How Solar PV is Winning Over CSP
March 12, 2013
More and more, renewable energies are competing against each other, instead of against conventional energy sources.
If you read the reports from major energy agencies and industry associations, you might be tempted to conclude that there is a bright future where all types of renewable energies will flourish and coexist peacefully. Well, they will not. Much like in any other sector, some technologies will trump others. In this article, we analyze how solar photovoltaic (PV) is winning over concentrated solar power (CSP).
In the 1980s, CSP seemed set to beat solar PV. While the latter relied on expensive solar modules more often used in small consumer electronics than in power plants (Exhibit 2), the former used tried and true technology borrowed from coal plants in order to produce vapor and drive a turbine (Exhibit 1).
Exhibit 1 - The 354-MW SEGS CSP plant, built from 1984 to 1990 in California’s Mojave Desert
Exhibit 2 - The 1-MW Arco Solar PV plant, built in 1984 in Sacramento, the largest at the time
Twenty-five years later, the face of solar energy has changed dramatically. In 2010 PV had a global installed capacity of approximately 35 GW, compared with CSP’s 1.5 GW (Exhibit 3).
Exhibit 3 - Evolution of PV and CSP global installed capacity (MW)
Over the last years, we have had the privilege of working in these two sectors from multiple perspectives (supporting investors in selecting technologies and projects to invest on, helping start-ups in funding their ideas, and working with policy makers in defining incentive mechanisms) and believe that two factors have contributed the most for the dominance of PV over CSP:
- Market size: PV can be installed almost everywhere CSP can, but not the other way around. Current commercial CSP technology needs higher levels of irradiance (typically those of the sunbelt countries), access to water (just like a coal plant) and large-scale deployments (typically more than 20 MW, compared with the few kW of a residential PV system). This means that there are more tech companies, investors and policy makers interested in PV than in CSP (Exhibit 4);
- Technological simplicity: a PV system is like a quartz watch, whereas a CSP system is like a mechanical watch. The former revolves around the solar cell, while the latter is a combination of equally critical components. This has allowed the PV industry to focus on solving one issue — driving down the cost per Watt — while the CSP industry is spread across multiple challenges e.g. improving the optical efficiency of collectors, researching new heat transfer fluids or procuring higher efficiency turbines (Exhibits 5 and 6).
Exhibit 4 - Venture Capital and Private Equity investment in PV and CSP (2010/2011)
Exhibit 5 - Impact/Probability matrix for CSP technological developments
Exhibit 6 - Impact/Probability matrix for PV technological developments
Does this mean CSP will eventually disappear, trampled by PV? Not necessarily. CSP has one major advantage over PV: dispatchability. Current CSP plants can store thermal energy for up to 16 hours, which means that their production profile can match the demand profile (just like a conventional power plant). PV is not dispatchable, as a feasible commercial energy storage system does not yet exist. Dispatchability will be increasingly important when and where renewable energies achieve high penetration rates, so two things can happen: CSP becomes a commercially viable solution before a commercial PV storage system is developed, carving its own market segment; or the PV industry quickly solves the storage issue and becomes the solar technology of choice.
This article was originally published in X&Y Partners blog.
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