A common refrain about the limitations of solar power is that the technology only works when the sun is shining. That's certainly true of photovoltaic (PV) solar technology. Some consider the variable nature of PV (or wind power) a threat to the reliable operation of the electrical grid.
Concentrating solar power (CSP), while more expensive upfront than PV technology, has an absolute advantage over PV: the ability to store thermal energy long after the sun goes down. This ability improves CSP's capacity factor and dispatchability, and has the potential to improve CSP's levelized cost of energy (LCOE).
And CSP needs every advantage it can muster, given the plunging cost of PV and the exploding scale of the global photovoltaic market. In fact, a significant number of planned CSP plants have switched to PV because of the challenging economics of CSP, as well as financiers' familiarity with PV.
In August of this year, BrightSource Energy, a VC-funded CSP firm with gigawatts of PPAs in its pipeline, announced a power tower CSP system that includes two-tank molten-salt storage.
This week, BrightSource Energy announced that it has added storage capabilities to three of its power purchase agreements with Southern California Edison. BrightSource claims that adding storage allows utilities to "avoid the hidden costs associated with integrating intermittent resources that require fossil fuel back-up."
The advantages of molten-salt storage are known and proven, and they include:
- Increased capacity factor
- Extended production of electricity into later parts of the day and after the sun sets
- Greater operational flexibility to shape production to meet changing utility customer demand
- Added balancing and shaping capabilities, as well as ancillary services to support a reliable grid
BrightSource’s power tower solar thermal system uses a field of software-controlled mirrors called heliostats to reflect the sun’s energy onto a boiler atop a tower to produce high temperature and high pressure steam. The steam is used to turn a conventional steam turbine to produce electricity. When paired with storage, the steam is directed to a heat exchanger, where molten salts are further heated to a higher temperature, storing the heat energy for future use.
Later, when the energy in storage is needed, the heat stored in the molten salts is used to generate steam to run the steam turbine. BrightSource claims to have efficiency and cost advantages over competing parabolic trough solar thermal technologies because of the power tower’s ability to reach higher temperatures and higher pressures during operation. According to the BrightSource S-1, the firm has at least three patent applications covering storage.
Today, molten salt storage is used widely in solar thermal plants in Spain from Abengoa and others. The “solar salts” are composed of 60 percent sodium nitrate (NaNO3) and 40 percent potassium nitrate (KNO3) -- commonly available materials.
Another entrant in the CSP with molten salt storage field is Santa Monica, Calif.-based SolarReserve, which is building a 110-megawatt solar thermal plant in Nevada with help from a $737 million DOE loan guarantee. SolarReserve CEO Kevin Smith told us back at Intersolar that it could produce power for close to 12.5 cents per kilowatt-hour, a figure that will drop to 7.5 cents in a few years.
According to one industry expert we spoke with, Solar Reserve’s sun-to-salt-to-steam architecture has some inherent advantages over BrightSource's sun-to-steam-to-salt-to-steam system.
BrightSource's original PPA with Southern California Edison called for four million megawatt-hours of electricity annually across seven power plants. According to the press release from BrightSource, the higher efficiencies and capacity factors provided by storage will allow the same amount of energy to be generated with one less plant. The new plans still have to be approved by the California Public Utilities Commission (CPUC).
Brett Prior, a senior analyst with GTM Research, speculates that the impetus for this change was the recent decision by the CPUC to reject the power purchase agreement (PPA) for PG&E's 60-megawatt North Star solar project, on the basis that it was not priced competitively. If SCE brought the BrightSource PPAs before the CPUC and they were rejected, that would reflect poorly on SCE. In order to get the PPAs approved, SCE likely asked BrightSource to agree to lower PPA rates (i.e., $0.10 per kWh instead of $0.12 per kWh). BrightSource may have responded that it could accept a lower PPA price, as long as three of the plants added storage. This would lower the cost per kWh, and increase the revenue per kWh (due to the impact of time-of-day factors). That is Prior's theory, and it was not confirmed by SCE or BrightSource.
The large CSP pipeline in the U.S. still faces the head winds of low PV prices and low natural gas pricing. Note that the only large CSP plants under construction in the U.S. are those with DOE loan guarantees (Ivanpah, NextEra's Genesis, SolarReserve's Crescent Dunes, and Abengoa's Solana and Mojave Solar).
CSP maintains its advantage of storage capability and the potential to hybridize with fossil fuel plants. So far, however, that hybridization seems to only result in lower efficiency for the fossil fuel plant.
Brett Prior has looked at the LCOE economics of CSP in a recent report, Concentrating Solar Power 2011: Technology, Costs and Markets. Prior calculates that CSP towers with storage can earn higher revenue and profits per kilowatt-hour than PV. His analysis comparing the levelized cost by technology can be found here.
The high-level finding is that power tower technology is cost-competitive with PV on a levelized cost basis, and that power tower with storage will represent the lowest cost per kWh solar option in 2016 and beyond.
BrightSource Energy has an IPO in registration with the SEC in what is a hostile IPO environment for greentech companies and solar companies. Will BrightSource be able to convince institutional investors that CSP is the best utility-scale renewable energy source with enormous growth potential and proceed with their IPO? Or will they have to look for "strategic alternatives"?