Feb. 25 (Bloomberg) — Uruguay will offer contracts next
month to buy power from 200 megawatts of solar farms at the
world’s cheapest rates as the South American nation seeks to add
low-cost generation.
President Jose Mujica plans to sign a decree in two weeks
that will require Uruguay’s national power utility
Administracion Nacional de Usinas y Transmisiones Electricas to
purchase electricity from the projects at a set rate of about
$90 a megawatt hour, Ramon Mendez, director of energy at the
Ministry of Industry, Energy and Mining, said today in a
telephone interview.
Uruguay will produce some of the world’s cheapest wind
energy and expects to do the same with solar power as the cost
of photovoltaic panels fall, he said.
The price the government is offering is probably the lowest
in the world and may not attract developers, according to Jenny Chase, an analyst with Bloomberg New Energy Finance in Zurich.
“That level of compensation is very optimistic,” Chase
said in a telephone interview today. “Most countries where
solar is being built offer higher rates than that, or extra tax
incentives, as in the U.S.”
China, which has some sites that receive as much sun as
Uruguay, offers $160 a megawatt hour and cloudy Germany offers
118 euros ($154.53) a megawatt hour, Chase said.
Developers will have four months after the decree is issued
to submit proposals and will be granted contracts on a first-
come first-serve basis, Mendez said. Projects may be as large as
50 megawatts.
Developers Optimistic
“We’ve spoken to at least three companies who say they can
sell at that price,” Mendez said. If the offer isn’t
successful, “we just wait another couple of years for equipment
prices to come down and we try again.”
Solar radiation levels in Uruguay average about 5 kilowatt
hours a square meter a day, about the same level as the south of
Spain, Mendez said.
The decree also calls for a bid to develop a 1-megawatt and
5-megawatt plant, he said. Both projects will sell energy to
state utility UTE for 25 years.
Power bought from hydroelectric plants, which produce about
80 percent of the nation’s electricity, costs on average $80 a
megawatt hour, he said. Wind developers offered to sell power at
$63 a megawatt hour in a 2011 auction for new capacity, slightly
higher than levels reached in a Brazil auction the same year
which were the lowest in the world at the time. The projects are
still being developed.
To contact the reporter on this story:
Stephan Nielsen in Sao Paulo at
snielsen8@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
