CSP Today: A recurring question from our audience related to the relationship between LCOE (levelized cost of energy) and installation cost / solar resources and technologies – is there a direct correlation?
Bob Stojanovic: This is not a question that can be answered directly. First cost or installation cost has a great impact on LCOE, however LCOE incorporates initial costs, development cost, as well as all O&M costs and incentives in place. Solar resources come into play when considering the Power Purchase Agreement terms and conditions, and the agreed upon price in the PPA, time of use pricing or fixed. It is clear that storage for example lowers the LCOE for a CSP plant if there is a time of use/generation incentive in place, however too much storage, will drive the LCOE down. The local solar resource will have an impact on how much storage is needed etc.
CSP Today: A lot of our discussion during this month’s webinar revolved around CSP’s potential efficiency as a combined cycle being much greater than a simple cycle CSP plant… Would that not result in lower water consumption for CCPP assuming both CSP and CCPP were wet or dry-cooled?
Bob Stojanovic: In terms of pure thermodynamics this is true. The primary source of heat in combined cycle is the combustion of some fuel (coal, gas, etc), the exhaust of that combustion process is the secondary source of heat for the secondary generator. Gas power combined cycle plants are roughly 60% efficient, while a modern CSP solar plant is 38% efficient.
The pure physics of efficiency alone is not necessarily the end game of the power or any industry for that matter. For example the modern internal combustion engine is only 18 to 20%, however due to the low cost of fossil fuels they are much less expensive to operate than an electric vehicle whose energy conversion efficiency from the battery to the motor drive shaft is closer to 90%. This line of reasoning does not try to incorporate the costs of infrastructure to deliver the gas to the car, or the electricity to the batteries. If efficiency was all that mattered we would all be driving electric vehicles because they are far more efficient than the internal combustion engine. Currently a reasonably priced new gas driven vehicle is $20,000 US, and the same electric vehicle is $40,000 without any subsidies or incentives. The long term cost of operation over the lifetime will determine which product is selected.
What we need to consider are socio-economic factors that impact the cost of the power produced. This is why the industry tries to focus on LCOE. Methane based combined cycle plants are arguably the cleanest source of fossil fuel based electricity today. You will likely see a large increase in construction of methane based CC plants in the United States over the next 20 years for a number of socio-economic reasons. Coal is still the cheapest power available, however the environmental negative attributes that are now widely associated with coal has changed the public perception of the industry and is directly impacting its future. In general coal plants will probably shut down over time and be replaced by gas CC plants, especially as the cost of methane continues to decline due to hydraulic fracturing of shale deposits across the USA
The point of solar CSP is to create renewable power plant whose economics is not tied to a fossil based fuel source as the primary source of heat. By decoupling the cost of the fuel (sunlight) from a market manipulated commodity such as gas or coal, one is much more capable of accurately forecasting the LCOE of the plant over an extended period such as 20 or 30 years, a common term for a modern Power Purchase Agreement. Methane was a very volatile commodity in 2000, and 2001, many companies were reselling their methane contracts on the spot market to take advantage of the market price. Certain industries shuttered the businesses and resold their gas contracts, because it was more profitable to sell their gas allocation then to produce aluminium.
CSP Today: During the webinar, much of the discussion around bankability for CSP focused on storage… How much of a track record and experience do we have in molten salt storage?
Bob Stojanovic: Storage is the missing link in modern CSP. Modern salt based storage solutions are in the midst of being deployed and their success can make or break the CSP industry in the near term. There are other technologies that are currently being researched, that may be easier to handle than salt. The corrosive nature of salt makes the safe handling of it very expensive. The materials that are used to contain the salt are the primary cost drivers: high grade, corrosion resistant metal alloys. We have just recently commissioned a plant with storage, and it is much too early to make any comments on the process. To answer your question directly storage is the one component of the technology where we don’t have a long track record of operating successfully when we specifically talk about molten salt.
Bob was part of the ‘Myth busting webinar’ held in the run up to CSP Today USA (taking place in Las Vegas, June 27-28) – to download the full podcast and hear from all 5 speakers, follow this link: