What happened to Concentrated Solar Power
Concentrated Solar Power (“CSP”) technology was once the next big wave for utility-scale solar energy generation. CSP uses mirrors to concentrate the sun’s energy into a central power tower that stores energy.
In the past 10 years, CSP fell out of favor among investors because of falling costs of crystalline silicon panels. In countries that built CSP plants, new solar PV systems are so cheap that even including the cost of a Battery Energy Storage System (“BESS”) to a PV system would still cause rational investors to choose PV+BESS over CSP.
CSP will get even more expensive vs PV+BESS
The Levelized Cost of Energy (“LCOE”) for Concentrated Solar is now higher than PV+BESS and the materials cost differential will grow as demand for PV and lithium batteries in other sectors such as electric vehicles prompts investments across value chain of BESS technology. By 2030, the LCOE (a per MWh cost of investing in and operating a plant) of PV+BESS is forecasted to be $27 to $54 per MWh — half of the cost attributable to the PV and half to the BESS[i] — while that of CSP is forecasted to be $50 per MWh.[ii]
Investing in CSP plants utilizes more resources (land, labor, capital)
CSP plants require up to 90% more land than PV+BESS. They also require more specialized engineering, procurement and construction firms. And the minimum economic size of Concentrated Solar requires a significantly higher initial capital expenditure.[iii] From an investment perspective, PV’s modularity makes it simpler and more flexible to install.[iv]
CSP is constrained to specific geographies
CSP deployment is limited by geography to only the highest Direct Normal Irradiance areas (red areas above). While Solar PV uses other metrics to measure the solar power resources in an area, Direct Normal Irradiance (kwh/m2) is the key metric for CSP.
Fun fact: Ouarzazate City in Morocco was chosen for the filming of Lawrence of Arabia (1962) for the same reason a Concentrated Solar plant was built there eight years ago. A couple things made Ouarzazate an attractive location for filming: proximity to Western Europe, stable geopolitics, and most importantly, a cloudless sky. High Direct Normal Irradiance was critical in minimizing shadows since the camera technology of the day wasn’t too advanced.
However, CSP’s built-in thermal storage technology can hold energy for longer periods
Hybrid PV+CSP plants are currently being piloted in Morocco.[v] Solar panels are being added to a CSP plant. The solar panels help the mirrors charge the liquid storage inside a CSP tower.
Recent investments in the CSP space by venture capitalists such as Bill Gates may have to do more with components of CSP technology such as the thermal storage system which can be used for long-duration storage.[vi] Thermal storage can economically store energy for longer periods of time than the lithium-ion used in BESS. Longer duration storage provides electricity in the wee hours of the night long after the sun has set. Lithium-ion can economically store energy up to 4 hours after nightfall. Thermal storage can economically store energy up to 8–12 hours after nightfall.
Could CSP technology make a come-back? Potentially for thermal storage, but more on long-duration storage in a succeeding article.
[i] Bloomberg New Energy Finance: Data on LCOE for PV+Batteries is only available for USA. Current Data on CSP LCOE is only available for UAE and Morocco. While LCOE estimates differ per data provider, BNEF estimates appear to be the most accurate. Note: Size of storage attached to solar plant has large impact on LCOE
[ii] Trabish, Herman (March 2020), Cheapest is not always best; https://www.utilitydive.com/news/cheapest-is-not-always-best-concentrated-solar-power-could-beat-lower-pric/574154/
[iii] National Renewable Energy Laboratory, US Department of Energy; https://www.nrel.gov/docs/fy13osti/56290.pdf
[iv] The 50MW Bakpoort CSP in SA: https://www.evwind.es/2019/10/18/egypt-plans-to-establish-1-2bn-concentrated-solar-power-plantsegypt-plans-to-establish-1-2bn-concentrated-solar-power-plants/71381 ; https://reneweconomy.com.au/vast-plans-600m-baseload-solar-thermal-plant-for-mt-isa-96076/
Disclaimer: This post reflects my personal views and not those of the International Finance Corporation, World Bank, or any other member of the World Bank Group