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Large-scale solar is about to rise on the energy scene with unprecedented impact. The revolution in small-scale solar is well-known, with installation of small solar systems in California, New Jersey, Germany, Japan and Spain setting records each year. But the time for 5 megawatt and over systems seems to have arrived.
I recently attended the first annual Concentrated Solar Power Summit in San Francisco. Attendance was double what was expected, with over 300 business, academic, non-profit and governmental representatives present. The summit began on a rocky note, with discussion focusing on the fact that the federal energy bill passed in December did not include an extension of the 30 percent investment tax credit, considered crucial for new large-scale solar projects to be built. But the mood lightened up throughout the two days, with company after company presenting its technology and utility company, non-profit, and government voices expressing optimism for the various solar technologies presented.
Large-scale solar (which I define as any solar technology used in facilities of 5 MW or larger) is a better load-following resource than wind, today’s more cost-effective renewable energy technology. Wind power is competitive today with fossil fuel power generation, but whereas wind power often peaks when demand is far from its peak (depending on the location of the wind turbines, with inland turbines being more likely to peak at night and coastal turbines more likely to peak in the afternoon), solar facilities peak in early to late-afternoon. This is much closer to the time of peak demand, which typically occurs in the late afternoon or early evening.
To sweeten the solar deal even further, some large-scale solar technologies can be “firmed up” with storage systems like molten salt thermal storage. This technology was developed at Solar Two, the “power tower” system built in the 1990s near Barstow, which achieved multi-day continuous operations with its molten salt thermal storage.
Solar Reserve, one of the most exciting new companies to present at the Summit, is the direct descendant of the experience with Solar Two. Solar Reserve is a joint venture with Rocketdyne and United Technologies, and has the engineer who ran the Solar Two project for a decade on its team. This company claims that it can achieve cost parity with natural gas power plants today – with the investment tax credit. It also claims that it is more cost-effective to include the more expensive energy storage systems with their facilities because these facilities can then sell power during peak pricing, while also becoming reliable peak power providers.
Claims Must be Backed Up
We must take all such claims with a grain of salt – until they are substantiated with “steel in the ground” – but the general buzz at the Summit was truly exciting. Most companies that discussed price focused on the target contract price of 15 cents per kilowatt-hour, as the price at which companies could turn a decent profit and also ensure construction occurs. The price for electricity from new baseload natural gas plants is about 9 cents per kilowatt-hour, and rises to 12 to 48 cents per kilowatt-hour for peak power, depending on what report you read.
Many utilities have signed power purchase agreements with solar companies, including two massive contracts with the concentrating dish manufacturer, Sterling Power, which was notably absent from the Summit. Sterling has contracts of 850 and 900 MW, respectively, with Southern California Edison and San Diego Gas & Electric. More recently, and perhaps more realistically, Solel recently received signed a contract with PG&E for 553 MW of trough-based concentrating solar power (the most prevalent technology today, with facilities in California, Nevada and Spain). Also quite promising is the 177 MW project planned by Ausra for a site in San Luis Obispo County. Ausra has a contract with PG&E for this power and has also announced it plans to construct a manufacturing facility in Las Vegas, vertically integrating its operations.
CalRENEW-1, a 5 MW solar photovoltaics project, just received approval from the California Public Utilities Commission (CPUC) to sell power to PG&E. This is the first solar PV project contracted for under the state’s “renewable portfolio standard.” With the RPS system somewhat re-structured this year by SB 1036, the CPUC now has authority to approve contracts even if they come in over the “market price referent,” which is the proxy cost of power from new natural gas plants. The “word on the street” is that the cost of PV is coming down fast, such that it may now be able to compete favorably with concentrating solar power technologies and may even be competitive with new natural gas-fired electricity. If true, this will be truly revolutionary, though it is hard to envision 1,000 MW solar PV farms spread throughout the desert, considering the vast ramp-up in solar PV production that would be required for such projects.
However, there are literally 50,000 MW of large-scale solar projects proposed in Southern California, consisting of trough, dish and power tower concentrating solar power projects as well as some truly massive PV projects. The entire installed capacity for all of California is less than 70,000 MW, so the magnitude of new solar projects proposed is incredible.
Many of these projects may, however, turn out to be “vaporware” – more aspiration than reality. But even if 10 percent or less of these projects is built, 5,000 MW of large solar facilities will more than achieve California’s ambitious renewable energy goals, and will, very likely be a cost-saver for ratepayers in the long-term. This is the case because even if such facilities cost more up-front, costs can be locked in over the life of the contract because there are no fuel costs. Construction and amortization costs are known at the start of the contract, so if ratepayers are paying 15 cents per kilowatt-hour for the life of the contract, such prices will very likely be less than what ratepayers will pay for electricity from new natural gas plants because the cost of natural gas has risen precipitously and is projected to continue to rise at a rapid rate.
So will we see this revolution go beyond the ranks of the attendees at the Summit in San Francisco? The general consensus was that the investment tax credit needs to be renewed – and not for just one year. The Senate stimulus package recently proposed includes a 1-year extension, so let’s hope this is enough to continue progress on the many projects already proposed. Taxpayers and ratepayers will almost certainly benefit over the coming decades if Congress and our president are wise enough to see the light.
