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Solar’s Latest Subsidy Is Squeezing Down Costs -- And Companies

  • Auctions yielding record-low bids to build solar farms
  • Industry concerned projects pay too little to make money
The company will invest $600 million to build the 103-megawatt Horizonte MP project with 103 megawatts of capacity, the 158-megawatt Lapa solar farm and the 292-megawatt Nova Olinda facility.
Photographer: SeongJoon Cho/Bloomberg

The latest mechanism designed to support solar power is proving wildly successful in squeezing down the cost of energy. It’s also threatening to destabilize the renewable-energy industry.

From India to Mexico and the United Arab Emirates, authorities are moving away from making fixed subsidy payments for clean energy and toward a system of auctions. The new system forces companies to compete for contracts to sell electricity and has resulted in offers to supply photovoltiac power at record-low rates this year. Bigger markets including Germany and Japan will start the practice next year.