CSP Today speaks to Jayesh Goyal, AREVA Solar’s Global VP of Sales about the steps AREVA is taking to expand into new markets, the need for storage and the potential of hybridisation to give CSP the cost competitive edge it requires.
AREVA, a leading supplier of Linear Fresnel technology, has made waves in the CSP industry after its acquisition of Ausra in 2010.
CSP Today: In a previous interview you told CSP Today that AREVA is focussing its attention to moving into new markets, particularly in the MENA region. Which markets specifically are you looking towards and what are the drivers behind your decision to move into new markets?
Since we did the acquisition of Ausra in March 2010 we have made a lot of progress commercially in Australia, the USA and India. While we will continue to expand our market in these regions, we recognise the importance of moving into emerging areas. We really expect the Middle East and North Africa to become strong CSP markets. The announcement of Saudi Arabia’s plan to install 25GW of installed CSP power by 2032 has further reinforced our ambitions. AREVA is in the process of establishing plans and developments in Saudi Arabia, Algeria, Morocco, Kuwait, Jordan and South Africa – all countries which have announced strong solar programmes. We’re also investigating new developments in Chile and Brazil.
There are a number of drivers that make these markets attractive for CSP development broadly speaking and specifically our entry into them. Perhaps the most important are obviously strong solar resources that can be harnessed cost-effectively by technologies like Linear Fresnel, growing energy demands and in many cases, progressive government policies that promote CSP projects, such as the Saudi plan that I just mentioned. A number of MENA nations also see the much needed economic benefits that CSP projects can bring in the form of local jobs, as well as local procurement and manufacturing. For example, up to 95% of the content used for our Linear Fresnel technology – mainly steel and glass – can be locally sourced. Lastly, CSP can help boost one of the region’s most valuable exports: oil. Rather than use reserves domestically for electricity generation, oil-producing North African countries, for example, are finding it economically favorable to sell this commodity on the international market and leverage CSP for power generation at home.
CSP Today: How does AREVA plan to establish itself in these new markets? Do you have existing relationships with developers in these regions?
We don’t have any exclusive agreements, although we are able to identify developers, which have a strong standing in a market, and therefore we will engage with them to try building multiple projects in that region. We work with developers based on their experience profile and the strategic fit with AREVA.
CSP Today: Technological innovation is another trend receiving a lot of attention in terms of making CSP a more cost effective and efficient solution. We’ve seen this in the SunShot initiative most recently. How is AREVA ensuring it remains constantly up to date with new innovation?
We have been making significant technical improvements over the past couple of years in order to broaden our profile, incorporating other solutions including hybridisation and storage - the latter of which was announced at the CSP Today USA 2012 conference. Like solar/natural gas hybridisation plants, this will allow for power generation beyond sunlight hours – a definite unique selling point of CSP. As we build projects in the USA, India and Australia we are constantly finding areas for enhancements, therefore there is a constant R&D programme being conducted on an incremental level.
Hybridisation has always been part of our offer and it is an area that is receiving a lot of attention as the industry seeks to bring down the overall costs of CSP. We are building a 44 MWe solar/coal augmentation project in Australia and recently announced a 5 MWe solar coal/natural gas augmentation project in Arizona.
In the area of combined cycle plants with solar, two types of hybrid plants exist.
Firstly, there is augmentation where you add a solar field to an existing combined cycle plant. Then, there is a plant built from scratch intentionally as a hybrid. We are working with turbine suppliers to design such plants and the solution is already available. Although we have established booster plants in the USA and Australia and recognise their potential in new markets, it is important to understand that new plants that are designed specifically as solar hybrids have technical advantages, making them more efficient. Therefore, we are therefore looking to expand our stake in this area.
Also important to keep in mind is that many countries don’t provide incentives for booster plants, where as they do for standalone CSP plants – therefore, a lot of our time and energy is being spent on developing standalone CSP plants. This is our primary focus and remains the largest market for CSP development.
Whilst hybrid technology is well established, storage requires new technological innovations. We will be demonstrating a product later this year and launching it commercially by 2013. The reason we are able to bring it to the market so quickly is that none of the technology is radically new, but is building upon proven storage technology such as molten storage tanks. We will incorporate this technology into our linear fresnel system, looking at how we can include a new Heat Transfer Fluid and with modest modifications to our receiver.
Our linear fresnel storage solution is another example of how we are expanding our suite of dispatchable CSP offerings to meet the specific energy needs of our customers, as some may have country-specific requirements for storage.
CSP Today: We have spoken about new markets and technical innovations that will contribute to the development of the CSP industry, but what about new applications? Has AREVA investigated off-grid applications for CSP?
This is a market segment we are interested in, but it remains an issue of economics. Electricity programmes offer incentives from local governments, whilst mining, desalination and other off-grid applications often do not enjoy the same benefits. Therefore, it needs to be investigated whether off-grid applications are economically viable in their own right, outside of the incentive framework. This is an area we are open to, with the right business case.
CSP Today: With regards to your interest in expanding into the MENA region, do you foresee the possibility to export electricity to Europe?
It is definitely a possibility. However, it will not necessarily be immediately implemented. The countries in the MENA region have enough demand in their own markets to absorb electricity produced by the first few CSP plants. Developing a grid to transport electricity to Europe is a large undertaking and it may be some time before we see it realised.
CSP Today: Has AREVA thought of expanding its portfolio to include other CSP technologies outside of Linear Fresnel?
When we did the acquisition of Ausra, we did a thorough evaluation of all other technologies. We found Linear Fresnel to be the most cost-effective with the highest potential for cost reduction. In fact, we have achieved a lot of cost reduction over the last three years. Another strong factor for focusing specifically on linear Fresnel is the localisation potential of up to 95% as I mentioned previously. Most government incentives are focused on developing local content, which linear Fresnel lends itself towards. A third advantage of Linear Fresnel is its ability to take up less land than other CSP technologies, with our design being the most land-efficient solar technology. With respect to water, AREVA's technology uses the same amount as trough. The steam conditions that AREVA has been offering since 2009 gets our design to basically the same water usage as trough for wet cooling and cycle makup. The technology uses approximately half as much water for cleaning.
These advantages do not come at the cost of efficiency, as we generate the same output with similar or higher capacity factors than other CSP technologies.
CSP Today: With potential for further cost reduction, do you see linear fresnel enabling CSP to achieve grid parity?
When discussing grid parity there is a mix of many factors, including incentives, local cost of electricity and so forth, which are country specific, making the determination of exact grid parity on an international level a complex task. Keeping this in mind, we are already seeing a reduction in the gap. In India we are at the point where solar power plants are being done at about 9 or ten rupees per kW hour –close to what the Indian government views as grid parity, which is about 6 and a half to seven rupees per kW hour in many regions. In the USA, CSP steam augmentation (including incentives), has enabled power generation prices at as low as 8 cents a kWh, lower than the market reference price (based on a new combined cycle plant) in California. In fact, our Linear Fresnel steam augmentation solution is the lowest-cost solar solution in the market.
Considering all factors, standalone CSP is on target to reach grid competitiveness within four to five years – whilst with steam augmentation we are almost already there. I expect we will see a large increase in hybrid and steam augmentation plants, in addition to stand alone plants, with new generation CSP making up the bulk of production over the next few years.