[The Vector] Solar Thermal – Getting Competitive
The Spanish Solucar PS10. Source: afloresm
Spain is world leader in utility-scale solar power generation with a capacity of more than 430 MW, following commissioning of their latest plant in the North West of the country. The United States’ utility scale solar generation is a little over 420 MW. Within a year another 600MW will come onstream in Spain and by 2013 solar capacity will have reached 2.5 GW, according to Protermosolar, the country’s generation industry association.
Despite Spain’s enthusiastic promotion of solar generation, there are other areas of the world where solar can operate much more efficiently. Countries in the Middle East and North Africa, as well as the southern states of the US, have higher solar power generation potential. The German-led Desertec project to generate power for Europe in the Sahara continues to progress. A number of North African countries, including Egypt, are interested in getting involved.
At the same time, utility-scale solar generation is becoming more competitive. Reports that suggest this include the following:
A joint report by management consultants AT Kearney and ESTELA, the European solar thermal electricity association, predicts that generation costs associated with solar thermal will gradually fall over the next few years. By 2015 the costs of electricity generation in countries with the highest levels of sunshine may fall by 30 per cent. By 2025 they could be reduced by more than 50 percent.
According to the report, published at the end of June, thermal electricity (STE) is now entering the commercial ramp-up phase. Global installed capacity could reach 100 GW by 2025. Improved economies of scale and technological improvements may enable STE to challenge conventional and other renewable energy sources without any subsidies.
Assuming fulfillment of the industry roadmap as outlined in the study, STE penetration is expected to reach 12 GW of installed capacity by 2015, 30 GW by 2020 and between 60 and 100 GW by 2025.
Already by 2015, when most of the STE ramp-up phase improvements currently underway are expected to be implemented in new plants, energy production can be expected to be boosted by more than 10 percent and plant CAPEX reduced by 20 percent. Furthermore, economies of scale resulting from increases in plant size will additionally contribute to reducing plant CAPEX per produced energy unit.
Dr. Martin Sonnenschein, Head of A.T. Kearney Central Europe explains: “Depending on the STE technology used and the dispatchability of the plant, a cost reduction up to 30 percent can be expected by 2015. Therefore between 2015 and 2020 tariffs for STE can be reduced by as much as 50 percent. In areas of high irradiation, for example in the Middle East and North Africa, additional cost reductions for electricity generation of up to 25 percent are feasible. Together those cost reductions can result in tariffs of 10-12 euro cents per kWh.”
One of the advantages of STE over other renewable energy sources its its high degree of predictability and reliability. Proven and cost-efficient energy storage systems associated with STE make it flexible or ‘dispatchable’.
But STE’s potential is not achievable without continued support from utilities and governments, says the report. The creation and maintenance of legal frameworks such as feed-in tariffs, for instance, is absolutely pivotal and not only mitigates initial investment risks but also encourages future investments and fosters innovation.
Energy legislation should be reviewed so that it does not hinder adequate STE plant development, as happened in Spain where plant sizes were limited to 50 MW, thereby restricting the achievement of economies of scale.
The report calls for investment in high-voltage direct-current connections to enable large-scale energy distribution from countries with sunshine levels where STE can achieve very competitive costs to countries seeking to import renewable energy. National and cross-national cooperation and market mechanisms to foster STE deployment and to support the exchange of green electricity in order to create further outlets for STE-produced power.
