World Bank's Zambia solar auction sets African low price benchmark

WASHINGTON, June 13 (Reuters) - A World Bank-led solar power auction in Zambia has set a new low-cost benchmark for Africa, with two development groups winning backing to build generating plants in the next year, the international lender said on Monday.

Neoen SAS, First Solar Inc and Enel Green Power were the winners of the initial auction for the “Scaling Solar” program, the World Bank Group’s International Finance Corp said in a statement.

France’s Neoen and U.S.-based First Solar jointly bid 6.02 cents per kilowatt hour and will build a 45-megawatt solar plant in the African nation. Enel Green Power, a subsidiary of Italy’s largest power utility, Enel, bid 7.84 cents per kilowatt hour and will build a 28-megawatt plant.

Those bids compare with recent solar contract prices of over 7 cents per kilowatt hour in South Africa and up to nearly 12 cents in India.

The two new solar plants are expected to expand Zambia’s generating capacity by 5 percent, easing the strain of drought that has reduced the country’s hydroelectric output, the IFC said.

“These are the lowest solar power tariffs seen to date in Africa, and among the lowest prices for solar power anywhere in the world - a game changer for Zambia and other countries in the region facing electricity shortages,” IFC Chief Executive Officer Philippe Le Houérou said in a statement.

The World Bank program aims to help governments deliver cheap and clean energy by helping them run competitive auctions and reducing investment risks. It includes a full suite of World Bank products and services, including IFC financing and advice as well as guarantees from the group’s Multilateral Investment Guarantee Agency arm.

The IFC said Senegal and Madagascar also have signed up to run Scaling Solar tenders, which are expected to move to the prequalification phase in the coming months.

The program, which hopes to develop one gigawatt of solar power in the next three years, also is supported by the U.S. Agency for International Development and the Dutch and Danish governments.

The Zambian auction initially attracted interest from 48 development groups, seven of which submitted final proposals. (Reporting by David Lawder; Editing by Paul Simao)