Recently, the Ministry of Ecology and Environment issued the first batch of methodologies for four voluntary greenhouse gas emission reduction projects: afforestation carbon sequestration, grid-connected solar thermal power generation, grid-connected offshore wind power generation, and mangrove forest construction.

Solar energy, as an inexhaustible and renewable energy source on Earth, is commonly associated with photovoltaic power generation. However, when it comes to solar thermal power generation, it may still be unfamiliar.

Posted onNovember 17, 2023Author

What is solar thermal power generation? How does it differ from photovoltaic power generation? What is the emission reduction potential of grid-connected solar thermal power generation projects? What significance does it hold as one of the first four methodologies released?

As a participating organization in the development of the methodologies, Li Guangming, Vice Chairman of the National Solar Thermal Alliance and Deputy Secretary of the Party Committee/Director/General Manager of China Guangdong Nuclear Power Holding Co., Ltd., accepted an interview with a reporter from China Environmental News; Xu Weixing

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XW: What is the significance of the methodology for grid-connected solar thermal power generation projects as one of the first batch of four released methodologies?

LG: Grid-connected solar thermal power generation projects have multiple functions, including green power generation, energy storage, and peak shaving. They can safely, efficiently, and for a long duration store energy and provide stable power supply. It is an effective means of safely and reliably replacing traditional fossil energy sources, as well as an indispensable component of a new type of power system, playing a positive role in promoting the achievement of carbon peak and carbon neutrality goals.

However, grid-connected solar thermal power generation projects currently face challenges such as excessive initial investment and relatively high generation costs. Therefore, under the current electricity price policy, the large-scale development of solar thermal power faces certain challenges. The release of the voluntary emission reduction methodology for solar thermal power generation projects will assist these enterprises in developing voluntary emission reduction projects, improving project returns, promoting the application of solar thermal technology, creating significant social and economic benefits, and driving the scaled development of the solar thermal industry.

XW: What specific projects does the grid-connected solar thermal power generation refer to? How does it differ from photovoltaic power generation projects? What is the current development status of the industry?

LG: Photovoltaic power generation is the technology that directly converts solar energy into electrical energy. Solar thermal power generation, on the other hand, involves converting solar energy into thermal energy and then using traditional thermal power generation cycles to convert that thermal energy into electrical energy. In comparison to photovoltaic power generation, the process of converting thermal energy into electrical energy in solar thermal power generation allows for the long-term storage of heat. Therefore, even in the absence of sunlight at night, it can still generate power steadily. Additionally, it can serve as a flexible adjustment power source for rapid peak shaving, better adapting to the practical needs of China’s new power system and promoting the safe and stable operation of the power grid.

In recent years, China has constructed a number of solar thermal power generation demonstration projects, effectively promoting the improvement of our country’s solar thermal technology level, and significantly enhancing the supporting capacity of the solar thermal industry.

With the rapid development of the domestic new energy industry, the “solar thermal+” model will become a key development direction for subsequent solar thermal projects. By coupling various forms of energy such as solar thermal, photovoltaic, and wind power, a complementary operating mode will be formed, greatly improving the efficiency of the new power system. The “solar thermal+” model will promote the establishment of comprehensive renewable energy generation bases that integrate solar thermal power generation with photovoltaic power generation and wind power complementary regulation.

Simultaneously, the construction of large-scale integrated bases for wind and solar energy storage will provide a more promising solution for the reform of the power generation side in China’s energy sector. The “Notice of the General Office of the National Energy Administration on Promoting the Large-Scale Development of Solar Thermal Power Generation” (National Energy Office Comprehensive Notice [2023] No. 28) proposes striving to achieve an annual new construction scale of about 3 million kilowatts for solar thermal power generation nationwide during the “14th Five-Year Plan” period. Combined with the construction of new energy bases in desert, Gobi, and desert areas, a batch of solar thermal power generation projects will be implemented as soon as possible.

XW: Compared to photovoltaic power projects, grid-connected solar thermal power projects are in the early stages of development, with relatively small scale. Why were they released ahead of photovoltaic power projects?

