CSP picks up a head of steam thanks to PV

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Concentrated solar power has run out of steam as PV prices plunge and transmission costs to CSP resources stranded out in the desert soar … or so many in the PV industry would have you believe. But CSP academics and advocates say the technology could be poised to perform a very fine balancing act on California's grid.

BrightSource, a Californian venture-backed CSP company, raised more than $300m from the likes of VantagePoint Capital, Chevron and Google. But those investment dollars pale in comparison to the federal government's $1.6bn loan, the highest single award under the Department of Energy's 1705 programme. But only by a shade. Abengoa has taken a total of $2.646bn for its Mojave and Solano projects, which takes 1705 awards for CSP well on its way to a total of $6.802bn, or put another way, just shy of 13 Solyndras…

Meanwhile, the Solar Trust of America last year flipped the first 500MW of its 1GW Blythe Solar Power Project from CSP to PV technology, citing improved PV market conditions.

Pressure on the CSP industry to perform is ramping and companies like BrightSource are scrambling to reposition their technology in the energy mix amid the twin crosswinds from low natural gas and PV prices.

You would expect Udi Helman, director of economic pricing and analysis, to focus on the brightspot for BrightSource.

Helman said: “Everyone is wrestling with this question of what to do with CSP in the low-cost PV world – how do these two solar resources fit together?”

BrightSource currently has 2.6GW in signed Power Purchase Agreements with Pacific Gas & Electric and Southern California Edison. Its flagship Ivanpah 392MW plant in the Mojave Desert, due for completion in 2013 at a cost of $2.2bn, will be built without storage capacity.

Helman's recruitment last year was a shrewd move by BrightSource. As a former renewables integration specialist at the California Independent System Operator, Helman's arrival has been followed by the addition of solar thermal storage on future projects as the company re-phrases what its technology can offer.

“The good news for the solar thermal question is how it operates in high renewables systems – this is a newer topic,” he said. “If we go into higher and higher PV penetrations, system impacts will start to be significant. That's where CSP becomes a clear, necessary part of the solar portfolio.”

California's Renewable Portfolio Standard requires that utilities purchase 33% of electricity for retail from renewable sources by 2020. Cal ISO estimates that 601MW of solar is connected to the state's grid. By 2020, that figure will rise to 12.3GW. Meanwhile utilities have to find replacement generation for the state's two nuclear facilities and once through cooling plants on California's coast.

Future CSP projects would add value by plugging this gap in the grid and balance solar's peaks and troughs. Solar thermal storage at the end of the line could capture the value of peaking solar and wind generation for later dispatch as renewable generation drops, Helman said.

“We retain most of our energy into storage and shift our energy production into the evening. It's an asset now but it's going to be even more of an asset in the future in the PV world because of the way PV will be dropping off the system in the late afternoon and other units will have to be ramped up to compensate. We can provide reserves and we can dispatch the plant like a conventional power plant overnight.”

Another challenge facing CSP was the downward pressure renewables had on wholesale power prices, said Helman.

“Wholesale power prices will be even further depressed by renewables – this is an effect that was not fully understood a few years ago.

“Simulations we ran at the Cal ISO with GE show that solar does indeed heavily suppress wholesale power prices during the peak hours. And wind suppresses them in the off-peak hours. Future wholesale power prices will be much lower than they are today. They are essentially very low today but the outlook is bad now and getting worse in the future.

“The costs of most other types of storage are too high to make it worthwhile to earn money out of the existing power markets especially if prices will remain as suppressed as gas prices would suggest.

Power purchasers would also be willing to pay higher costs of electricity for the benefits of being able to ramp quickly, he said.

“That's where a dispatchable solar plant gains value – the ability to ramp fast.”

But at estimated prices of 12–17¢ per kWh, is Helman justified in thinking that utilities will pay a premium?

Reese Tisdale, solar power research director at IHS Emerging Energy Research, says that the market for CSP has changed significantly since the company was founded in 2004.

“The market environment has dramatically shifted for CSP given the financial environment. These projects are large, expensive, require a lot of upfront capital. They don't have the siting flexibility of PV so they need to be in high solar insolation areas like southern California. They can't be in New Jersey in contrast to PV.”

“Many of these developments began as early as 2005-2006 and they're just going into construction right now. Some of them have fallen by the wayside. Several companies have gone bankrupt or have become largely inactive.”

Solar Millennium in Germany filed for insolvency last December, a few months after manufacturer Stirling Energy Systems went out of business in Scottsdale, Arizona.

“New technology players such as BrightSource have proposed different system designs and strategies to drive down costs and deliver reliable power,” said Tisdale.

“CSP does work. Plants have been operating for 20–25 years. The question is: can it be installed and operate cost effectively? That's one of the challenges of the more traditional parabolic trough players have had to demonstrate – can they drive this cost down?”

Many of the CSP plants in the pipeline in the US would not even be considered without the DoE's $35.1bn loans programme and there are future challenges such as the expiration of the Investment Tax Credit in 2016, said Tisdale.

“If it takes four to six years to get one of these projects in the ground, 2016 is going to be here before you know it. The question is, can the CSP industry live without it after 2016? They can survive if the utilities are willing to pay for it. With storage added to projects, utilities are willing to pay more for reliable dispatchable power and receive it when they want it. And that's fair. The question is can they do it?”

Tisdale forecasts an additional 1.5GW of CSP in the US in the next four years. Last year's IHS Emerging Energy Research report, US Solar Power Markets and Strategies: 2011–2025, forecast an additional 6GW of CSP worldwide by 2025.

But it's not just CSP players who claim that high penetration of solar PV could be the making, not breaking, of solar thermal projects. Last November, a report from the National Renewable Energy Laboratories concluded:

“The use of thermal energy storage in concentrating solar power plants provides one option for increased grid flexibility… This could result in greater use of non- dispatchable solar PV and wind meaning CSP and PV may actually be complementary technologies, especially at higher penetrations.”

NREL is expected to release further analysis of dispatchable CSP this spring.

Chances of BrightSource following through with last year's IPO registration look dim in 2012. But SolarReserve last week brought some welcome news for the industry by announcing the completion of its 110MW Crescent Dunes Solar Energy Plant molten salt tower.

BrightSource has also diversified its portfolio with a 29MW demonstration solar-to-steam Enhanced Oil Recovery plant for Chevron at Coalinga and is looking for opportunities to expand into other markets, such as South Africa.

But BrightSource must be feeling the heat of expectation after accepting $1.6bn in federal dollars. Failure is not an option.

“They have to make money,” said Tisdale. “BrightSource is a technology player and all they have is this technology. They're not GE and they're not Siemens. They don't have anything to fall back on. They're venture-backed. They need to succeed. I don't think they see it any other way.”

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