Bold, Decisive Times for Concentrating Solar Power
As utilities put thousands of megawatts on the drawing boards, U.S. developers and regulators move to clear implementation hurdles and create thousands of jobs.
By DAVID KEARNEY, PH.D., and FRED MORSE, PH.D.
In the mid-1980s, implementation of concentrating solar power (CSP) technology was progressing ahead steadily but slowly.
The field consisted of a few moderately sized industrial-process heat projects, technology research and development at the national energy labs and the 10-mega-watt (MW) prototype Solar One power tower near Barstow, Calif. And then there was Luz.
Headquartered in Los Angeles with its engineering arm in Israel, the then-small Luz International Ltd. began the design and construction of a series of CSP parabolic trough projects in 1984. This series culminated in 354 MW of installed electric capacity in the Mojave Desert in 1991. The promise of Luz’s SEGS, or solar electric generating stations, continues to be fulfilled today as CSP emerges as a major solar energy resource in the U.S. Southwest and elsewhere, notably Spain.
In recent years, CSP development in the United States has moved ahead strongly, while at the same time facing a tough financing environment, habitat-protection concerns on development lands, a long permitting process, transmission constraints and other issues.
Despite these challenges, the 64-MW Nevada Solar One CSP plant was built in 2007, and Southwest developers during the past three years have signed contracts for over 8,700 MW of CSP projects — enough to power New York City. Their construction, operation and maintenance, as well as the manufacturing of their components, are expected to create tens of thousands of jobs in America.
Tapping CSP’s Promise
CSP technology consists of systems that concentrate the beam radiation of the sun to produce high-temperature thermal energy for various uses. Today the focus is on utility-scale solar thermal electric systems. Like the SEGS plants, many projects on the drawing board utilize parabolic trough technology. Other CSP systems include centralized power tower systems, parabolic dish-engine systems and linear Fresnel technology. Troughs and tower technologies generate high-pressure, high-temperature steam to run steam turbine generators of 100 to 250 MW net capacity. Linear Fresnel systems currently generate lower pressure/temperature steam. Dish systems consist of large arrays of kilowatt-size units to generate megawatt-scale electricity output. To varying degrees, all have the potential to generate significant solar electricity contributions in large utility-scale systems. It is typical to expect a 250-MW power plant to supply electricity to about 70,000 homes. While Luz International Ltd. no longer operates (though the SEGS reliably do), many companies have stepped in with CSP innovations.
Major CSP Technology Providers Active in the United States
Large power plants of 100-MW capacity and higher make up a majority of the new generation planned for the Southwest utility grid. Plants of this size are built by private developers who sell the electricity to utilities on the basis of power purchase agreements, or PPAs. PPAs for CSP systems in the Southwest have increased sharply during the past three years, resulting in the 8,700 MW of capacity referenced earlier.
Utilities are becoming more interested in CSP systems as important elements of their generation mix for many reasons. These include their low emissions, guaranteed fuel supply (the sun), a known and level cost, and the ability to provide near-firm power by use of thermal energy storage. This last characteristic differentiates CSP from another attractive solar electric technology, photovoltaics (PV), as utilities can tailor the use of CSP electricity as needed.
The fixed price of CSP-generated electricity is of great value to utilities as a hedge against natural gas price volatility and likely increases. It also hedges against the future pricing of carbon. Further, as CSP technology providers become increasingly larger, managing balance sheets and gaining greater development experience, utilities view CSP as a secure business proposition. To reduce carbon emissions to the levels generally expected to be required by federal regulators, and to provide electricity when it is demanded, central solar power systems will be required in addition to distributed PV.
Some CSP technology, notably molten salt power towers from Solar Reserve and parabolic trough plants from Abengoa Solar and Solar Millennium with thermal energy storage using molten salt, can provide more uniform output over the day and increase annual electricity generation. In this way, such CSP plants can offer quasi-firm generation to utilities. For example, while solar energy availability peaks at noon, during Arizona summers, demand peaks in the late afternoon when the energy from the sun is already winding down. During Arizona winters, however, there is a morning peak and an evening peak due to large electric heating demands. Therefore, a solar resource that produces only during the daytime is of little value to the utility for managing peak loads that require energy during the morning and evening peaks — when there is little or no sun. Thermal energy storage allows the utility to tailor the electricity output of a CSP plant to meet that demand.
New regulations and technology advances have also promoted renewed interest in CSP during the last five years. Renewable portfolio standards enacted in many Southwest states have driven utilities to sign an increasing number of PPAs with renewable energy suppliers. CSP offers a quasi-firm power alternative and excellent power conditioning due to its inherent thermal inertia and thermal storage option. During the 1990s, when incentives for renew- able energy dropped dramatically, CSP plant development stopped. But, at the same time, the output of the SEGS plants increased with more efficient components and improved operations and maintenance practices. Then new commercial developers joined troughs with power tower and dish-engine options, offering compelling new products and aggressively seeking, and signing, new PPAs with utilities.
The deployment of CSP systems in Spain during the last three to four years has become another driver of CSP growth and operating experience. These projects have been made possible by sufficient feed-in tariffs (i.e., fixed-price must-take contracts) offered by the government for electricity produced by renewable resources. Spanish regulators capped individual CSP plant capacity at 50 MW, and the Spanish government recently set the total capacity under the tariff at 2,400 MW. This capacity is fully committed by 18 CSP project developers whose plants will come online by 2014. Strengthened by the rapid development of Spain’s CSP buildup, largely developed and constructed by Spanish firms, some of the same developers are establishing themselves in the U.S. market.