For information on purchasing reprints of this article, contact sales. Copyright 2013 CyberTech, Inc.
Current drastically increasing fuel prices and power shortages for summer daytime peaking power in southern Europe suggest that Concentrated Solar Power (CSP) systems will find their prime market segment in summer season on peaks. Here, power generation cost differences, compared to typically used gas turbine operation, are smallest. Any renewable energy supply strategy aiming to take over the major part of electricity supply in the decades to come has to consider CSP as this technology option is capable of contributing with reliable, dispatchable power, specifically for daytime-demand peaks. Moreover, southern Europe is not capable of generating all of its required reliable peaking power alone through its own renewable resources. Consequently, energy cooperation with its neighboring countries is mandatory and has already become day-by-day practice. There are gas and power interconnections between Italy, Tunisia and Algeria, as well as between Morocco and Spain. As these southern neighbors also have a much greater solar resource, it is logical to intensify this co-operation for CSP. In addition to that Integrated Solar Combined Cycle power Plants (ISCCP) with their capability of thermal energy storage and of solar/fossil hybrid operation can provide firm capacity and thus are a key element for grid stabilization and power security in such a well-balanced electricity mix. This has led to a rather rapid development of ISCCP to achieve good performance at all modes of operations and to increase the shear of solar power generation, and subsequently an increase in the thermal and environmental effectiveness of the plant. From this standpoint the recent study  was undertaken to include a proposed design for increasing the specific output at sunny periods, and off design performance at cloudy periods and at night, of the Integrated Gas turbine Solar Power Plant (IGSPP). The desired effect of integrating a Gas Turbine Unit (GTU) with a Solar parabolic trough Power Plant (SPP) is not just to add the power produced by the GTU to that produced by the SPP but indeed to augment the latter. The proposed design of IGSPP offers a number of potential advantages over conventional SPP and represents an innovative way to reduce cost and improve the overall solar-to-electric efficiency. Also, the IGSPP will allow for a flexible transition from the present Combined Cycle Power Plants based on fossil fuels to a future plants based to a large extend on solar energy . Being one of the most effective technologies in terms of technical, economic and environmental sustainability [1,2]. For the case study (IGSPP with annual share of solar thermal power generation 42.2 %) the economical effect amount 187.9 ton fuel / year for each MW design thermal energy of parabolic solar collector array . The corresponding decrease in exhaust gases emission (nitrogen oxides (NOx) 294 kg/MW.year, carbon dioxides (CO2) 679.9 ton/MW.year). Moreover, the GTU output power during solar operation periods becomes a lower fraction of the IGSPP output (0.37 : 0.5) with parallel increase in the power output of steam turbine unit. Beside that, the increase in the output of PSCA and, subsequently, in solar power generation, will also useful to offset the normal reduction in performance experienced by GTU during the summer season. It is also important to note that, according to the World Bank, the expected evolution of total electricity costs is that they will drop to 8 to 7 € cents/kW.h in the medium term (100 MWe Rankine-cycle plant or 100 Mwe ISCCP, both with storage) and to 5 € cents/kW.h in the long term (200 MWe Rankine-cycle plant with storage) for high insolation sites with an annual direct normal solar radiation of more than 2800 kW.h/m2.
 Hussain Alrobaei,2006, Integrated Gas Turbine Solar Power Plant/ The Energy Central Network/ energycentral.com/centers/knowledge/whitepapers.
 Hussain Alrobaei , 2007, Novel Integrated Gas Turbine Solar Cogeneration Power Plant/DEC, Halkidiki, Greece ,22–25 April 2007.
Len Gould 4.1.08
Concentrating Solar is one of the two generation technologies with near-term potential for significant unit cost reduction (the other is PV) and should logically be supported at maximum in every form. Whichever country does this could wind up in a situation similar to that of Denmark regarding wind generators, eg. a virtual monopoly.
Michael Keller 4.7.08
At the risk of raining on the parade, I suspect that the real driving forces behind solar power are (1) government subsidies (2) government requiring using renewable energy and (3) closing out all other options like coal and nuclear power. Left holding the bag, as usual, is the consumer. I don’t doubt there are applications for solar, particularly in the Southwest. However, expecting solar generation to meet base load generation may be a "bridge-too-far".
Before trotting out World Bank forecasts, might not be a bad idea to check their track record on predictions – looks kind of dismal to me.
I’m also skeptical about “wind” being competitive with fossil generation. Perhaps in California, but here in Kansas it’s not a contest. Coal wins by a landslide.
Todd McKissick 4.8.08
Michael, At the risk of attracting a confrontation from this forum, I would suggest that you have got it exactly backwards. Government subsidies are only directing solar towards Germany and Japan and California, as opposed to evenly where the economics warrants it. However, the real big subsidies go to the fossil fuel suppliers to keep them from rising higher than solar and getting rightfully mothballed. One only needs to look into the technical and economic viability of carbon sequestration to see what a joke that is. Government mandates and RPSs do not take into account which resource is most economic in a certain region so they basically prop up one technology over another that may better be put to use there. I also don't see governments at any level closing out any fossil fuels. They make appearances of doing so, but in reality, they rarely put a dent in fossil use.
