulfilling the potential that the dreamers of the world of the past foretold of.

When the bids of 2.42¢/kWh hit last summer in 2016, much of the world suggested this was a bottom that was unique and couldn’t be passed without financial loss by the owners. When Saudi Arabia hit 1.79¢/kWh just a few weeks back – the narrative was that these prices were impossible elsewhere in the world because nowhere else in the world has Saudi Arabian oil money, sunlight, and control of all levels of government.

Mexico’s economic rating, like Chile’s, is less than perfect. The S&P just increased Mexico to ‘stable.’ Moody’s Investors Service rates Mexico’s debt at A3 – one level above S&P’s assessment – with a negative outlook. These ratings affect the rates that developers can borrow money at. These groups are definitely not getting the same interest rates that the Saudis give each other (if the Saudi’s give any interest rates internally at all – look up Islamic Finance).

I predict that in 2019 we’re going to see 1¢/kWh from a solar power project – and this low price will be primarily driven by increasing solar panel efficiencies. I am bullish that efficiency will drive an additional 0.7¢/kWh out of solar power because right now we’re seeing laboratory efficiencies increase from a current standard of 16-17% solar panel efficiency toward a leading edge solar cell at 23.45% by JinkoSolar. Depending on how that cell efficiency translates to a panel, that’s an increase of up to 40% more efficiency based upon 16.5% solar panels. That means 40% less racking, 40% less labor laying our wiring and solar panels, 40% less maintenance and cleaning, 40% less land, etc.

This efficiency gain is in addition to other technological advances. Drones are lowering long-term costs, international finance has more trust in solar, inverters are getting smarter and cheaper, re-powering is extending plant lives and companies are learning how to manage their projects better.

Soon we’re going to have to confront new questions as solar power costs less than anything seriously considered before, and will offer new opportunities never thought of before. What will we do with all of this cheap energy? How do we move from fossil systems toward solar sources without destroying the social fabric of those dependent on revenue from gas and coal? How will our post scarcity society continue to advance? It’s going to be more difficult to live up to the potentials of solar and ‘free energy’ than we think.

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