China has seen its solar power bids fall to a record low in a recent auction held in the province of Inner Mongolia, which is rich in solar energy resources.
According to media reports, the Chinese government conducted an auction for 1 gigawatt (GW) solar power capacity in the Inner Mongolia province. A total of 50 solar power project developers and module manufacturers successfully participated in the auction, which saw the record-low tariff of 7.8¢/kWh.
This tariff bid is comparable to some of the costliest thermal power projects in China, indicating that higher competition in the country would expedite grid parity for solar power projects – as has been the case in other developing markets.
Inner Mongolia is not only rich in solar resources but has ample land resources for the development of large-scale solar power projects, which could explain the low tariff bids.
Inner Mongolia has seen curtailment of wind energy generation over the last few years due to lack of adequate transmission capacity. However, earlier this year, the National Development and Reform Commission mandated grid companies to purchase electricity from wind and solar power projects so as to let them function a set minimum hours in a year.
China’s lowest-ever solar price bids are still higher than the lowest tariffs seen in other parts of the world. For example, Abu Dhabi recently saw a world-record-low solar bid of 2.42¢/kWh while Chile allocated solar power contracts at 2.91¢/kWh a bit earlier.