At the CPUC site that lists the 110 big contracts the three California utilities have signed with solar developers, I noticed that SolarReserve contracts – and Abengoa’s – were priced "above the MPR" but BrightSource is below.
MPR is the Market Price Referent, sort of an amalgamated price that reflects all the different types of generation; sort of a blended average rate (of natural gas in California, plus, presumably, nuclear, wind, geo, hydro and solar). New contracts must be (on average) at or below that price to avoid costly electricity contracts.
So I talked with Tom Georgis, the Senior Vice President of SolarReserve – to see if the higher price allowed by the CPUC for the SolarReserve contracts was because there is an added value in its inherent storage as well, since it includes molten salt storage – meaning the potential for solar night and day.
Are the SolarReserve contracts listed by the CPUC over MPR because of the value of the storage that you include?
Well, yeah. We internally have been looking at the value of storage but there are several independent groups that are looking at the value of storage, looking at quantifying the value.
The benefits of storage are, we don’t require augmentation from natural gas power plants and so late afternoon when PV is dropping off, and direct steam and trough are dropping off – in the evening hours, you’re going to have to fire up natural gas facilities to augment and supplement those intermittent resources.
Whereas with Solar Reserve technology we don’t require any supplemental from fossil fuels, either within the facility or from other fossil fuel generation assets.
What is that value per kilowatt hour?
The current research there is being lead by NREL; the National Renewable Energy Laboratory. They’re estimating that the value of storage (depending on the cost of the alternative is – so where the price of natural gas and where the PV panel price is) can be anywhere from 1.6 cents to up to 4 cents a kilowatt hour.
So certainly a lot more work needs to be done on quantifying that. It’s also geographical; so California has numerous stakeholder processes that are ongoing that are looking at the cost of intermittency projects without storage like Abengoa and Brightsource and PV – versus projects that have an inner storage, such as ours. The only kind of metric that we really have right now, that’s public, is that NREL number in terms of quantifying the value of storage.
Didn’t BrightSource also add storage last year?
Yes, they announced that they have but I don’t believe… well the Ivanpah projects don’t have storage, those are just direct steam. I think they are attempting to reduce their price by adding storage to their PPAs that are being amended and going through the CPUC process right now.
So that has the effect of reducing their price? – or is it just more bang for the same buck?
I don’t know their economics and how they are looking at it, but my presumption is that yes, they’ve reduced their price, but I can’t confirm that but I think that’s what they’ve done. So, I don’t know if that’s around having storage, I think from the press release and what they’ve intimated, that by adding storage they’re able to increase their output, therefore reduce their price.
But storage costs money to put in, though? Isn’t that why yours and Abengoa’s were above MPR?
It does, (but actually Abengoa does not have storage on their California project. Their California project is just trough. Their Arizona project has storage but not their California project).
But in our case you know, yes, it does cost more. Solar reserve does PV as well, so we understand the price point: where PV projects are, and where our solar thermal with storage is, in the pricing range – but we think its a premium product, and deserves a higher price than an intermittent resource, because we can operate like a conventional power plant.
We can operate when it’s cloudy; we can operate at night. We can deliver very valuable electrons during the peak periods. And certainly the California utilities have Time of Day pricing and so we can obviously take advantage of that by delivering the megawatt hours when they need it most.