Abengoa was awarded contracts to supply 950 gigawatt-hours (GWh) of electricity annually to Chile's Central Grid (SIC) in an auction held last week. To deliver this energy, the company has announced that it will build two 110 MW solar power tower CSP plants, as well as a 100 MW solar PV project.

The two projects will employ a thermal energy storage system developed by Abengoa, which the company says will allow it to deliver electricity 24 hours a day. Unlike the other electricity supply contracts for solar PV, which were awarded for eight hour blocks in the auction, Abengoa was awarded contracts for 24-hour electricity supply.

The company will be supplying this round-the-clock electricity for the sum of US$0.115 per kilowatt-hour (KWh), which is a very low cost for combined solar and storage, particularly for CSP. Since this supply auction was open to conventional generators as well as renewable energy sources, it appears that Abengoa's solar and storage solution beat other bids by fossil fuel generators on price.

“Abengoa seeks to be an important actor in the electricity generation market in Chile, providing clean and competitive energy at the same price and characteristics as traditional energy generators,” Abengoa CEO Manuel Sánchez Ortega declared in a press statement.

GTM Research Solar Analyst Adam James notes that the extremely strong irradiation in Northern Chile as well as the lower cost of capital from Abengoa's yieldco are likely contributing factors to this very low price. He also notes that the company may benefit from additional electricity sales beyond what it is contracted to deliver.

The contracts were awarded in block 4 of the supply auction, under which Abengoa is contracted to supply electricity from January 2019 through the end of 2033. In the same auction SunEdison was awarded electricity supply contracts for which it will build 350 MW of solar PV.