Energy storage is key for the future of the concentrated solar power market

A majority of the active CSP projects with storage have a thermal storage capacity in the range of 6-10 hours.

Concentrated solar power (CSP) with energy storage is an upcoming renewable technology that promises to provide cost-effective power generation with improved efficiency.

CSP energy storage

Although the technology has been in existence since the 1980s, growth of CSP was hindered by a number of factors such as high cost of capital, global economic slowdown resulting in lack of finance, competition from other low-cost renewable technologies such as wind and solar PV, and lack of specific government support in the form of favorable policies.

The performance of a CSP system is dependent on direct normal irradiance (DNI). Other factors which determine the financial viability of a CSP project include the type of technology used, costs involved and the extent of government support provided. Due to these parameters, the number of regions in which CSP systems can be installed and remain financially viable is limited.

The cumulative installed capacity of CSP in the world increased from 1,092 MW in 2010 to 5,597 MW in 2018 at a CAGR of 22.5%. CSP market development slowed down in the last 4-5 years as prices for competing technologies such as solar PV nosedived. CSP is once again gaining prominence with research and development (R&D) to increase efficiencies, improve storage capabilities and reduce costs. With more and more countries adopting ambitious renewable targets, the need for reliable and stable power is gaining prominence.

CSP with energy storage has the ability to provide stable, scalable and reliable power. Thermal storage helps retain solar heat generated during the sunny period to convert it to electricity when needed. Thermal storage thus helps in making solar power dispatchable, making it a reliable source of power generation. Of the 5.6 GW active CSP capacity by the end of 2018, around 2.6 GW is with energy storage and around 3 GW is without storage. In contrast, of the total CSP projects under various stages of development, 95.8% of the upcoming capacity has storage. Only 4.2% of the under-development CSP capacity is without storage.

A majority of the active CSP projects with storage have a thermal storage capacity in the range of 6-10 hours. In the case of the under-development CSP capacity, 62.8% is with storage of 10-13 hours and 14% has over 13-hour storage. This shows the increased importance given to long hours of storage by project developers and owners to not only provide stable and reliable power 24/7 but also reduce the cost of electricity generation from CSP by using a longer duration of thermal energy storage.

The figure below provides details of CSP installed capacity split by hours of storage as on December 2018.

Figure 1: CSP market, global, installed capacity split with and without storage, 2018

Source: GlobalData Power Database [Accessed on March 6, 2019]

Auction results indicate declining costs for CSP generation with storage

Auction results over the last few years indicate the declining cost of generation for CSP projects. Technology advancements due to continuous R&D, economies of scale and lowering the cost of capital are key reasons for a reduction in capital costs. Technological advancements in solar field equipment such as mirrors, reflectors and collectors, reduced engineering, procurement and construction (EPC) costs and advancements in thermal storage and associated costs contributed to the decline of the cost of electricity generation from CSP.

Further reduction in costs is expected with more CSP deployments coming up in future, the emergence of hybrid CSP – PV and with the influx of capital from institutional investors for CSP projects lowering cost of capital.

The years 2017 and 2018 have been breakthrough years for CSP in terms of cost reduction, as auction results across the world in these years indicated that cost of generation for projects with storage, expected to be commissioned from 2020 onwards, will be in the range of $0.06/kWh to $0.12/kWh. Also, all future CSP projects will have an increased number of minimum hours of thermal storage.

Morocco is all set to pioneer hybrid CSP – PV development through its Noor Midelt project. After the groundbreaking the success of standalone CSP projects Noor I, II & III, Morocco had launched a request for proposals for two hybrid solar plants at Noor Midelt, with a gross CSP capacity (with storage) of between 150-190 MW for each plant.

Five international consortiums are pre-qualified for the project led by Saudi Arabia’s ACWA Power, France’s EDF and Engie, Germany’s Innogy and Japan’s JGC. The Moroccan Agency for Sustainable Energy (MASEN), with its “Plug and Play” approach is assuming the development and financial risks. The approach is expected to lead to cost reductions as developers can solely focus on optimizing project costs as MASEN is taking up a range of responsibilities such as offtaker, lending support and a minority stake in the project. MASEN will handle all the risks associated with the CSP project such as land acquisition, social issues, environmental studies and will carry out studies to reduce development risk.

The Noor Midelt project is expected to move forward to final bids and financial terms by mid of 2019. Morocco’s tariffs for CSP projects have already dropped from $189/MWh for Noor I to $140/MWh for Noor II. It is expected that CSP costs will continue to drop with the combination of low-cost PV with CSP storage capability.

Dubai Electricity and Water Authority (DEWA) in September 2018 awarded the contract for the fourth phase of the Mohammed bin Rashid Al Maktoum solar project, a 700 MW CSP project to a consortium of Chinese Shanghai Electric and Saudi Arabia’s ACWA Power at an impressive bid of $73/MWh. The project is expected to be online by 2021-2022.

Solar Reserve has been awarded a 150 MW CSP project in South Australia at a tariff of $0.061/kWh and expected to come online in 2020. In Chile’s renewable auction 2017, Solar Reserve had bid less than $50/MWh for 24-hour solar– the lowest bid on record for a CSP project.

The figure below indicates CSP tariff for projects subscribed through the auction mechanism in various countries spanning across various years.

CSP market, global, auction price trends based on project online year, 2015–2022

Source: GlobalData Power Database [Accessed on March 6, 2019]

Retirements of coal-based capacity and ambitious renewable targets – an opportunity for CSP to bridge the dispatchable energy gap

Ambitious renewable energy targets are being adopted by various countries. Many countries such as Sweden, Denmark and Spain plan to attain 100% renewable by 2040 / 2050 and many other countries such as South Africa, Australia, Austria, France, Germany and all major European countries are planning to phase out coal-based power or decommission majority of their coal fleet to reduce their carbon footprint. This provides a potential opportunity for CSP to supply dispatchable generation to bridge the gap created by the phase-out of fossil fuel plants and an influx of intermittent sources such as wind and solar PV.

In Australia, with 15-16 GW of coal capacity due to retire in the next 15-20 years, companies are offering CSP with thermal storage as a solution to fill the country’s peak electricity gap. The country has already achieved its renewable target of 23.5% by 2020 by adding significant capacities of solar PV and wind. With more coal capacity due for retirement, an energy gap during evening hours is expected when energy from solar PV becomes unavailable. According to Wes Stein, chief solar technology research scientist at the Commonwealth Scientific and Industrial Research Organisation (CSIRO), CSP with 5-hour storage has the ability to avoid 72% of the constrained sites based on his study on 21 top load events.

Back in 2016, Bokpoort CSP plant in South Africa demonstrated its dispatchability by supplying power round the clock for 14 days. The plant was operated at 66% of its capacity in order to test how long it could run on its stored energy every day. Operating at full capacity the storage was enough for 9.3 hours and at 66% operating capacity, the operator was able to spin it out longer with round the clock generation for 14 days. This proved that CSP could replace coal for night time power and reduce dependence on coal-fired power and avoid blackouts.

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