You could be forgiven for thinking that Concentrated Solar Power (CSP) is 'expensive'. But with 9.45 US$ cents per kWh in the recent DEWA 200 tender, the time has come for you to fundamentally reconsider.
DEWA will announce the winner in a few weeks. But the opening of the financial envelopes was revealing. A consortium composed of ACWA Power (Saudi Arabia), Shanghai Electric (China), BrightSource Energy (USA) bid at 9.45 US$ cents per kWh, proving that CSP is today the cheapest form of dispatchable renewable power. This proposed PPA is a third cheaper than the cheapest CSP project currently being built. The Dubai project is a two-tower configuration, with dry cooling and 8+ hours of storage. The towers are not configureded to dispatch power from 10 am to 4 pm, because during that time they are storing thermal energy and will then use it to dispatch electricity after 4 pm, when it is most needed, turning this CSP plant literally into a 'giant solar battery'.
Paddy Padmanathan, CEO of ACWA Power, is delighted to see CSP technology with molten salt storage that can offer a single digit tariff for dispatchable solar energy day and night and can compete in many parts of the world, shoulder to shoulder with LNG fired combined cycle electricity generating alternative’. Furthermore, he added that ‘Equally exciting is that, this also means no more distracting noise about intermittency of solar energy!’
The result in Dubai is significant in many ways. Firstly, because it reveals that the economies of scale and learning curve for CSP technology have been truly outstanding. CSP has managed to reduce costs by two thirds in 10 years within only its first 5GW globally.
Compare that to deployments of 300 GW for PV and 500 GW for wind and you will understand why CSP should be a pillar of energy planning in sunny countries: with a size of only 1% of the wind market and only 2% of the PV market, today dispatchable renewable power from CSP costs 9.45 US$ cents per kWh. Those costs can obviously come down a lot further as global scale increases – China alone plans to double global capacity by 2020.
And dispatchability is a big deal. When you have a lot of pre-existing power in a grid from hydro and gas, dispatchability in a system is guaranteed. But as you add cheap, plentiful, and clean energy from PV and wind the picture changes. In order to accommodate more variable renewables, you need dispatchable power which can react to sudden peaks and troughs in production. Not to mention the ability to produce electricity when the sun is not shining and the wind is not blowing.
And you could potentially resolve this situation with electrical storage... but we are still a few years (perhaps decades) away from being able to affordably store large quantities of electricity in batteries, so in a centralized grid system, CSP´s molten salt thermal batteries make a lot of sense.
More interesting still is the fact that the UAE is by no means the best market for CSP. Direct Normal Irradiation (DNI) in the UAE ranges from the 1900 to around 2200. Not bad, but countries around the MENA region have, in many cases, a much better solar resource. The better the resource, the better the results.
Jonathan Walters, CSP veteran and head of the World Bank´s MENA CSP Knowledge & Innovation Program (MENA CSP KIP), throws out intriguing questions for the industry going forward: "There are four big questions about the Dubai CSP price. How much lower would it have been in a country with an even better solar resource, like Jordan or Egypt? How much lower would it have been in a country that can access the Green Climate Fund or other global Paris Agreement sources? Does it mean that investment will now switch to cheap thermal storage and away from more expensive large-scale storage solutions? How soon will CSP outcompete natural gas, particularly for import-dependent countries? This could be a revolution starting."
At WB MENA CSP KIP (of which I am part of) we have put together a free-to-attend webinar (first-come, first-served) where Paddy Padmanathan, CEO of ACWA Power, Jenny Chase, Manager of Solar Insight at Bloomberg New Energy Finance & Frank Wouters from the MENA CSP Knowledge & Innovation Program will analyze in-depth the implications of CSP at 9.45 US$ cents per KWh in the whole MENA Region.