Regarding the scale that solar could be put into place, I would suggest you might want to check into it's record. Stearn & Wheeler (I think) reported to the DOE as early as 1997 that CSP was down to about 16 cents/kwh with much room to further drop. Funny thing is that all that data was removed before the DOE passed the report on to congress under Cheney. Now, eleven years later, we're hearing the 'breaking news' that CSP can be down to 15 cents with room to drop. If you check out the middle east or european news, you'll find that CSP is taking off in a big way. Over 4 years ago, I passed on to my senator, a white paper on a single project to supply 60% of Europe's power from North African CSP plants at a price of 5 cents over 20 years. That includes load balancing energy storage to cover other renewables' variability. Since then, I've seen two similar competing projects.
Right now, you're only seeing the profit taking on the low hanging fruit. When it does start to take off though, you can bet that with highly repetitive manufacturing and labor as it's major costs, it's prices will drop rapidly. That price and to a lesser extent, it's overall efficiency, is the only thing stopping it from being used in less sun areas like Kansas. I see the bottom end around 3 kwh/m^2/day of sun. Looking at an insolation map, that covers way up into most of Canada.
Bob Amorosi 4.8.08
3kwh/m^2/day of sun would be fantastic. I can envision just half of my residence's rooftop here in Ontario equipped with a small-scale CSP. Just 20 to 30 m^2 would satisfy my residential energy needs easily, with lots to spare on sunny summer days. Combine this technology with some sort of decent future storage capability (in my basement), and I might even be able to divorce myself from the grid altogether all year long.
You know, if this technology were available commercially, even if it were many thousands of dollars, it would be worth pitching to new home builders as an option. When someone goes to buy a new home and spends in the order of 500 thousand on it, even adding another 10% to the mortgage to pay for a CSP system would be attractive if meant no utility bills to the home owner for the life of their mortgage.
Todd McKissick 4.8.08
Bob, That's what I'm counting on.
To add to your comment, keep in mind that in the winter much of your energy needs shift a large balance from electricity to domestic heat, just like the output of CSP systems running in colder weather. Better news yet is that emergency 'backup' energy could come from natural gas which can be stored as long as you want with no 'time cost'. That means you only really need a few days' worth of storage.
Michael Keller 4.9.08
Todd, I'm not sure what planet you are on. How, specifically, is the government subsidizing fossil power? I have seen no evidence of the bags of money showing up at the local utility from mysterious government sources.
Solar proponents need to keep economics in mind. I can put a $35,000 solar panel installation on the roof, but It will take decades to payback. Poor investment.
Bob Amorosi 4.9.08
Mike: agreed most consumers would not want an investment payback that takes decades under normal circumstances, referring to energy efficiency upgrades. But if an investment has the potential to eliminate a consumer's utility bills altogether by becoming divorced from the grid, I'd bet many consumers would swallow long payback periods because consumers loathe being dependent on monthly bills, and prefer to spend their money on discretionary things i.e. many would relish becoming independent of the grid even if they had to go to extreme financial measures to do it.
I am not an expert on solar but I assume a prohibitive amount of battery storage would be needed for a solar PV panel system to enable a residence to become independent from the grid. Concentrated Solar however sounds like it has much more potential.
Here in Ontario our provincial government tries to encourage private consumers to buy solar PV systems by paying a premium to the consumer for selling excess power back out onto the grid on sunny days rather than trying to store it. On cloudy days these consumers then simply revert back to consuming from the grid at the going utility rate.
Jeffrey Kelsen 4.9.08
To Michael Keller,
DUH- they're all subsidized. Where do you think the grid came from, ever heard of TVA? Ever read the history of GE, or Standard Oil? Get with it dude, so you think the coal and the nukes aren't subsidized? Come on - the culprit isn't the subsidy, the culprit is the demand.
Todd McKissick 4.9.08
Michael, You really need to get out more often. Take a look at who is benefitting and how from all the energy legislation being passed these days. How long have the CAFE standards been stuck at an archaic low MPG number? Who bought off those 'nay' votes? How can you not see the oligopoly of big energy in every sector and the hundreds of millions they spend on lobbying? Why are they being put in charge of deciding which alternatives to support? Who do the politicians go to for advice on how to regulate net metering laws? Oh, and let's take a vote on who thinks that $120B in free oil royalties qualifies as 'bags of money'.
Let me ask you a question. If you can come to the conclusion that PV is a poor business deal, then why is it the only solar being "researched" and subsidized? As you seem to have missed in the article above, CSP is usually not using expensive solar cells but rather concentrating the sun's heat to run traditional turbines. (If they are using PV now or in the next 3-5 years, I can guarantee you that some politician is involved!) The energy companies and their 'expert' analysts have got everyone convinced that CSP doesn't exist and we need to support them spending our money so they can fix PV (or wind). Doesn't that make you mad?
I'm guessing your parroted '20 year payback' line ultimately came from someone not wanting renewables to succeed. First off, let's look at that statement differently. Try this one instead: "Solar is paid off, free and clear, in 20 years with no further repetitive costs at all." Who wouldn't want a set, non-volitile payment for 20 years and zero costs (not counting repair) beyond that? Secondly, many non-PV technologies have much less payback times. But you're certainly not going to hear about the ones under a decade from KCP&L.
