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CSP Today speaks to Rabobank's Senior Associate, Clean Tech Research, Anke Verhagen, and Director of Clean Tech Research, Susan Hansen about whether the US CSP sector will find its feet in the absence of on-going government support; and about the findings of Rabobank's latest report, ‘Rabo on Renewables: Q3 2011’.

Interview by Rikki Stancich

CSP Today: Several major US projects have switched from CSP to PV this year. With the US treasury grant due to expire, the 1705 programme coming to an end, and no hint of further government support for utility-scale CSP, are we likely to see any new projects built?

Anke Verhagen: This is a big question: can CSP projects get built without the US treasury grant and loan guarantees?

First there was the ITC, but the tight US tax equity market undermined its efficacy, so the government made the option available to for project developers to take the Treasury Cash Grant in lieu of the ITC.

The cash grant was due to expire last year, but was extended for another year and is due to expire at the end of 2011. The problem is, the tax equity market is still not back at the level where the ITC would work. There were hopes that the cash grant would be extended again, but that is now looking unlikely.

The US projects are enormous and most of them have loan guarantees. It seems unlikely that similar large projects can be built without the loan guarantee or the cash grant.

CSP Today: In this respect would you say that, for CSP to survive, it would need to be deployed as a modular technology?

Anke Verhagen: Scalable, modular CSP technology could present a solution with regard to securing finance.

CSP Today: Rabobank’s report predicts more consolidation in the solar (PV) sector in response to foreign competition. Do you foresee a similar consolidation trend occurring in the CSP sector?

Anke Verhagen: In the report, the consolidation referred to over-capacity in PV panel manufacturing; not every company can survive in such a fiercely competitive market, so we are bound to see consolidation among existing players - and  most likely some bankruptcies, as we have recently seen in the US with Solyndra, SpectraWatt and EverGreen Solar.

For CSP, however, it is very different; you don’t have a dedicated asset (such as PV panels); rather you have a systems approach, involving mirrors, pipes and steam turbines, made by companies that are not dedicated to CSP only. As such, there is no overcapacity in CSP components manufacturing, so we are unlikely to see a similar trend there.  The PV module market is currently a highly competitive market where low costs are key. In addition, there is over-capacity.

CSP requires very high, up-front investment, which is its biggest challenge. For this reason, although the LCOE of CSP is not bad (it is competitive, if not cheaper than PV), it remains difficult for CSP to compete with PV.

CSP Today: Lowered PV tariffs have resulted in a lower level of investment over the last 12 months. Does this suggest that CSP may be increasingly attractive as an alternative investment, given sustained, high feed-in tariffs CSP in Spain?

Anke Verhagen: In Europe, there are limited geographical locations that are suitable for CSP – it is really limited to southern Mediterranean areas, such as Spain and southern Italy. I wouldn’t expect to see PV investors switch to CSP.

PV is relatively easy to install, whereas CSP requires more of a systems approach, and is relatively more difficult to build. It requires engineering and system expertise and developers with a good track-record.

CSP Today: There have been a number of significant investments and acquisitions by energy heavyweights such as Alstom, GE, Siemens and Areva. Are we likely to see more of these types of acquisitions going forward?

Anke Verhagen: CSP opens up new opportunities for these players in new solar markets such as South Africa, Jordan and India. It is certainly not a bad idea for these companies to be buying into components in this way.

CSP Today: The report mentions an anticipated short upswing in PV pricing toward the end of 2011. What impact would that have, if any, on CSP sector?

Anke Verhagen: We are talking about two separate markets that are structured very differently. An upswing in pricing won’t necessarily hurt the PV sector, nor will it benefit the CSP sector.

CSP Today: You infer that the two markets are disconnected from one another, yet comparisons of the sectors (particularly with regard to price competitiveness) are frequently made, and decisions such as STA/Solar Millennium’s to switch from CSP to PV suggest that on the contrary, CSP is locked in competition with PV for market share...

Anke Verhagen: CSP is having a hard time competing with PV. When PV costs were still higher, CSP looked very interesting. The dynamics have since changed in each market, but there is not a one-on-one dynamic in the short-term.

It always appeared as though CSP would be interesting for utilities, given the scale, baseload power and the dispatchability, but even they seem increasingly more comfortable with PV. PV is more flexible: it can be small-scale residential, commercial rooftop or large-scale. CSP, on the other hand, is mostly big power machinery, requiring major investments because of the larger sizes.

Still, CSP does not need to worry if PV will bite out of its market share, as the set of rationales to choose for CSP or PV is quite different. For countries with good solar resources and availability of cheap land, CSP will always be a very interesting option.

With CSP, the supply chain is more fragmented, with major suppliers that produce components for a broad range of sectors; current CSP developments and the accompanying demand for mirrors for instance is not going to impact glass prices. Unlike PV, CSP does not have a dedicated supply chain.

CSP Today: The Fukushima incident has prompted countries to review their nuclear energy programmes, which in turn has revived concerns over long-term energy security. Is CSP, as the only other low carbon energy capable of providing base load energy, consequently likely to gain a higher profile?

Anke Verhagen: Fukushima has revived the energy debate, however, CSP will continue to sit at the same level as other renewable energies, even though it can provide base load power.

Susan Hansen: This is really because PV can be placed anywhere – even in Scandinavia – while CSP is limited to certain regions. CSP will not directly benefit from Fukushima, because it cannot be installed in Germany or the UK, for example.

To respond to this article, please write to the Editor:

Rikki Stancich: rstancich@csptoday.com