LG: As the proportion of renewable energy continues to increase, the peak-shifting and energy storage advantages of solar thermal power generation will become more prominent. This aligns well with the urgent need for rapid peak-shifting power sources for the safe and stable operation of the power grid under the current scenario of high proportions of unstable renewable energy sources. It lays a secure and stable foundation for building a new power system dominated by new energy. However, solar thermal power generation technology is complex, currently in the early stages of development, and has high costs. It requires funding and policy support from CCER to obtain carbon reduction benefits and gradually achieve scale.

The priority release of the solar thermal power generation methodology reflects the encouragement and support of the Ministry of Ecology and Environment for the development of emerging low-carbon technologies. This will promote the development of the solar thermal industry, contribute to the comprehensive green transformation of the economy and society, facilitate green and low-carbon development of energy, and reduce greenhouse gas emissions. Photovoltaic power generation, after more than a decade of development, has matured in technology and achieved industrial scale.

XW: Which grid-connected solar thermal power projects are applicable to this methodology? Which are not? What conditions must projects applying this methodology meet?

LG: This methodology is applicable to two types of solar thermal power projects: first, independent grid-connected solar thermal power projects, and second, the grid-connected solar thermal power part of “solar thermal+” integrated projects. It does not apply to off-grid solar thermal power projects or solar thermal heating projects. Projects applying this methodology must comply with legal and regulatory requirements, meet the development policies of the solar thermal industry, and the solar thermal power part must be connected to the grid, with the electricity generated from the grid-connected part independently metered.

XW: What considerations underlie the choice to exempt the additional assessment for grid-connected solar thermal power projects? The methodology mentions barriers in this field due to technical and investment risks. What are these obstacles? How will the release of the methodology promote industry development?

LG: First, solar thermal power generation is still in the early stages of industrial development, with a small industrial chain and overall installed capacity, and has not formed economies of scale. The investment cost of projects is high. Currently, there are only nine solar thermal power projects with a scale of 50MW or above in operation nationwide, with an installed capacity of 550,000 kilowatts and a unit installed investment of 25,000 to 30,000 yuan/kW. The planned installed capacity is 3 million kilowatts, with about 40 projects and a unit installed investment of approximately 16,000 to 20,000 yuan/kW. Although most equipment is domestically produced, the investment is still high, far exceeding other renewable energy sources.

Second, solar thermal technology routes are relatively complex, and construction and operation costs are high. Compared to conventional wind and photovoltaic projects, solar thermal systems are more complex, involving various system integrations such as heat collection, heat transfer, heat storage, steam generation, and conventional power generation systems. It combines multiple technical fields such as optics, thermodynamics, materials science, mechanical and automation control, making it different from conventional power production and traditional solar thermal utilization. It requires interdisciplinary and cross-domain efforts, resulting in significant difficulties in project construction and operation, leading to high costs. The current cost of the best solar thermal power generation technology is approximately 0.7 to 0.8 yuan per kWh.

Third, changes in solar thermal electricity price subsidy policies have further reduced the economic viability of projects. In the first batch of 20 solar thermal power generation demonstration project lists released by the National Energy Administration in September 2016 (eligible for a subsidized electricity price of 1.15 yuan/kWh), only seven projects were successfully commissioned. Other projects were stagnated or planned due to unmet economic expectations. In 2020, the Ministry of Finance issued the “Opinions on Promoting the Healthy Development of Non-Hydro Renewable Energy Power Generation,” which clearly stated that starting from 2021, the central government will no longer subsidize newly approved solar thermal projects and will implement grid parity. The solar thermal electricity price was reduced from 1.15 yuan to the provincial benchmark coal-fired electricity price.

Due to the high cost of solar thermal power generation and the cancellation of national subsidies, local financial subsidy policies are still unclear, and the entire industry’s development is in a difficult situation. By the end of 2021, the installed capacity of completed solar thermal power generation projects in China was 588,000 kilowatts, only 10% of the development target of 5 million kilowatts proposed in the “13th Five-Year Plan” for renewable energy development. It did not meet expectations.

In addition to independent solar thermal power plants, the country encourages solar thermal as an adjustable power source to cooperate with wind power. Since 2021, a total of 48 integrated “solar thermal+” projects with confirmed development rights have been implemented nationwide, mainly distributed in six provinces (autonomous regions): Qinghai, Gansu, Jilin, Xinjiang, Inner Mongolia, and Tibet.