Todd McKissick 4.9.08
Jeffrey, Agreed on the bulk of subsidies. However, I don't see how demand itself is the problem. Demand drives the economy and it's growth and in and of itself does not cause any problems. Using environmentally damaging sources to satisfy that demand is the only negative here. But if you only listen to those spouting that there's too much demand for the clean technologies to cover, aka they're only niche suppliers, then you would naturally buy into the mantra that we have to pollute to make that much power.
A common example given is of an aluminum foundry. I've heard almost everywhere that even if you could provide power to most homes and businesses by solar, you'd never get to the level where you could melt enough aluminum. There just isn't enough power. Luckily, someone forgot to tell the guys doing it without fuel costs. I'll keep looking for a link but with the new computer, my stuff's in turmoil right now. Here's a good
A quick google search fiinds the following article regarding $6 billion in new subsidies to oil and gas industry in the 2005 federal energy bill: : OIL & GAS SUBSIDIES: $6 BILLION Section 1329 Allows “geological and geophysical” costs associated with oil exploration to be written off faster than present law, costing taxpayers over $1.266 billion from 2007-2015. The provision claims to raise $292 million from 2005-06, and cost taxpayers $1.266 billion from 2007-2015. It originated in the House (there was no such provision in the original Senate bill). Record-high oil prices should provide a sufficient incentive for oil companies like ExxonMobil to drill for more oil without this huge new tax break. Section 1323 Allows owners of oil refineries to expense 50% of the costs of equipment used to increase the refinery’s capacity by at least 5%, costing taxpayers $842 million from 2006-11 (the estimate claims the provision will actually raise $436 million from 2012-15). This provision was added by the Senate. Record high prices for oil and gasoline, and record profits by refiners like ExxonMobil and Valero should provide all the incentive needed to expand refinery capacity without this huge tax break. Sections 1325-6 This tax break allows natural gas companies to save $1.035 billion by depreciating their property at a much faster rate. This tax break makes no economic sense, as natural gas prices remain at record high levels, and these high prices—not tax breaks—should be all the incentive the industry needs to invest in gathering and distribution lines. Section 342 Allows oil companies drilling on public land to pay taxpayers in oil rather than in cash. Sections 344-345 Waives royalty payments for drilling for some natural gas in the Gulf of Mexico. Section 346 Waives royalty payments for drilling in offshore Alaska. Sections 353-4 Waives royalty payments for gas hydrate extraction on the Outer Continental Shelf and public land in Alaska. Section 383 Allows oil companies drilling in federal land off the coast of a particular state to pay the state 44 cents of every dollar it would have paid to the federal government for the privilege of drilling on federal land. The royalty-in-kind provisions in this section allow corporations drilling for oil on public land to forgo paying cash royalties to taxpayers. Instead, companies provide an amount of the oil as an in-kind contribution to the federal government. Since federal land supplies one-third of the oil and gas produced in the United States, expansion of this program could have a significant impact on the federal treasury. www.citizen.org/cmep/energy_enviro_nuclear/electricity/energybill/2005/articles.cfm?ID=13980 http://www.taxpayer.net/energy/oil-gas.htm
Todd McKissick 4.9.08
Awe, now Bernie. Don't be so hard on those guys. They new wave of green colored commercials has got to have cost them a bunch. Plus, they had to compete with CSP which, if I remember close, got 300 MILLION dollars in '07. ...Even though it was spread between a few perpetual research grants to national labs and some consortiums that included those same energy guys. Since not a single 'garage tech' solution that I know of got even a morsel, I'd say it was their own fault. It's so obvious they didn't spend enough on their legislators.
Thanks for the info.
david austin 4.9.08
He he he. I LMAO when British Petroleum changed their name to "Beyond Petroleum".
Still, the majority of CO2 comes from heating and grid power generation.
I'm surprised nobody has mentioned the recent announcement that PG & E is awarding a 900MW solar tower project to BrightSource (run by the CEO of now-defunct Luz which made all the original solar thermal plants currently in the Mojave).
That's the biggest CSP installation ever announced, and I suspect it's just the beginning. I still think Ausra's frensel mirror arrangement will prove to be cheaper, but time will tell.
I also think this article is too conservative. Long term most of the pundits say we should expect large and highly optimized CSP to provide electricity as cheap as $0.07/MWh within 20 years.
Warren Reynolds 4.9.08
Good summary and perspective. Let me add some details about those 2 large contracts by SES, inc.
In 2005, the Stirling Energy Systems Corporation signed contracts with two California electric power companies. One with Southern California Edison Electric and the other with San Diego Gas & Electric. Nearly half of the San Diego project is completed, i.e. "steel in the ground". The details are : - San Diego Gas & Electric
-300 MWe w/option to 900 MWe
- 12,000 x 25 kWe reflector dish array - 2,700 acres: under construction: 2006-2009
- $0.06/kWhr (contract price to SDG&E)
- So. California Edison Electric
-500 MWe w/option to 850 MWe
- 20,000 X 25 kWe reflector dish array - 4,500 acres: construction to start 2009 with completion by 20012
- $0.06/ kWhr (contract price to PG&E)
The cost for electric power from gas or fossil fuel powered plants will increase over the next 3-5 years while the solar power plant electric costs will stay essentially flat.
