When Solar Millennium announced on August 18, 2011, it was converting the first half of its planned 1-gigawatt concentrating solar power (CSP) plant in California into a 500-megawatt PV plant, it was just the latest of several thermal solar projects to end before they began. The change was largely motivated by “improved market conditions” for photovoltaic devices, according to Solar Millennium. The company also said switching to PV would let them build the plant in 250-megawatt increments and make financing easier since PV technology is more attractive to finance institutions.
In all, a total of 3 GW of CSP projects have been recently converted to PV projects in the U.S.
No CSP projects came online during 1Q 2011 in the U.S, but more than 9 GW of CSP projects are in the pipeline with more than 2.4 GW of those already signing power purchase agreements, according to the Solar Energy Industries Association report: “U.S. Solar Market Insight: Q1 2011.”
Current industry estimates put the installed cost of CSP plants at around $5.79 per watt, while the installed cost for utility-scale PV plants is closer to $3.40. The future of the large-scale CSP projects appears to be at risk due to the continued decline in PV panel costs - roughly 30 percent so far this year - which is prompting some utilities to pick PV over CSP for future solar power plants. Some PV executives claim that CSP projects in the U.S. can't be built without government loan guarantees and that those projects without loan guarantees are doomed.
Still, CSP projects continue to receive U.S. Department of Energy loan guarantees, such as the $852 million the U.S. DOE just gave final approval for NextEra Energy Resources’ 250-megawatt Genesis Solar Project on government land in California. TheMojave Solar Project, developed by Abengoa Solar in California, was offered a $1.2 billion DOE loan guarantee in June 2011. Even the now defunct Solar MillenniumCSP project was offereda$2.1 billion DOE loan guarantee.
Tessera Solar: The First CSP Casualty
Tessera Solar, the development arm for Stirling Energy Systems dish-engine solar plants, had developed the 709-megawatt CSP Imperial Valley Solar Project through a Power Purchase Agreement (PPA) with San Diego Gas & Electricutilizing the “Stirling Engine” concentrating dish technology.
But in February 2011, Tessera announced that, a joint venture between AES and Riverstone Holdings, had acquired the Imperial Valley Solar Project. AES intends to move the solar project forward to fulfill the PPA agreement, but not as a CSP project and using none of Stirling Solar’s unique technology. The nail in the coffin for the change was Tessera's inability to secure a loan guarantee like their CSP competitors BrightSource Energy, Abengoa, or Solar Reserve.
Solar Millennium Jumps the CSP Ship
On June 17, 2011, Solar Millenniumand its U.S. subsidiary Solar Trust of America, held groundbreaking ceremonies at the Blythe Solar Power Project site that included U.S. Department of Interior Secretary, Ken Salazar, California Governor Jerry Brown and a number of local, state and federal agency representatives. The 1-gigawatt Blythe project was to be one of the largest CSP plants in the world and uses a heliostat system to concentrate sunlight onto liquid-filled tubes with the resulting heat used to generate steam for electric turbines.
In April 2011, DOE announced a $2.1 billion loan guarantee for the construction of the first phase of the Blythe Solar Power Project. The company was already prepping the 6,000-acre site for the tens of thousands of “HelioTrough” CSP reflectors. With water being scarce in the California desert, the project was also planning to use “dry-cooling” technology, which requires 90 percent less water than a wet cooled CSP facility the same size.
But Solar Millennium then announced on August 18, 2011, it was switching the first 500 megawatts of its Blythe facility from CSP to PV technology, conceding that CSP technology was simply not viable in the current market conditions. Solar Millennium released a statement noting that that developing Blythe as a commercial PV project would make it a more attractive for financing from commercial banks and allowed the company to “focus on maximizing the potential of our sites by deploying the right technology at the right time.”
The company was also forgoing the $2.1 billion loan guarantee from the U.S. DOE the company had won in April 2011. Instead, the project will now be funded through commercial markets without the federal support, officials said. The day following the announcement, Solar Millennium shares fell as much as 30 percent.
The company has 1,000 MW of additional solar power projects in advanced stages of development in California and Nevada, including the 500-megawatt Palen Project, which also was originally planned as CSP. That project is still waiting for final regulatory approval and the company would not say if it also will be switched to PV. But that move may be predictable. In May 2011, Solarhybrid, a German solar developer planning Italy’s biggest PV plant,set up a joint-venture with Solar Millennium to operate PV plants in North America.
The Economics of Converting CSP to PV
The CSP developers who are considering, or have already switched to PV technology, are citing improved PV market conditions and cost differences as the main driver in making the switch. The estimated installed cost for the first 500 MW of CSP comes in at $5.80 per watt. With PVs, the estimated cost is half that.
According to a recent American Solar Energy Society CSP Technical Division webinar, First Solar projects go in for under $3 per watt, a price that’s hard for CSP to compete with. First Solar’s thin-film PVs at 12.3 cents per kilowatt-hour clearly beats out what Solar Millennium’s CSP would have been: estimated at 15.5 to 16.8 cents per kWh. And CSP prices are dropping at a snails pace. One example is Florida Power & Light’s 75-MW Martin plant, the largest parabolic trough CSP plant in the United States. The project began at $6 per watt in 2008. Since then, parabolic trough prices have fallen by less than 5 percent.