Among them, the unit installed investment of the solar thermal part of the integrated projects is about 16,000 to 20,000 yuan/kW. Influenced by factors such as solar thermal electricity price, solar thermal-photovoltaic ratio, heat storage capacity, and electric heater power, the return on investment of the solar thermal part in integrated projects varies significantly but remains at a low level, with significant, industry-recognized additionality.

The release of this voluntary emission reduction methodology for solar thermal power generation projects will assist solar thermal power generation companies in developing voluntary emission reduction projects, improving project returns, promoting the application of solar thermal technology, creating significant social and economic benefits, and driving the scaled development of the solar thermal industry.

XW: How is the emission reduction of grid-connected solar thermal power projects calculated? Is there any controversy regarding its scientific basis? How feasible is it? How is data accuracy ensured? What should stakeholders, such as project owners and third-party verification and inspection organizations, pay attention to?

LG: Grid-connected solar thermal power projects belong to the category of renewable energy. The principle for calculating emission reduction is based on the assumption that, in the absence of the solar thermal power project, an equivalent amount of electricity comes from the regional power grid, and the emission reduction is the amount of emissions produced by the existing or newly added power plants in the regional power grid that generate an equivalent amount of electricity. In terms of emission reduction calculation methods, it aligns with the common practices of various international emission reduction mechanisms. The formula for project emission reduction is: Baseline Emissions – Project Emissions – Leakage.

For obtaining key parameters in emission reduction calculation, grid-connected solar thermal power projects need to acquire crucial parameters, including electricity and fossil fuel consumption data (mainly natural gas). The methodology imposes strict requirements on data sources, monitoring frequency, and monitoring equipment. Cross-checking data from the National Grid and natural gas companies ensures that the data is monitorable, verifiable, and traceable.

Project owners need to pay attention to three main issues: first, properly record monitoring data, appoint a dedicated person for meter reading, and regularly record the data. Second, maintain monitoring equipment by regularly calibrating/testing devices such as electricity meters and flow meters; any issues discovered should be promptly repaired or replaced. Third, properly archive all documentary evidence, including data monitoring records, monitoring equipment calibration/testing reports, electricity/natural gas settlement vouchers, and other supporting materials.

Third-party verification and inspection organizations mainly verify the authenticity, accuracy, and reasonableness of monitoring data, ensuring that key parameters for emission reduction calculation, such as on-grid electricity, off-grid electricity, and power grid baseline emission factors, comply with relevant requirements.

XW: How does the CCER methodology for solar thermal differ from the original methodology and international mechanisms? What considerations are there? Can it be unified and interconnected in international standard mutual recognition?

LG: The original methodology “CM-001-V02 Renewable Energy Grid-Connected Generation Methodology (Second Edition)” and other international voluntary emission reduction methodologies for renewable energy have a broader scope, suitable for all renewable energy projects, including wind power, photovoltaics, hydropower, geothermal, and many others.

The CCER methodology narrows down the scope to focus on solar thermal power generation. This precise support aligns with China’s relevant industry policy requirements and the development trend of green and low-carbon technologies, specifically supporting solar thermal technologies with low carbon effects but currently in the early stages of industrial development.

This approach is consistent with international practices. For example, the Verified Carbon Standard (VCS) restricts specific types of renewable energy projects for certain countries. For China, only centralized solar thermal and floating photovoltaic projects are currently allowed to apply.

In addition, this methodology fully considers industry-related technical specifications and international practices in terms of project boundary delineation, monitoring method selection, and data cross-checking methods. The approach to selecting greenhouse gas sources, calculating emission reductions, and other considerations aligns with international mechanisms such as the United Nations Clean Development Mechanism (CDM) and VCS, providing a scientific basis for mutual recognition.

XW: Currently, are there any statistics on the number of such solar thermal CCER projects and their emission reductions? How is the revenue, and can you provide an example?

Li Guangming: As of October 2023, there are a total of 8 operational solar thermal power projects with a combined installed capacity of 588 MW. All of them are independent solar thermal power projects. Taking a 50 MW solar thermal power project in Qinghai province as an example, with an annual operating hours of 2500, the annual on-grid electricity is approximately 125,000 MWh, resulting in an annual emission reduction of about 80,000 tons. Calculating at a CCER price of 40 yuan/ton to 60 yuan/ton, it can add an annual revenue of 3 to 5 million yuan to the solar thermal project.

Source: China Environment News