Tam Hunt 4.9.08
Interesting report just released by EIA on the issue of subsidies for electricity generation technologies in 2007:
It shows that oil, coal and renewables received the lion's share. The report also notes that the 2005 Energy Policy Act and the 2007 EISA have significant additional subsidies for nuclear and renewables, so even though nuclear subsidies in 2007 were fairly small, they'll be much larger in the coming years b/c of the 2 c/kWh production tax credit provided for the first 6,000 MW of nuclear and other support such as loan guarantees and Price-Anderson risk insurance.
In terms of liquid fuels subsidies, oil companies have long received the oil depletion allowance and also received tax credits for offshore exploration in the 2005 EPAct to the tune of billions of dollars. The controversy in the last six months re Dems in Congress trying to increase subsidies for renewables arose b/c the Dems wanted to take away tax breaks provided to oil companies in 2005 in order to pay for the tax breaks for renewables (which makes a lot of sense).
Tam Hunt 4.9.08
Warren, is that price going to stay? I've heard nothing but skepticism from other industry folks. Also, I've heard that SES has not been able to design dishes that work continuously, so there will likely be hefty replacement costs. Is this not accurate?
Len Gould 4.9.08
Micheal Keller: "I can put a $35,000 solar panel installation on the roof, but It will take decades to payback. Poor investment. " -- even if your estimate is correct (it looks like a PV quote to me), I would refer you to the recent article this site by a very smart accountant who states economic evaluaters need to distinguish between to different types of "Payback". The first, traditional, calculation is where the choices are "Make the investment or keep the money in the bank". In this case, a quite short payback period is usually justified, based on the returns available in alternative uses of the money. HOWEVER, the second, is where the choices are "Make the investment or pay the money to an external supplier". In this case, the logical payback calculation is "does the equipment last even 1 year longer than it takes to pay it off?"
A home energy supply system clearly falls into the second category, and yes, a home solar system WILL last longer than it takes to pay off including interest, so SMART people will be fighting to get them included into their mortgages. (Also applies to commercial and industrial energy-bill-replacement technology. Once they figure this out, CEO's are going to start asking some very embarassing questions to their finance people).
Michael Keller 4.10.08
Which costs less: a. Install $35,000 worth of solar collectors, pay off the debt and pay the utility company for the power needed at night and when solar energy is too small to cover the load.
b. Just pay the local utility for the power you need.
The answer is currently "b".
Obvious complications are government subsidizes as well as "selling" power back to the local utility.
Never-the-less, "b" will remain the answer for the vast majority of home owners well into the future.
If the solar installation is only $1000, then it's a good investment.
As far as subsidizes are concerned, nobody should receive them beyond the research and start-up stage.
Michael Keller 4.10.08
PS I was only considering subsidies that amount to the government sending money to a local utility. For instance, sending money directly to say agri-business (currently hundreds of million $ per year) is a subsidy to my way of thinking.
I suppose, however, avoiding taxes is a subsidy of sorts.
Had not really considered the oil & gas folks and do not have a good handle on that industry. Does the government send them money or are we talking about avoiding taxes?
Mike My mistake.
Len Gould 4.10.08
Micheal: That's not very rigorous financial analysis. Won't make it on this site.
Tam Hunt 4.10.08
Michael, a few comments. Subsidies come in different forms in the US, but the most common form is a tax credit. This is not money sent to companies or individuals. Rather, it's money that the company or individual doesn't need to send to the government b/c of reduced tax liability.
Re small scale solar, you're actually correct in many cases: solar for homeowners generally doesn't make economic sense, in the traditional sense of that phrase. In other words, as Len pointed out, under the traditional analysis, solar PV is not a "good investment" b/c you can make more on your money elsewhere. And this is true even in states like CA and NJ where there are good rebates available (a rebate is actually a sum sent to the homeowner). In states where there is not very good sun or not rebates, it gets even worse.
However, I agree with Len's second type of financial analysis as a legitimate perspective - particularly when we consider that a homeowner can lock in the cost of electricity with solar PV in order to protect against higher utility rates. For example, one our local utilities, So Cal Edison, has announced its intent to double rates over the next five years.
Also, if a homeowner has a very large utility bill in a state where tiered rates are in force, solar PV can make sense b/c it can remove the highest tier or two, which in CA can be as high as 30 c/kWh.
Moreover, solar for businesses does in fact make economic sense from a traditional perspective in states like California and NJ. Businesses have more tax advantages, particularly the lack of a cap on the 30% federal investment tax credit (which is capped at $2k for homeowners) and accelerated depreciation.
But the focus of my article is on large scale solar so none of this analysis is apropos of my article's topic.
Todd McKissick 4.10.08
Michael, Three points to clarify.
Grid shift is when you use electricity from the grid at night and supply it back during the day. Currently, there isn't much incentive around the country for the homeowner but that's destined to change. It'll change because the peak prices will rise in comparison to baseload when natural gas prices rise and with the advent of more nuclear. This change will make the homeowner's sold product more valuable than his purchased product. Perhaps Tam can correct me if I'm wrong, but TOU (time of use) rates in CA are around 9 cents at night and reach 56 cents during the afternoon. The net result is that you only have to make half or less of the power you use in total to have a net zero cost monthly bill. Your mileage may vary.
