Concentrated Solar Power Heats Up

After 15 years of relative inactivity, utility-scale solar power projects are gaining considerable momentum globally, according to a recently released brief from Emerging Energy Research - a leading advisory and consulting firm tracking emerging technologies in global energy markets.

Cambridge, MA, 17 October 2006 - After 15 years of relative inactivity, utility-scale solar power projects are gaining considerable momentum globally, according to a recently released brief from Emerging Energy Research - a leading advisory and consulting firm tracking emerging technologies in global energy markets.


With higher energy costs and new regulatory support, concentrated solar power (CSP) technology, using the sun's thermal energy to generate electricity from steam, has re-emerged as a competitive power generation option, particularly in arid regions where power demand peaks during the heat of the day.

Currently over 45 CSP projects are in the planning stages globally with a combined capacity of 5,500 MW, according to EER's research. Four projects are anticipated to begin commercial operation in the next 18 months in the US and Spain.

"Beyond wind, solar CSP represents the scalable renewable investment opportunity with the most potential to be competitive with peak power prices in the medium term," according to EER senior analyst Alex Klein. "With more than 5,000 MW of projects in the pipeline, the CSP market is positioned to boom if regulatory and planning support continues to grow in the short term, allowing the industry to mature," says Klein.

While today all of the world's commercially operating CSP power plants are cited in southern California, the technology's growth prospects are just as bright in southern Europe, North Africa, and other parts of the globe, according to EER.

In Spain, passage of a new feed-in tariff has provided a big boost for CSP projects. Spain has set a 2010 target of 500 MW of solar thermal generation capacity, while Spanish utility Iberdrola and developers Solar Millennium and Solucar have announced project pipelines totaling over 1,000 MW. "Attractive feed-in rates and reduced barriers for plant operation should ensure the Spanish government meets or exceeds its target CSP capacity over the next five years," according to Klein.

Depending on its success in Spain, CSP could quickly emerge as a scalable solution in other southern European countries, where solar resources are significant and governments are considering implementing higher, longer-term bankable incentives for solar energy, according to EER. Projects in the developing regions of the world, including South Africa, northern Africa, the Middle East and Asia are also progressing with the support of the World Bank and other multi-lateral institutions.

In the US, a federal investment tax credit for CSP coupled with state renewable portfolio standards are driving renewed interest in CSP, according to EER. The first large-scale commercial plant to be installed in the US in more than 15 years is now under construction in Nevada. Nevada Solar One is a 64 MW commercial solar CSP plant being developed by Solargenix, based in Raleigh, North Carolina. Earlier this year, Spanish renewable energy developer Acciona Energia acquired a 55% stake in Solargenix.

"A US investment tax credit and rising peak electricity prices in the Western states have rekindled interest in CSP," says Klein. "CSP is particularly appropriate for the southwest US, where the sun shines most of the year, where the power prices are among the highest nationwide, and where power supplies in general are frequently tested."

Most CSP project developers have chosen to use parabolic trough systems, which are the most commercially-proven and which have demonstrated improved economics and performance over time at existing projects - all of the existing 354 MW installed CSP to date use trough technology. Other CSP technologies such as central receivers and Stirling dish engines are also being pursued, with project pipelines exceeding 2,000 MW in California alone, according to EER.

"There is cautious optimism for the CSP industry in general," says Klein. "If early implementations proceed on schedule, we can expect to see a significant increase in IPP interest, as well as CSP capacity growth in southwest US markets, southern Europe, Australia, North Africa, and Asia."

ABOUT EMERGING ENERGY RESEARCH

EER is a leading advisory and consulting firm tracking emerging technologies in global energy markets, based in Cambridge, Massachusetts and Barcelona, Spain. Our customers - which include many of the world's largest corporations and technology vendors - seek our informed, objective view and advice on these fast developing markets.

EER's Emerging Generation Strategy Advisory service provides clients with market intelligence and strategy insights into Utility Generation Strategies, Clean Generation, and Renewable Generation. For more information visit www.emerging-energy.com

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