Parting Thoughts – Solar Thermal / CSP

As of this month (August 2014) – I am no longer with AREVA. I have ventured out on my own and finally “just effing doing it” – but more on that later.

I have been associated with solar thermal (CSP) for almost 5 years now, split evently between California and India. Have written a couple of posts about what I thought were the primary advantages, drivers and challenges for the technology (at the time) here and here. It has been an excellent ride in terms of learning of whether a fledgling technology can flourish or not, may or may not, in fact, depend on the technology as such. CSP did not ever “really take off” in USA but here I will focus on the reasons in India.

Large scale CSP in India is broken at the moment. I see no meaningful revival in the next 4-5 years and most likely, ever.

Two of the main advantages of the solar thermal technology that remained in the last 3-4 years were (1) energy storage and (2) hybridization with other steam based power technologies like coal, biomass, combined cycle plants, etc. Of course there is the localization and job potential in India, but much of that can be obtained with PV as well.

Energy Storage

CSP can provide energy storage using molten salts. It’s proven with many 100s of MW running in Spain successfully for the last many years. It increases the upfront cost, but the idea is that the added generation should offset this added cost over the lifetime. It also provides a “firmer” output than you will get with solar direct technology as the variation in power generation can be managed.

Now India needs more electrons on the grid, day or night. Most of us have read articles about the “power deficit” in the country and those numbers don’t even include the unelectrified 100 million or so!In addition the question about firmness of the grid with the renewables variability is constantly being proven as a red herring, with Germany, Portugal and California production profiles leading the way. Energy storage and firmness is just a “nice to have” feature at the moment, especially if it comes with any risks of defocussing time and money towards PV programs.

Hybridization

Now this is quite relevant in the context of India have to import a lot of the coal and gas. There are MANY plants running way below their expected utilization due to fuel supply problems. Integrating CSP into those, would be a great win-win. So why are we not doing it? 

Well, the stock answer from the policy-makers is that it’s difficult to measure, hence incentivize the contribution of CSP in such plants due to “thermal” not electric contribution. This is an excuse. Many more complicated incentive problems have been solved in the energy space. So it’s more a function of the opportunity cost – the subset of plants that are in good solar region AND have flat land nearby AND have spare capacity AND compatible turbines is small. Maybe a few 100MW all over India. Similar challenges lie with biomass integration too. So the potential dent it can make in India RE goals is quite small.

Having said that, the CSP industry also did not serve itself well. It ended up being a visible failure due to developers and external financial factors, and the policymakers lost interest. Of course there are many other reasons that are debated ad nauseum, but in the end  it could not prove itself enough to be given a real second chance.

Currently, PV industry is way ahead in terms of price and deployment. That has turned out to be the real DISRUPTION in the solar industry and will continue to lead the way for a more solarized and cleaner world.

Advantages – Concentrated Solar Thermal (CSP)

I attended the CSP Today conference last week in San Francisco. A well attended event with many industry gurus sharing their views about the state of CSP in US.

It seems to me that there are three main advantages that are often touted for CSP (over Photovoltaic let’s say…) – Storage, cost and predictability of output. Besides predictability, the other two seem to be subjective.

Storage
This is the only solar technology that allows for storage naturally. Since the solar radiation is indirectly converted to electricity, there is an opportunity to store the collected heat in molten salts, before converting the heat to electricity.

The cost of setting up the molten salt system is exorbitant. The financial viability of the storage option depends on the incentives. In Spain, the power companies are incentivized based on the total energy output (MWh) into the grid. So they try to maximize the energy produced and having storage allows for higher energy / capacity factors – thus more revenue. Also the feed-in-tariff is enough to justify the extension of the salt system.

In US the companies are incentivized for the installed capacity (MW) through the investment tax credits. The credit is independent of the total energy production. So in US, the additional investment in the storage technology is not financially viable currently. The scarcity of projects demonstrating the molten salt technology also leads to more risk, leading to financing hurdles. The whole industry is waiting to see Solana (280MW, 6 hours of storage) project in Arizona get financed and built to lead the pack.

Cost
The common understanding is CSP is cheaper than PV due to the use of off-the-shelf, commodity components like mirrors, turbine, etc. It also was known to have higher efficiencies in solar to electricity conversion (~15%).

Due to the global oversupply in PV panels and reduced demand due to the financial crisis, the prices of the panels have drastically reduced. On the efficiency front, the PV at 15-20% efficiency is typical now, further adding the cost parity. The result is that PV is now at parity or close to parity with CSP. One western region utility claimed that they pay 0.16 c/Kwh for CSP and 0.14 c/Kwh for PV. This difference was attributed to the timing of the PPAs, generally the difference is not significant anymore.

Predictability
The ability to provide “firm power” is a clear advantage of CSP at this time. Due to the output being provided by a steam turbine (and not directly from the field) and a ~2 hour built-in buffer in the trough technology, small variations in the in insolation do not affect the turbine output – like a passing cloud. PV on the other hand can have a very sporadic output profile. The firmness of power is highly valued by the utilities. No other solar technology existing has this benefit. This benefit is unique and is valuable, and I believe would be discussed more in months to come.