Markets

The ASI’s latest report reveals how concentrated solar power has been undervalued to date, and why future energy markets must break the baseload-peakload mold.

By Giles Parkinson, Australia correspondent

A report prepared on behalf Australia’s Solar Institute has predicted that Australia can play a significant role in the development of the global concentrated solar power sector, and secure a major place in the global supply chain, but only if provides incentives to further the deployment of CSP technologies in the country.

In a detailed report, Realising the Potential of Concentrating Solar Power in Australia, energy consultants IT Power identified CSP as the one renewable technology that offered Australia the opportunity for Australia to claim a major global role. But it was an opportunity that could be missed.

It prepared a roadmap suggesting that Australia could have 2GW of CSP by 2020, growing quickly to 10GW by 2030 – when it could be providing up to 10 per cent of the country’s energy requirements. It said that 15GW could be installed in areas that would not require huge amounts of grid extension, but the potential was there to provide one half of the nation’s energy needs by 2050.

Costs, though, are critical. The report provides a range of estimates on solar thermal LCOEs, but says that in general they average around $A250/MWh – with the potential to fall to around that half that level in a timeframe that ranges from 6-18 years depending on the pace of technology improvement and deployment.

While that is a significant gap between the cost of wholesale electricity in Australia on its National Electricity Market (currently at an all-time low of around $35/MWh), the authors argue that the “time value” of CSP’s dispatchable energy is greater than for other technologies, and means that the gap between its cost and conventional costs will not be so great.

Clean and smooth

Andrew Want, the head of the Australian Solar Thermal Energy Association, which contributed to the report along with the Clean Energy Council, the Australian Solar Energy Society, CSIRO and Boston Consulting Group, said the remaining cost gap could be closed within a few years. He said the report concluded the value of electricity depends on several factors, including time of day flexibility, dispatchability, and network efficiency.

“CSP is a complementary technology,” Want said. “It can smooth the peaks and troughs of more variable generation and help address the grid stability challenges that emerge with increasing capacity of PV and wind. Gas and diesel generation can do this too, but obviously with fuel and environmental costs CSP does not have.”

Lead author Keith Lovegrove said modeling of the Australian electricity market over 2005-10 showed an average price of $42/MWh, but electricity from CSP plants would have attracted an average rate of around $87/MWh because of the higher value of its output. Just delivering in its normal generation times would have earned 50 per cent more than the market average, while being able to deliver dispatchable energy would have delivered two or three times the market average.

Beyond baseload

Lovegrove says this means that energy market operators will have to have a different vision of the market than the current baseload/peakload paradigm. “Base-load is basically an outmoded concept,” he said.” The reason you would bother with CSP is that it is dispatchable, so the incentives we put in place should recognize that.

"The thing about the energy future is to match supply to demand at all times. Smart meters will allow people to decide how to manage demand. People in the business of energy supply can decide how to manage that. CSP with storage is well suited to that.”

The report recommends a series of policy measures that ensure that financing is available for early deployment, and the industry is hopeful that the planned Clean Energy Finance Corporation, a sort of green bank with $10 billion at its disposal, will survive the anticipated change of government after elections due next year. 

The report also recommends the creation of solar-CSP precincts, and said Australia leverage its considerable R&D expertise, with a focus on targeting deployment of systems below 50MW, a sector it says had been overlooked by the global industry.

It also suggests projects that incorporate energy storage, improve efficiency and hybridisation with fossil fuel plants, as well as the development of advanced cooling technologies, which will be well suited to areas such as Australia (and other potential CSP areas), which are generally short of water.

The report comes as Silex Systems prepares to publicly unveil the first demonstration plant of its concentrated solar PV technology at Bridgewater in Victoria, and work continues on a 44MW “solar boost” project at the Kogan Creek coal-fired generator, using the compact linear Fresnel reflector technology now owned by Areva.

However, a neighbouring project to build a 250MW plant under the government’s Solar Flagships program remains in the balance, with Areva and its partners having until the end of June to secure finance for the project under an already extended deadline.

Keith Lovegrove will be presenting the report at the forthcoming CSP Today event in Las Vegas on 27 June.

To respond to this article, please write to: Giles Parkinson

Or write to the Editor:

Rikki Stancich: rstancich@csptoday.com