Uruguay’s government plans to offer contracts to buy 200 MW of solar energy at US$90 per MWh – the lowest rate the world has ever seen. President Jose Murica will sign a law in two weeks that will require the national power utility to purchase solar energy at that price.
Ramon Mendez, the director of energy at the Ministry of Industry, Energy and Mining, says Uruguay will produce some of the world’s cheapest wind energy and they plan to do the same with solar.
An analyst with Bloomberg New Energy Finance says the rate is very optimistic adding that it may not attract developers since other countries offer higher rates or extra tax incentives. China for example offers $160 per MWh while Germany offers 118 euros or a little over $154 per MWh.
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Mendez says they have already spoken to at least three companies who say they can sell solar energy at the specified price. If the measure fails to attract developers, Mendez says the government will wait another two years for equipment prices to fall to a sufficient level.
Uruguay gets 80 percent of its electricity from hydroelectric plants at an average of $80 per MWh. Wind developers have already agreed to sell power at $63 per MWh in a 2011 auction for new power capacity but these projects are still under development.