Solar heads to 1c/kWh before 2020 after Mexico sets record low

Solar heads to 1c/kWh before 2020 after Mexico sets record low

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Australia solar research leader Martin Green says solar heading to a price of 1c/kWh before 2020 after latest record auction result.

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Australia’s leading solar researcher Dr Martin Green predicted just a few months ago that the cost of solar would fall to around 1c/kwh by the mid 2020s. He now expects he will not have to wait that long.

Mexico has announced that its latest tender, for 3 terawatt hours of solar electricity, has elicited a price of US1.77c/kWh from Italy’s Enel Green Power – a record low. The price translates into $US17.70/MWh, or $A23.40/MWh.

The offer beats the previous low of US1.79c in Saudi Arabia, although the outcome of that result is yet to be confirmed, and a bid of US2.1c/kWh in a recent auction in Chile, which also featured a winning bid from Enel.

mexico solar auctionAccording to a table published on Electrek (see above), Enel bid two different projects at the new record low price, for a total of 289MW.

In all, five bids were sub US2c/kWh and the average price for 2.4GW of solar capacity allocated in the auction was just US2.05c/kWh.

Enel is also building the 220MW Bungala solar farm near Port Augusta in South Australia.

Other low bidders were Canadian Solar, Mitsui/Trina (also sub 2c/kWh) and French energy giant Engie the owner of the recently closed Hazelwood power station and the seller of Loy Yang B. It also owns Pelican Point gas plant in South Australia.

Another French group, Neoen, which is building solar and wind projects in South Australia, NSW and Victoria, as well as owning the Tesla big battery near its Hornsdale wind farm, bid 2.02c/kWh for a 201MW solar farm.

The fall in price of solar to around US2c/kWh in 2017 was predicted by Green in August, but even he is surprised by the push way below that level.

He said in August that by the mid-2020s costs of just US1c/kWh ($US10/MWh ) will be obtained, and prices in the $US20/MWh range will be routine across the world. He now thinks it will come sooner.

“It now seems almost certain that we see solar PV auction bids below US$10/MWh tendered before 2020,” Green told Reneweconomy on Monday.

And while these bids may represent industry-leading prices, Green says the costs will flow soon enough across the board.

competition - costs copy

“Although there is an element of forward extrapolation in these bids, this graph (above) from the IEA suggests these headline bids could well represent typical prices at time of commissioning only 3-4 years down the track.”

Green says the major factors contributing to these reduced costs are decreased financing costs, combined with reductions in PV module, inverter and other balance of system costs, due to increased volumes, streamlining of processes and improved module conversion efficiency.

“Average module selling prices dropped 20% from 2015 to 2016 and a further 30% from 2016 to 2017, with ongoing reductions anticipated more or less indefinitely.

Green – and the IEA (see the graph above) – also highlights the benefit of reverse auctions in driving down the costs across the board. Many say it is the most effective policy and has been adopted around the world.

It is true that the continued fall in solar costs continues to stun many observers. But even as each stepping stone is dismissed as an aberration and deemed impossible to meet, new records are set soon after.

In Mexico,  auction for large scale solar farms elicited average prices of US4.49¢/kWh and then US3.17¢/kWh. This graph below (also from Electrek) illustrates how these once established world record lows before being beaten.

record low solar price copy

In just four years the price of large scale auctions has fallen by 80 per cent – from US8.13c/kWh – mostly in countries with excellent solar resources, relatively low labour costs and supported by a low cost of finance (thanks to stable and clear policy).

“Electricity from large solar PV is already cheaper than from any other source and it’s going to get a lot cheaper – maybe 2-3 times cheaper than at present,” Dr Green said in August.

“Australia has played a major role in getting to this stage through its research leadership – this role should be encouraged and even accelerated … because it benefits the Australian resources industry enormously and may give Australia the world’s cheapest electricity further down the track.”



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  1. RobertO 3 years ago

    Hi All, I wonder if “automated manufacturing” along with solar improvements will continue to drop the price of Solar. It seem to me that Solar will be our main stay of electricity production (including all transport, battery + H2 trucks (via Fuel Cells)). Will robots do most ,if not all this work? It possible that we will need to improve our recycling of all materials so we waste nothing in the cycle. We will need to do this in Australia so we keep work in Australia.

  2. Joe 3 years ago

    Two TonguesTurnbull can keep his 50cent a week power bill saving…sometime after 2020. We’ll just take our ‘solar savings’ now thank you very much.

