The fact that concentrating solar power plants can be coupled with energy storage and thereby dispatch power in a more uniform way makes them attractive to utilities. However, questions remain about their long-term finan

The fact that concentrating solar power plants can be coupled with energy storage and thereby dispatch power in a more uniform way makes them attractive to utilities. However, questions remain about their long-term financial outlook.

Pragmatic discussions about the financial viability of concentrated solar power (CSP) abound. The oft-dismissed redheaded step child of the solar industry, CSP’s relegation to the recycle heap of history is seen by many to be a foregone conclusion due to its inherently high cost. But is CSP destined to play Betamax to PV’s VHS? Or will foreign countries like Spain — which presently boasts one of the highest numbers of CSP plants in the world — demonstrate that CSP’s ability to be coupled with storage makes it an alternative energy worth pursuing? Let’s examine some of the inherent challenges faced by the proverbial underdog of the renewable energy world.

To Spain and Beyond

The appeal of building a solar plant capable of providing energy during nightfall and on cloudy days is clear. It’s a concept that anyone can easily wrap their minds around, and it stands as a compelling argument in favor of further exploration and investment in CSP. In 2011, Spain’s Gemasolar became the first ever solar plant to achieve uninterrupted, 24-hour operation. In the summer of 2013, a few months short of its second anniversary, the CSP plant reached another milestone when it achieved continuous 24-hour operation for a consecutive 36 days.
Although Spain is dominant in its proliferation of CSP plants, other countries have evidenced a desire to play catch-up. In the north of Africa, Morocco is currently procuring 400 MW of CSP facilities. Additional initiatives in the Middle East also offer game changing opportunities for the market. Saudi Arabia is said to be banking heavily on CSP with a strong emphasis on storage, with the intent to procure 25,000 MW of CSP facilities by 2032, according to Marc Norman, director of marketing and communications for the Middle East Solar Industry Association (MESIA) and project finance lawyer at Chadbourne & Parke.

The Holy Grail of Energy Storage

Where competition between technologies is concerned, CSP’s ability to achieve high levels of lasting energy storage is what places it head and shoulders above PV, making the dream of round the clock solar energy a reality. Using molten salt storage, CSP plants have proven capable of storing thermal energy for as many as 16 hours — a feat PV has proven itself as yet incapable of. In the long term, the dispatchability that CSP with energy storage provides could be the determining factor in the survival of one technology over the other.

“Energy storage is the Holy Grail,” says William Conlon, former Chief Engineer and Senior VP of Engineering at AREVA Solar. “But CSP is in an early stage right now. In my view of the market, CSP is very much where solar energy was maybe 8 to 10 years ago. I think we’re going to see things that are technically challenging to do that are probably too costly.”

According to Conlon, contributing factors include a combination of unproven technology, varying degrees of uncertainty, the inability to have meaningful guarantees, and a general lack of understanding among prospective financiers.

Nevertheless, Conlon believes there exists a “big pot of money available” that many entrepreneurs will rush to sink their hands into. “There are several working solution models,” he says. “It’s just a question of whether they’re cost effective.”

Market Resiliency Factors

As solar energy becomes more market sensitive, Conlon says the time value of energy will become a greater factor. “Feed In Tariffs create different economic incentives which ignore the time-of-day value of power. This results in plants that are more like base load systems. But the future requires resiliency, flexibility, and load following.”

According to Conlon, FIT-supported CSP plants like those in Spain may experience a rocky road with respect to achieving market based resiliency without having to undergo complete redesign. “I think as we add more market elements into renewables, and as they become mainstream, they’re going to have to be more responsive to market forces instead of subsidies like tax credits and FITs. They’re going to need to act like other things in the power generation system.”

This means being capable of responding to the demand for load following — the ability to throttle power output on demand — as opposed to performing like base load systems.

Addressing the Natural Gas Question

Conlon says hybridization is key to ensuring CSP’s success, pointing to the low cost of natural gas as a reality that could make further adoption of more expensive CSP solar options difficult — especially in the hearts, minds and wallets of consumers.

Conlon says, “I think the low price of gas introduces another variable. CSP and PV can’t compete with the price of gas. We have to ask whether consumers are going to be willing to see a doubling of their electric rates. I think that gas is going to be the real challenge for both CSP and PV.”

He adds that hybridization can be a bridge to aid in CSP’s effectiveness. “We’ve heard a lot from people in the gas industry who talk about natural gas being ‘a bridge to a greener future.’ Yet we don’t actually see anybody walking that talk. I think we have to find a path that truly uses gas as a bridge.”

The Bottom of the Ninth

Conlon cites the expiring solar investment tax credit (ITC) as one of the principal reasons why power purchase agreements have become tougher to come by for solar projects in the United States. “I think that here in the States, for CSP, we’re kind of stuck,” he says. But he tempers this by offering insight into how concentrated solar power can gain a valuable foothold that may serve to keep it in contention as a viable energy generation source in the future.

“We have to try to create some synergy between the renewable systems in PV and CSP, and the low cost of gas might provide that. There are technical synergies as well as potential financial synergies.”

Ultimately, the future of CSP hinges on the ability to place units in the field so that their effectiveness and value within the energy supply chain can be proven. “That is the difference today between CSP and PV,” Conlon says. “They’re proven and CSP isn’t. In my view, that’s the ball game.”

Vince Font,