Adding to that scenerio, the loan for the system will be locked against not only volitility but inflation as well while the utility bills will rise due to inflation and 'crisis mode' volitility. For example, taking out a loan for $35K for 20 years at 8% costs $293 per month. If you offset an average $213/month in bills (depending on what part of the country you're in) at 3% inflation, your balance would be as follows. At 10 years, you'd be $5,394 upside down. At 20 years, you'd be dead even (yeah, that's why I picked that example). At 21 years, you'd be $4726 up and at 30 years, you'd be $54,288 to the good. This isn't even counting on any subsidies.
You seem to be stuck with PV solar as your model of residential renewables. While they are getting better now and have lots more room to continue that, you need to open up a little and review some others. There are many others both now and upcoming that have much better economics.
Michael Keller 4.10.08
Tam Actually, I suspect the underlying economic principles of the small scale "home owner" are relevant.
Is a large scale concentrated solar energy plant a good investment -- today?
Is it a good deal for the consumer -- today?
As your article notes, it is not yet clear what the actual cost to the consumer will be.
Would be an interesting analysis to compare concentrated solar, natural gas, coal and nuclear all on the same basis, say: 15 year note at 8%, Owners Equity at 35%, indirect cost of say 25%, no subsidies for anyone. Natural gas at $10/mmBTU, coal at $1.80/mmBTU, nuclear at $1/mmBTU. Direct capital costs: coal $1700/kW, gas $600/kW, nuclear $3300/kW. We can even add an integrated gasification combined cycle plant if you like.
Figure we want a 12% return on Owner's equity and let's see what the price of power needs to be for our investor (cost to consumer).
If somebody can provide the direct construction cost of a concentrated solar unit and average capacity factor, I can pop out the results in an hour or so.
PS Len , too complicated for you?
Bob Amorosi 4.11.08
These calculations are very hypothetical to start with because there are many assumed variables for interest rate, amortization period, subsidies, etc. Your assumptions for these numbers today can and will change in future, and at any point in time they differ between jurisdictions around North America.
What matters is whether a given source will be in the same ballpark cost relative to the others, and in the case of a privately owned residential power system how much if any it reduces one's energy dependence on utility companies.
Len Gould 4.11.08
Micheal: ha ha. What figure should be included for CO2 / carbon tax / trading? (etc. etc. etc.)
Len Gould 4.11.08
Micheal: Sorry, my immediate reaction was that your question to me was sarcasm but re-reading i believe i should give the benefit of the doubt and simply warn that i'm not the person who should be doing financial calcs here, i spent too much time climbing transmission poles in a misspent youth when i should have been studying finance at university.
"The reference technology to which these assumptions apply is a new 100 MW solar trough system with an oil working fluid transferring heat to a secondary water cooling system that operates a steam turbine. The reference design is assumed to have 6 hours of thermal storage and no natural gas backup, and be located in the Mojave desert."
"The base overnight capital cost for new CSP plants is $3389/kW, prior to applying zonal cost multipliers and financing costs during construction costs (see Table B). This value is based on Black & Veatch 2006 cost assumptions, adjusted for inflation and recent increases in the cost of materials. (See “Financing and Incentives” report.) Reference case variable O&M costs for CSP are $0/MWh and fixed O&M costs are $53.45/kW-year. The reference case capacity factor is 40%, which follows the Black & Veatch 2006 design specifications."
Much other useful data.
Len Gould 4.11.08
I note that the article I reference states a "decision outcome ($0.0125 to $0.016)" without detailing what interest rate assumption it uses.
I also think it's fair in this discussion to propose that decision yea or nay on support for the technology should be based on at minimum, the articles projected year 2020 costs, when they expect the capital cost figures to have dropped by 20% in current dollars, and IMHO we can anticipate the costs of competing N Gas to have risen substantially. In order to get there now, i'd suggest it's worth a 20% capital subsidy immediately reducing as install volume increases, not charged to cost calculations.
Black & Veatch has made the following conclusions about the deployment of CSP from this analysis: • California has high quality solar resources sufficient to support far more CSP than either the 2,100 MW or 4,000 MW scenarios analyzed. • Depending on the CSP plant interconnection point and the load profile of the local electricity provider, CSP with 6 hours of storage could perform peaking and/or intermediate generation roles for a utility. • Investment in CSP power plants delivers greater return to California in both economic activity and employment than corresponding investment in natural gas equipment: - Each dollar spent on CSP contributes approximately $1.40 to California’s Gross State Product; each dollar spent on natural gas plants contributes about $0.90 - $1.00 to Gross State Product. - The 4,000 MW deployment scenario was estimated to create about 3,000 permanent jobs from the ongoing operation of the plants.
• Operations period expenditures on operations and maintenance for CSP create more permanent jobs than alternative natural gas fueled generation. For each 100 MW of generating capacity, CSP was estimated to generate 94 permanent jobs compared to 56 jobs and 13 jobs for combined cycle and simple cycle plants, respectively.
• Energy delivered from early CSP plants (startup in 2007) costs more than that delivered from natural gas combined cycle plants5 ($157 per MWh vs. $104 per MWh, based on a 30 percent ITC for CSP). With technology advancements, improvements to CSP construction efficiency, and with higher gas prices consistent with 2015 MPR projections, CSP becomes competitive with combined cycle power generation ($115 per MWh vs. $119 per MWh, even with the permanent 10 percent ITC). Most of the economic and employment advantages are still retained.
