Positive signs from the core markets for concentrated solar thermal energy power plants

All of the Solar Millennium Group’s core Concentrating Solar Power markets showed positive signs: Spain has provided for legal security in the issue of feed-in tariffs for pre-registered projects; the US extended its Renewable Energy Grants, for investments in solar-thermal power plants by one year; and, in the MENA region (Middle East and North Africa), Solar Millennium managed to pre-qualify to participate in the bid for a 125 MW solar power plant in Morocco.

In Spain, Real Decreto 1614/2010, which took effect in December, governs the details of the Spanish feed-in tariffs, thus providing for investment security and regulatory stability. These regulations adapt earlier royal decrees to the changed situation on the Spanish market.

As such, it was determined that a maximum of 4,000 full-load hours will be remunerated for a parabolic trough power plant with 9-hour thermal storage capacity. The Ibersol power plant developed by Solar Millennium, for instance, has storage for roughly 8 hours and is expected to reach 3,400 full-load hours per year on average, meaning the regulations allow for a sufficiently large buffer in particularly sunny years.

Another regulation refers to the first year of power plant operation: a regulated fixed tariff applies for this period. Starting from the second year of operation, power plant operators can chose between a fixed and a variable tariff that consists of the pool market price for electricity plus a premium. The Decree furthermore filled a legal loophole, meaning that retroactive changes for pre-registered power plants, such as Andasol 3 and Ibersol, will be excluded in the future. The Spanish Concentrated Solar Power (CSP) Industry Association Protermosolar also agrees that this Decree will finally put an end to the past year’s discussions of the feed-in tariffs.

Also in December US President Barack Obama signed a bill that prolongs Renewable Cash Grant by another year. This subsidy scheme provides for a direct grant of up to 30% of investment costs instead of subsequent tax relief for investments in alternative energies such as solar-thermal power plants.

Originally, this subsidy was only meant to apply to power plant projects that commenced construction before the end of 2010. The Blythe project developed by Solar Millennium would have met this condition in any case, since preparatory construction works have already started. However, the extension of this subsidy scheme will now improve the economic environment for additional solar-thermal power plant projects. If construction commences before the end of 2011, these could likewise qualify for the grant.

In the scope of its solar energy promotion project, Morocco has tendered a solar-thermal power plant with a capacity of 125 MW. 19 consortia had applied for the opportunity to build the power plant, but only four were pre-qualified. Solar Millennium AG is in one of these consortia, together with Evonik Steag GmbH and Orascom Construction Industries, the Egyptian partner with whom the company already carried out the Egyptian hybrid power plant in Kuraymat. In a next step, the consortium will submit a concrete proposal for the power plant to be built on the edge of the High Atlas Mountains at the Ouazarzate location.

International studies have also announced the continuous rise of solar-thermal power plants. For example, the current study by the Swiss bank Sarasin forecasts installed output worth 32 gigawatts (GW) in 2020. The Solar Thermal Electricity Study 2025 (by AT Kearney / ESTELA) even assumes that installed global output could amount to 100 gigawatts in the ideal case. Both studies are confident that the power generation costs of solar-thermal power plants will drop by some 30 to 50 percent in the same period. Levelized costs of electricity would thus reach € 0.08 to 0.10 per kWh.

Solar thermal power plants are forecast to undergo a real boom in the coming years and decades. The sunny regions of Asia, the USA, and North Africa provide an almost inexhaustible space potential. Experts have long been in agreement that solar thermal technology will enable the replacement of conventional, fossil fuelled, or nuclear power plants in the long term. Recent studies by Greenpeace and A.T. Kearney confirm the increasing competitiveness.

The German Aerospace Centre (DLR) has produced two studies documenting its forecasts for the growth of solar thermal power plants. In its Mediterranean Study the DLR predicts strong growth for solar thermal power plants in the Mediterranean area. According to this study, solar thermal power plants in the Mediterranean region will be generating twice as much electricity by 2050 as wind energy, photovoltaic, biomass, and geothermal power combined.

In its Solar Power Association Study, the DLR advocates electricity imports from North Africa to Central Europe via high voltage direct current which enables the transporting of electricity over large distances with only minimal transportation losses. By 2050 about 15% of Europe’s electricity demand could be met through the import of solar energy from North Africa and the Middle East.

The Swiss private banking institution Sarasin analyzes the market for photovoltaic, solar heat, and solar thermal power plants annually in its Solar Studies. The studies focus on short time periods only and predict strong short term growth in installed solar thermal power plant capacity.

