Solar power just sold for the lowest price ever, in Chile.

The Spanish developer Solarpack Corp. Tecnologica won contracts to sell power from a 120-megawatt solar plant for $29.10 a megawatt-hour at an energy auction this week.
That’s the lowest price on record for electricity from sunshine, surpassing a deal in Dubai in May. It’s the cheapest to date for any kind of renewable energy, and was almost half the price of coal power sold in the same event. According to Solarpack General Director Inigo Malo de Molina, it’s one of the lowest rates ever for any kind of electricity, anywhere.

“Solar energy technology has evolved and proved it is competitive,” Molina said in a telephone interview from Santiago Thursday. “Prices for electricity generation have changed drastically in the last years. Solar energy in Chile is now the cheapest in the market.”

A key part of the low price is the ever-declining price for solar panels. The average price on the spot market declined this week to 44.7 cents a watt for standard polysilicon panels, a record low.

Ideal Location

The location for this particular power plant is also a factor, in northern Chile’s Atacama desert. It’s high in the Andes, close to the equator and is considered one of the sunniest and driest places on Earth. It’s ideal for solar energy, and will generate more electricity than projects in areas that get less sunshine.

Chile’s government is planning to complete transmission lines that will let the solar farm deliver power to the entire country, which prompted Solarpack and other developers to bid so low, Molina said.

“This is the lowest price ever seen, for any renewable technology,” Ana Verena Lima, a Bloomberg New Energy Finance analyst in Sao Paulo. “The auction was very competitive and such a low price wasn’t expected by the market.”