• CSP plants are a fixed-cost generation resource and offer a physical hedge against the fluctuating cost of electricity produced with natural gas.
• Each CSP plant provides emissions reductions compared to its natural gas counterpart; the 4,000 MW scenario in this study offsets at least 300 tons per year of NOx emissions, 180 tons of CO emissions per year, and 7,600,000 tons per year of CO2.
Todd McKissick 4.11.08
Len, Of note is that all of these reports estimate the available resource (that 4,000 MW scenerio) based on NRELs estimate. That estimate filtered out all land that's not less than a 1% grade and estimated 5 to 10 acres per MW of generation and broke these sites down into small zones. They then only accepted a maximum of 1% of that zone's land. Both of those estimates are very conservative in that they discount any non-traditional siting. The effect, however, is to limit them to many locations with costly siting fees and use estimates of much higher land cost.
Also, none of these these projections consider the price beyond the loan term period which is the favorite trick of the nuclear advocates.
Michael Keller 4.12.08
The intent of the analysis (coal, nuclear, combined cycle and concentrated solar) is to obtain a basic "hand grenade" comparison of the underlying fundamental financial strength of the generating options without getting into all kinds of externalities (e.g. CO2 emissions taxes, tax credits, subsidies, etc) as these items can be easily shifted around, depending on your point of view.
I'll use B&V's $3900/kW direct construction cost and 40% capacity factor and see what we get.
I'm not so sure touting creating more jobs is such a great benefit for solar. My general thinking is that the idea is to minimize the cost to the consumer, not create another WPA operation (Great Depression program created by Roosevelt for you younger guys).
Also, may not be reasonable to rely on "future" improvements in solar without also accounting for "future" improvements to the fossil technologies (gas turbine firing temperatures move ever upwards as do the corresponding efficiencies).
Len Gould 4.14.08
Micheal: Agreed, only fair to consider improvements in CCGT's as well. However, they are arleady well developed, long into their commercial development phase, already pushing the Carnot limits, and therefore have only very small liklihood of much significant efficiency improvement or unit cost reduction. Not the same with solar thermal.
Tam Hunt 4.14.08
Michael, here's a link to the CA Energy Commission's recent "levelized cost" analysis for new power generation technologies. It finds that wind, biomass, small hydro and geothermal are all cheaper today than new natural gas plants, nuclear or coal with gasification. Solar trough technologies are cheaper than simple cycle natural gas peaker plants.
Tam: It is certainly refreshing to observe that in the report you cite above it is assumed that a system such as IMEUC is in place to approximately equalize the value of electricity generated at midnight with that generated at 3:00 PM. (Especially relevant to comparing wind with solar thermal for example). Kudos.
Three quibbles 1) the assumption of a 27% capacity factor for PT Solar Thermal seems low and also ignores the potential of relatively cheap thermal storage to greatly extend capacity. 2) the forward projections of natural gas prices for the next 20 years appear over-enthusiastically optimistic to say the least, approximately equal to overall economic inflation. I thought we should have learned at least that much from the 1990's. 3) No inclusion of effects of changes in relative currency values, especially important to LNG import assumptions.
Tam Hunt 4.15.08
Len, I couldn't agree with you more - the CEC report is a good base for analysis but is probably way off in its final conclusions re the costs of renewable energy technologies vis a vis natural gas and coal. If this report used the latest NG price projections from even the very conservative EIA, it would change these calculations dramatically. Solar Reserve, as mentioned above, thinks adding molten salt thermal storage will in fact be cheaper than not adding it b/c it will allow them to sell more power at peak pricing periods. LNG is a larger debate, but the US right now is seeing dramatic declines in imports b/c prices in Europe and Asia are double what the US market will bear currently. And this probably won't change much for many years as LNG liquefaction capacity will by all accounts remain very tight as LNG demand soars globally. Don't expect LNG in the US to be any kind of backup policy except for a low level of summer shipments on the spot market that can't otherwise find a home. As Platts main LNG reporter stated recently: the US is the "market of last resort" for LNG.
Len Gould 4.15.08
All we really need now to finally baste our nearly cooked goose, is for someone to suddenly publicise a capability to recover unlimited Nat. Gas from offshore clathrate deposits or Artic permafrost or something. Another 15 year delay in the ultimately necessary re-structuring of our energy infrastructures, with a twice-burned investor community (1970's and 2000's) saying "renewables nevermore".
Tam Hunt 4.15.08
"Renewables evermore!" Now that's a rallying cry. I'm beginning to realize that the era of subsidies and mandates for renewables will quickly wind down (in a decade or so - it's all relative) b/c the cost of fossil fuels appears to be in a terminal upward spiral. Of course, there will be hiccups as demand is destroyed due to high prices, but the long term trend seems quite clear: the world can't keep up with increasing demand and supplies will ultimately run out.
Todd McKissick 4.16.08
Tam & Len, If both of your latest comment's essences do go favorably for renewables, that still leaves the reason that Luz went under doing the SEGS plants in '91. Basically taxes, uncertainty of the EIC and PTC, the inequality of policy favoring fossil fuels and PURPA timeline and avoided cost regs killed them. (Exibit 7 even shows the effect of the discount rate making or breaking PV clear back in 1991.) How many of these hinderances are or will be in place for the new round of CSP?