  3. Ron Horgan 3 years ago

    Solar PV has just made all fossil alternatives obsolete.
    Even running existing coal and gas and nuclear power plants will cost more.
    No profit for Adani or other new coal mines.
    The clean coal idiots in Canberra would have us pay a fortune in increased costs for the pleasure of destroying the watertable , fracking our best farm land and causing ill health for the community.
    When will we be rid of this LCP rump?

  4. Hettie 3 years ago

    How great that this article comes out just ahead of next weekend’s COAG meeting.
    Please, any readers here who do Facebook or Twitter, share this every day half a dozen times a day. Post it to the pages of State energy ministers. Give them the ammunition to shoot NEG d.e.d dead.
    Don’t know your state minister’s contact details? Ask Dr Google.
    Just do it. Email them , phone them, be a damned nuisance.
    DO IT.

    • Webber Depor 3 years ago

      they are well aware of the situtation. but “top mind” is more real than you think.

  5. ivanc 3 years ago

    So that means that my electricity price will be lower than 6c/kwh??? 3 times higher that their cost?????
    Fill Australian deserts with solar panels, and pump water to reservoirs to get hydroelectricity at night, Do you think next winter we will not be cold as past winters?????
    or they will not rest until they get 10,000 % profit.

    • Rikaishi Rikashi 3 years ago

      Yes. Corporations are legally obliged to make as much profit as possible.

  6. Jon 3 years ago

    Its a nice headline but there is no way these numbers are real TOTAL project costs. I would guess they represent the cost of subsidy only. No one can build a 200MW solar farm for US$12m. The same project in Aus would cost about AU$300m.

    • Daniel Francis 3 years ago

      I think you will find it is 1.7c/kwh generated over 20-30 years, rather than 200MW/$12m

      • Jon 3 years ago

        The table makes no sense….they appear to have divided the USD column by the annual MWh to get to the cost in $/kwh. This is not a levelised cost! What does the USD column represent? Maybe annualised capex???

        • Giles 3 years ago

          The bids were requested in MWh, and how much output anticipated in each year. The $US is the total, the c/kWh the division into individual units. No, it’s not the LCOE. That would be cheaper than this because there will be a margin included.

          • Jon 3 years ago

            $US is the total what? Certainly not Capex?

          • Giles 3 years ago

            The total price for the energy produced. Megawatt hours times unit price. 600MWh x $20/MWh equals $1,200.

          • Jon 3 years ago

            So, in Australia, to achieve an equivalent offtake price for 20yrs we would need to see Capex costs cut in half and Opex and virtually zero for a 7.5% WACC. I appreciate that Mexico has higher capacity factors and lower labour costs, but this doesn’t really explain all the difference.

          • RobertO 3 years ago

            Hi Jon, remember that this is the sale price of the product they produce(see Giles answer below). To produce the product and their costs of producing that product are not part of the auction (Capex). They will have access to panels at prices (because they order millions of them, or they may produce their own) of $5 (or even less) per panel (Mass production drops prices) where if I tried to buy a panel it may cost me $100 each. They may have a connection point, tranformer, land rental and all the other things required paid for as part of the auction terms and conditions. They will have done their sums and know where they stand on the price

    • Mike Westerman 3 years ago

      1c/kWh for 3% IRR over 25y and 2MWh/kW/a gives a capex of about 35c/W, or $70 for 200MW.

  7. bmarcoux 3 years ago

    I made a similar claim (1/kWh within 10 years) back in January, at a Canadian Electricity Association meeting. This is quite unavoidable now. See

    • tmac1 3 years ago

      Great presentation. Thank you .

      • bmarcoux 3 years ago

        You’re welcome!

  8. Alex Hromas 3 years ago

    Don’t forget the improved efficiency of construction the panel mounting, installation and cabling have always been significant and improvements here have been similar to the high tech stuff. A lot of Mexico is at high elevations making its solar resource really great

  9. RobertO 3 years ago

    Hi All, and this is an action so sometime people overbid (underprice) the job, just so they can get the name up in lights to show they can do the jobs. Sometime you take a loss leader job to keep the pipeline of work coming your way, or you have a crew that need to fill in time between jobs, so it cheaper to undercut a job, rather than lose the crew. Automation is also pushing down prices, eveb simple jobs, loading panels on to the slide run 200 meters in length can be dome by hydraulics.

  10. Webber Depor 3 years ago

    australia should have been placed somewhere in 2nd graph.

    • RobertO 3 years ago

      Hi Webber Depor, Australia wouls never make the cheapest price in Solar, we are just too expensive. We could make a graph on Volumn (either volumn or per capita) if we decide to install what the country needs and more for transport, more for export somehow.

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