The Climate Protection Study from the German Physical Society places particular emphasis on the reduction of CO2 emissions through the construction of solar thermal power plants and importing electricity from the Mediterranean region to Central Europe.

Solarenergie 2010

The sustainability study “Solar Industry – Entering New Dimensions” by the Swiss private bank Sarasin (author: Dr. Matthias Fawer) compares and assesses the prospects of technologies, markets and industries in the field of solar energy respective of the three areas of application of photovoltaics (PV), solar-thermal energy and solar-thermal power plants (CSP).

According to the study, solar-thermal power plants (CSP) generated another 1.35 GW of new central electricity this year and last. Last year eight power plants with an overall capacity of 350 MW went into operation. It should be noted that solar-thermal power can offer higher “electricity quality” for utilities due to its storage capacity and dispatchability as well as the possibility for use in hybrid power plants. Sarasin expects a realized total capacity for solar thermal power plants of 32,000 MW by 2020.

Solar Thermal Electricity 2025

Solar-thermal electricity (STE for short) is competitive. Within the next ten years, there will be an opportunity to generate this economically and free of subsidies. In doing so, it will compete with fossil fuels. Moreover, STE represents an increasingly more attractive addition to the renewable energy portfolio, of which it has a relevant share. The thermal solar capacity installed worldwide will ideally reach 100 gigawatts (GW) by 2025. This could create up to 130,000 jobs; 45,000 thereof would be long-term in the fields of operation and maintenance. The central focus of the study is the development of an extensive industry roadmap aimed at estimating the potential of solar-thermal electricity with regard to the costs and technological development. The study also shows that the cost of generating STE electricity can be reduced by up to 30 percent by 2015 and even by more than 50 percent by 2025. As such, solar-thermal electricity can contribute significantly to reaching certain energy and environmental targets, for example the EU’s 20-20-20 goal.

World Energy Outlook 2010

The 2010 edition of the World Energy Outlook (WEO) was released in November and it provides updated projections of energy demand, production, trade and investment to 2035. According to the study (New Policies Scenario), renewables-based generation triples between 2008 and 2035 and the share of renewables in global electricity generation increases from 19% in 2008 to almost one-thrid (catching up with coal).

Greenpeace Study 2009

The Greenpeace study shows that the energy potential of solar-thermal power plants is enormous. Solar power plants with an overall capacity of 1,500 gigawatts could be built by 2050. These could generate 7,800 terawatt-hours of clean electricity annually – that’s three times more power than all nuclear power plants in the world combined. Because the solar-thermal power plants would replace coal-burning power plants above all, the annual carbon dioxide savings could rise to 4.7 billion tons by 2050.

Concentrating Solar Power for the Mediterranean Region (MED-CSP)

The MED-CSP study makes the assumption that the majority of renewable energy sources will be cheaper than fossil fuels by 2025. Renewable energy sources will largely replace fossil fuels in the Mediterranean region by the middle of this century, while electricity demand in the countries analyzed will multiply. Even though the study favors a general mix of renewable energy, it awards solar thermal power plant technology a leading role. According to the DLR study, the installed capacity of solar thermal power plants will be as great as that of wind, photovoltaic, biomass, and geothermic power plants combined by 2050.

Trans-Mediterranean Interconnection for Concentrating Solar Power (Trans-CSP)

In this comprehensive study the DLR has analyzed the future power requirements and the renewable energy potential of over 30 European countries. One area of focus is the possibility of importing solar electricity from sunny countries in North Africa and the Middle East (the MENA region) to less sunny regions such as Germany, for example. The DLR is of the opinion that Europe will be able to obtain 80% of its electricity from renewable energy sources by 2050, reducing its carbon dioxide emissions caused by electricity generation by 70%. Where relevant, the DLR advocates solar power imports from solar thermal power plants from 2020 onwards. The use of modern high voltage direct current cables would enable the transportation of electricity from the MENA region with transport losses of only 10 – 15%: "By 2050 20 cables from MENA will be able to meet (…) about 15% of European electricity supplies using solar energy."

Climate Protection and Energy Supply in Germany 1990 – 2020

The goal of the study is an overall assessment of climate protection and energy supplies in Germany. The study also aims to provide a guideline for the solution of the climate problem, with Germany playing a key role. With regard to solar thermal power plants, the DPG comes to the following conclusion: "From a technical and scientific perspective there can be no doubt that solar thermal power plants in the south represent one of the best options for providing the necessary quantities of CO2-free electricity." The study also emphasizes the fact that, for Germany, the import of solar thermal electricity from countries to the south is an important, cost-effective option.