A record-low bid for concentrated solar power with storage in Dubai has sparked debate over whether the technology might soon become competitive with solar PV.
The bid for power production priced at $94.50 per megawatt-hour is one of four received by the Dubai Electricity and Water Authority (DEWA), in a call for 200 megawatts of concentrated solar power (CSP) capacity to be built in Dubai’s Mohammed bin Rashid Al Maktoum Solar Park.
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Other bids ranged in price from $105.80 to $173.50 per megawatt-hour, according to local reports.
Although DEWA — which is due to issue the tender award in the coming days — has not said which bidder came in the lowest, during a recent industry webinar ACWA Power CEO Paddy Padmanathan admitted the $94.50 bid was his.
“CSP has come down to the 10 cents [per kilowatt-hour] level,” he said.
CSP, or solar thermal, has achieved this level of cost reduction with an installed base of just 5 gigawatts of capacity, he said. PV may be around half the cost, but to get that far has required installing around 325 gigawatts of capacity.
The DEWA tender does not include any kind of subsidy, although the land will be provided at “nominal cost,” Padmanathan confirmed. Furthermore, the tender specifically calls for energy to be delivered from 4 p.m. to 10 a.m. every day of the year.
That means the Mohammed bin Rashid Al Maktoum Solar Park CSP plant, which is expected to be a solar tower design comprising two 100-megawatt towers, will act purely as a molten salt thermal battery for the delivery of overnight electricity.
Proponents have said the news is growing evidence that CSP with molten salt could outgun PV and batteries for long-duration energy storage.
“What this bid shows is that nighttime solar can be pretty cheap using CSP with molten salt storage, even in a location where the solar resource is actually not great,” said Jonathan Walters, a Washington-based independent economic consultant and ex-World Bank director.
“That means the likelihood that grid-scale batteries will be more competitive than thermal storage in sunny countries is pretty small, with the exception of the first few minutes of demand responsiveness.»
Not everyone agrees, though. Jenny Chase, solar insight manager at Bloomberg New Energy Finance, said PV plus battery storage is already approaching a price point close to that put forward for the Dubai tender, which has a 2021 delivery date.
On Kauai Island, Hawaii, for example, a 28-megawatt PV plant with 100-megawatt-hours of battery storage is set to go live next year with a price of $111 per megawatt-hour, albeit including the U.S. 30 percent Investment Tax Credit (ITC).
In 2019, meanwhile, Tucson Electric and NextEra are due to launch a PV-plus-battery project offering 3 hours of storage at a cost of less than $45 per megawatt-hour, including the ITC.
Another factor in PV’s favor is that solar panels and batteries are still seeing significant cost reductions, unlike the major components of CSP, such as heliostats and steam turbines, which are already about as cheap as they can get.
Factoring in price reductions, Chase believes that by around 2021, a 200-megawatt PV plant with 1.6 gigawatt-hours of lithium-ion storage could achieve a levelized cost of energy of around $115 per megawatt-hour.
That’s still more than the bid being offered by ACWA Power in conjunction with its consortium partner Shanghai Electric, but not much. However, the real clincher for Chase is technology risk.
At the price points being offered by ACWA and the other bidders, which include Masdar with EDF and Abengoa, Power China with Engie and SolarReserve, and Suncan with Al Fanar, there must be an assumption that everything will go right, she said.
But “things don’t always go right on solar thermal projects,” Chase said. “They have a somewhat distressing tendency to go quite wrong, in fact.”
Today, the Spanish CSP fleet is running at a 25 percent capacity factor, she claimed, well below the 30 percent or 40 percent level it was designed for. In the U.S., she noted, Crescent Dunes and Ivanpah have taken longer to ramp up than they were supposed to.
That said, if DEWA selects one of the lowest-price bidders and the winner can make good on its promise, there is little doubt the project would be cause for celebration within the CSP industry. “For solar thermal, it’s do or die, really,” Chase said.
“If they can’t get the costs down into a region where they are at least cheaper than PV and batteries today,» she said, «they may as well give up now.»