But some segments of CSP technology are starting to show price reductions. The estimated levelized cost of energy (LCOE) for Solar Reserve’s “power tower” with storage technology is currently 11.6 cents per kWh, and Areva’s concentrating linear Fresnel reflector (CLFR) system is at 13.7 cents per kWh. Both compete today with First Solar’s thin-film PVs.
The Technology Gap
The current competitive environment between large-scale CSP and PVs appears to be as much about crunching the numbers as it is about differences in the technology.
The cost and length of time needed for building CSP plants are greater than large-scale PV facilities. And building large-scale PV generating stations require virtually no moving parts, except maybe tracking devices. CSP uses a field of mirrors to concentrate sunlight onto thermal receivers mounted atop towers. The captured sunlight heats a liquid pumped into the tower to produce steam that powers a traditional turbine generator. Each of those separate components require a wide variety of construction and ongoing maintenance expertise.
Because governments are pouring cash into PV research,PV technology breakthroughs in solar panel manufacturing and efficiency have made them more accessible and affordable. Large-scale PV power plants are also installed faster and last longer than CSP plants while being virtually maintenance free.
Current CSP Successes
The overall health of the U.S. utility-scale CSP solar market seems intact for now, with several CSP projects that have already secured financing and are now beginning construction.
IvanpahProject: BrightSource Energy is developing the Ivanpah Solar Electric Generating Station, a 392-MW CSP facility in California that will be the largest solar thermal project in the world when completed in mid-2013. The Ivanpah project, comprised of three separate plants to be built in phases, will also nearly double the amount of commercial solar thermal energy now generated in the United States and will be the first large-scale CSP plant to be built in California in 20 years.
The Ivanpah project received a $1.6 billion conditional DOE loan guarantee and the power generated will be sold under multiple 20-25 year PPAs to Southern California Edison, and Pacific Gas & Electric Co.NRG is investing up to $300 million and Google has also made a $168 million commitment.
NRG also owns the first commercial-scale PV facility in California, a 21-MW facility also located in Blythe, California. The solar array consists of approximately 350,000, 2-foot-by-4-foot PV panels utilizes thin film technology provided by First Solar. Power from this facility is also sold to Southern California Edison under a long-term PPA.
Genesis Solar Project: On August 29, 2011, Genesis Solar LLC, a unit of NextEra Energy Resources LLC, announced it had closed on $935 million of financing for their planned 250 MW Genesis CSP project in the California desert. The financing includes $702 million in project bonds, $150 million in a project term loans and an $83 million project letter of credit. The U.S. DOE announced final approval of an $852 million loan guarantee for the project in June 2011, a guarantee that was around $170 million more than was initially put forward.
The 250 MW Genesis Project will use rows of parabolic mirrors to focus sunlight on collector tubes to carry heated oil to a boiler, which sends steam to a turbine generator. The power generated from the project will be sold to Pacific Gas & Electric Company through a PPA.
Future of the CSP Market
The battle between PV and CSP utility-scale projects are playing out in California’s desert, a focal point for solar power projects since the state has a mandated goal for utilities to produce 33 percent of their power from renewable energy by 2020. Of the over 13,000 megawatts of utility solar projects with signed PPAs, half are CSP and half are PV. But with PV prices continuing to fall, the question is whether Solar Millennium’s switch is really the beginning of the end for CSP.
CSP plants coming online in the next few years are expected to help bring down the. Industry research forecasts CSP project costs will decline 3 percent to 7 percent each year in the period 2010 to 2020. However, PV costs will also continue their own cost declines, with PVs expected to maintain a cost advantage for both a cost-per-watt and cost-per-kWh through 2020.
But CSP technology is also diversifying. While over 95 percent of CSP in operation uses the parabolic trough design, utility-scale projects with power towers, dish engines and compact linear Fresnel reflectors (CLFR) are all in the works.
And CSP has another advantage: energy storage.
The storage capability of CSP makes it a favored technology by utilities and grid managers. CSP developers, like BrightSource and SolarReserve,can put tanks of molten salt at their CSP plants to save heat for nighttime operation, something PV facilities can't do. Instead, PV plants need batteries to store power, which is currently expensive. But U.S. utilities have not been enthused about molten salt energy storage and have been reluctant to pay for it. In fact, in California there is such a large load that whether a solar power project has storage or not doesn’t make a difference to the utilities.
Industry forecasts put CSP market growth at $3 billion in 2011 to over $10 billion by 2013. 2011 installations are slated to reach 472 MW, while 2013 is forecasted to exceed 2,000 megawatts. But after 2013, the optimism of these forecasts drops off due to the long-term threat posed by increasing PV breakthroughs and the fact that installed cost reductions for PVs continues faster than for CSP.