Len Gould 4.16.08
Todd: Just read your link above.
Man. Did the “investors” ever give that group (LUTZ) a hard time. Nuts. Demanding cash escrow during construction phase, risk premiums for tax shelter returns in case the government didn’t renew tax breaks each year, Absolute killer schedules, etc. etc. That’s not investing, it’s (clearly something else).
Todd McKissick 4.18.08
I agree. It seems that newer plants might be getting a little better break though. They're being installed in about 7 different countries in sizes usually in the 200 MW range.
The Army Corps of Engineers' '05 report estimated that we can expect $1500/kw and a levelized cost of under 8 cents soon. That's using the new hybrid plants that we are seeing go in and getting planned today.
"Concentrating solar power technologies currently offer the lowest-cost solar electricity for large-scale power generation (10 MW-electric and above). Current technologies cost $2,000-$3,000 per kilowatt, which competes with nuclear and environmentally compliant coal plants. This results in a cost of solar power of 9¢-12¢ per kilowatt-hour (kWh). New innovative hybrid systems that combine large concentrating solar power plants with conventional natural gas combined cycle or coal plants can reduce costs to $1,500 per kilowatt and drive the cost of solar power to below 8¢ per kWh."
Don Giegler 4.20.08
I found the Sandia report on LUZ informative, though probably for different reasons than you and Len did. I have had occasion to go by the station at Kramer Junction several times a year since before the first station was built. The site appears to have added stations fairly regularly since then, even after the date of the Sandia report 17 years ago. Has a similar report been issued for operation of the stations for the interim and to date? Of course, the other thing that struck me in the lessons learned section of the report was the recognition of "returns to scale" by the author and presumably his organization. Remarkable.
Roger Arnold 4.20.08
The URL you gave for your paper doesn't work. It needs a reference to the paper itself. This one should work:
It requires a login to Energy Central, but that shouldn't be a problem for any readers of Energy Pulse.
As to the concept itself, perhaps I'm missing something, but the only significant difference I can see between your proposal and a conventional CCGT in parallel with a solar thermal plant is that instead of separate steam turbines for the bottom cycle of the CCGT and for the solar thermal plant, there is a single ST that serves both. That may be advantageous in terms of system capital cost, but I don't see any advantage in terms of time spreading of the solar output.
david austin 4.22.08
Don't forget that part of the savings that comes from storing solar thermal electricity is that that your power-plant requirements go down. In other words, when you spread the energy throughout a 24 hr cycle you're only converting half of the thermal energy into electricity in the daytime, and the other half in the night time. This translates in significantly lower costs across the board. That's how they get the estimates into the sub $0.08/kWh range.
Currently nobody is doing this though. It's all theoretical at this point, but the numbers work if the long-term thermal storage technology is put into place. Whether that means storing hot salt, or using giant steam storage chambers underground - it's a great idea that everyone is talking about but nobody is currently doing. It's almost as if they're afraid to find out that it wouldn't work. In my mind it seems a phenomenal engineering feat to keep that much thermal energy isolated for 12 hours or more. I'd love to see it work.
Len Gould 4.22.08
david: "It's almost as if they're afraid to find out that it wouldn't work. " -- I would argue that it's almost as if they're afraid to find out it WILL work. The engineering is clearly not that challenging, esp. for steam turbine units. I expect there are two possible obstacles to seeing solar-with-thermal-storage implemented. 1) initially, perhaps the rewards available in the peaking market make the storage unjustified. 2) the whole concept of solar-thermal tends to gore some large incumbent oxen, eg. coal mining, N Gas exploration and delivery, etc.
Jim Beyer 4.23.08
I once read about a thermal storage analysis for making hydrogen via high temperature electrolysis (more efficient). The problem with solar is that the lower plant usage raised costs, even with thermal storage. So they recommended nuclear power.
Has anyone actually done the numbers on something like this? Even roughly? According to Sandia, a tank 30 feet tall and 80 feet in diameter could store enough heat in salt to power a 100 MW turbine for 4 hours. I guess that works out to roughly 2.6 kW-hr (electric) per cubic foot of salt stored. I guess that's not too bad.
If we drop the efficiency to only 1 kw-hr per cubic foot, that still would be OK. This makes me think that smaller sized units might be more reasonable, given the fact that so few people actually live in the desert....
Todd McKissick 4.24.08
Jim, Perhaps you should check out manganeze oxide. At least I think that's what I remember. It was many times the capacity of those salts. The problem was that it melted at a rather high temperature. I can't find any info on it now. Can anyone else find it?
**** **** 5.20.08
5.20.08 Septimus van der Linden. Just caught up with all the discussions, in particular to CSP. Question is why use steam for power recovery with trough collector systems. Thermal oil heated to 800 oF is ideal for new Cascading Closed Loop Cycles (CCLC) from WOW Energy Inc.using an organic working fluid,that does not require water or water treatment sytems and can be operated unattended. The latest developments in more efficient and lower cost trough collectors will also reduce the acerage required. Modular systems of 5/25/50 MWe can readily be disperesed, rather than concentrated as Central stations.Thermal storage is an easy add on, when and where required.The future for lower cost CSP could be bright.