Overcoming Implementation Challenges
But CSP incentives and development in the United States are very different from those in Spain, and the journey from a signed PPA to generating power is long and challenging. CSP projects are ideally located in the arid, sunny Southwest, where much of the land is public and managed by the federal government. But to date, no public land has been approved for solar project development, despite a long history of fossil fuel extraction in these areas. Obtaining environmental and other permits to begin construction of a plant is often arduous and expensive. Land use by CSP plants has become a major issue, especially in the California desert. Though technologies and regional solar resources differ, CSP requires approximately 5–6 acres per megawatt installed, or, for example, 1,250 acres (about 5 square kilometers) for a 250-MW plant without storage. However, in light of renewable energy’s great value and benefits, states and the federal government are obliged to make studied decisions in balancing land use with other factors. To place this in perspective, 300,000 acres have been set aside for off-road vehicles, and almost 5 million acres are set aside for military bases in the California desert.
Transmission is another key challenge. Connecting renewable resources to the power grid involves meticulous preparations, applications and reviews that can easily be delayed by state and local jurisdictions, requiring a truly national strategy to address the challenges of new transmission.
Environmental reviews at the federal and state levels often take a year or longer to complete. The Solar Energy Industries Association and others are working with agencies, including the Bureau of Land Management (BLM), to ensure a clear, thorough review process for these lands and to speed the process. The BLM owns vast areas of land in the West, many acres of which are targeted for CSP deployment. In the last few months, the BLM has initiated a fast-track process to shorten the time to approve applications for CSP and utility-scale PV deployment. In California, Gov. Arnold Schwarzenegger has initiated a fast-track system to minimize barriers within the state’s control for “shovel-ready” projects. In Arizona, Gov. Jan Brewer is examining ways to remove barriers for the state’s most viable projects.
Even before procuring equipment and constructing the plant, developing a CSP project takes considerable financial strength due to the high costs of site control, engineering, permitting and the due diligence required for financing. While utilities continue to receive proposals for less-proven technologies with relatively low prices, they are increasingly willing to pay higher electricity prices for projects backed by solid projections and credible solar developers that have a greater chance of completing their projects. Project viability has become paramount to regulatory commissions and utilities alike.
Furthermore, in today’s continuing financial downturn, the federal loan guarantees available to large CSP projects are a necessity, and many CSP project developers have applied for them. Such guarantees provide access to the Federal Financing Bank’s long-term, low-interest debt. The process to achieve such a guarantee is time-consuming, arduous and not at all assured, as the review by the U.S. Department of Energy’s (DOE’s) Loan Office is diligent and tough. In such an environment, weak projects may not survive the review process or be able to carry the many project risks shifted onto them in order to secure the loan guarantee. These guarantees carry many conditions that must be met
prior to financial close.
Valuing CSP as a National Priority
There is much to be gained in advancing the performance and lowering the cost of CSP systems through R&D programs cost-shared by DOE and the technology companies. The performance of the SEGS plants, the successful development of Nevada Solar One, the progress made by the national energy labs, industry innovations and the growing number of signed PPAs have greatly increased DOE’s interest in, and commitment to, CSP development. As a result, DOE’s CSP budget reached $49.7 million in fiscal year 2010. A proposed $98.2 million budget in FY2011 includes a major element to cost-share demonstration projects with industry.
The significant increase in CSP deployment slated in coming years will dramatically offset greenhouse gases internationally and generate many thousands of jobs in the United States in the construction and operation of these power plants.
Abengoa Solar’s 250-MW Solana trough plant, under development in Arizona, provides a striking example of the potential. More than 1,700 workers will be needed to construct the plant over two to three years, and almost 80 skilled workers will be required to operate and maintain it. Hundreds of people will be needed to manufacture the thousands of mirrors and receiver tubes required by Solana, creating even more U.S. jobs. Using Solana as reference, if all the 8,700 MW of CSP projects with signed PPAs were to make it through the permitting, financing and other hurdles, they would generate more than 45,000 construction jobs, more than 3,000 O&M jobs and thousands more manufacturing jobs.
David Kearney, Ph.D., (email@example.com) is an international expert in CSP technology and power plant development, with an extensive background that includes SERI, Luz International Ltd., and the evaluation of system feasibility, performance, cost and O&M requirements focused on trough technology.
His activities include past work with and current support of a number of the companies and institutions active in CSP today. Kearney is an American Solar Energy Society (ASES) Fellow and has been a member of the ASES Board.
Fred Morse, Ph.D., (firstname.lastname@example.org) is the senior advisor of U.S. operations for Abengoa Solar Inc. Morse first became involved in renewable energy issues in the late 1960s as executive director of the White House Assessment of Solar Energy as a National Energy Resource. In his work at the U.S. Department of Energy, he played a significant role in defining and managing major solar energy R&D programs.
Morse chaired the Western Governors’ Association Solar Task Force, was a member of the New Mexico CSP Task Force and is chairman of the Utility-Scale Solar Power Division of the U.S. Solar Energy Industries Association.