This article was originally published here.
The cost of solar energy has been dropping steadily, revealing a bright future for the technology.
The cost of lithium ion batteries has also been dropping at an incredible rate, adding a much-needed storage component to PV systems.
Will low cost LI batteries make CSP parabolic trough plants obsolete?
An Overview of the Energy Market
According to International Energy Agency (IEA), global electricity consumption reached approximately 24,000 TWh in 2017[1] and is expected to increase every year. Historically, coal has been the primary source of electricity generation, followed by natural gas and hydropower. Indeed, coal and natural gas accounted 9,500 TWh and 5,500 TWh of electricity produced in 2017[2] respectively. It is well-established that coal and natural gas lead to the emissions of carbon dioxide and other greenhouse gases which are connected to climate change. A United Nations Framework Convention on Climate Change 2019 report showed that the power generation sector accounted for the largest share of greenhouse gas emissions at 34%[3].
To mitigate the effects of greenhouse gases on global climate and economy, many countries are focusing on alternative renewable energy sources to replace fossil fuels. Many global large tech companies such as Google, Microsoft, and Amazon, have also committed to switching to 100% renewable sources in their daily operations. Furthermore, the environmentally conscious consumers’ shift towards renewable power contributes significantly to the growth of renewable energy consumption and technologies. The increasing demand by the three major segments of energy consumers signals significant growth in the renewable energy market in a near future.
Among renewable sources, hydro and wind remain the two largest sources utilized in electricity generation industry, representing 65% and 18% of the global renewable energy market share respectively (“MarketLine Industry Profile,” 2019), followed by bioenergy (9%), solar (6%), and geothermal (1%). While the solar sector holds fourth place in renewable energy market, this sector is expected to experience significant growth as the ubiquitous nature of solar energy helps overcome many geographical limitations of hydro and wind power. Additionally, the reduced costs of materials and manufacturing make solar products readily accessible to many types of consumers[3].
Solar - What’s the difference? (PV vs CSP)
As we know, there are two primary systems to harness solar power. The first and conventional system is the photovoltaic (PV) cell which can convert direct solar radiation into electricity. This system is limited by the amount of sunlight which varies depending on location, time of day, season, etc.
The second is the solar thermal system, specifically we will focus on Concentrated Solar Power (CSP), which generates electricity by creating a temperature gradient[4]. Although the solar thermal system has great storage capacity, the system requires a large area to harness the vast amounts of solar energy needed to be stored, thus it can be costly and not well suited to areas where space is limited.
In the past, these two technologies were not considered to be equals, but they solved different problems. Photovoltaic technologies have become very affordable in a very short amount of time. The higher efficiencies achieved in PV solar cells has led them to be the renewable solar energy option of choice for generating electricity from residential rooftops to utility scale installations. Recent advances in PV technology has brought their energy production costs down in line with, or below in some markets, conventional fossil fuel energy production technologies. However, an effective method of storing this energy for consumption later, think at night or through a cloudy day, had been prohibitively expensive.
On the other hand, solar thermal systems such as the most common concentrated solar power (CSP) parabolic trough technology, have lower efficiencies but provide an inexpensive method for storing energy from the sun. These plants have been installed in remote areas where land is abundant and the sun shines plentifully. The thermal storage inherent in the design is perfect for smoothing out the conflicts in consumer energy demands and the time of day when energy is most produced through solar energy technologies.
Solar Market by Segments
In 2018, the solar energy market was valued at $52 billion globally. This market is projected to reach over $220 billion by 2026, with CARG of 21% from 2019 to 2026[5]. The market consists of two major sectors, photovoltaic (PV) and concentrated solar power (CSP). In terms of application, the market is segmented into 3 primary categories: residential, commercial, and industrial uses. The solar PV sector experienced a significant growth in the US and around the world during the 2016-2017 period, propelled by governmental policies in many leading countries such as China, India, United States, Spain, and Germany. PV capacity in Q3 2019 reached 71.3 GW of total installed capacity in the United States. Total installed U.S. PV capacity is expected to more than double over the next five years.[6]
Similarly, the CSP sector is expected to grow at a steady rate. According to Fortune Business Insights[7], the global CSP sector was valued at $30 billion in 2018 and is projected to double by 2026 at a CARG of 8.1% during the 2018-2026 period. The CSP sector is further divided into 3 categories by technology: parabolic trough, power tower, and linear Fresnel. The parabolic trough segment holds more than 80% of the CSP market share. Currently, there are over 150 parabolic trough CSP plants installed around the world. The United States and Spain are the two leading nations in the number of CSP parabolic trough plants installed and power generation. Other countries such as China, India, and Morocco are currently installing more than 10 parabolic trough CSP plants[8]. Therefore, this sector is expected to continue to grow for now.
Are these old partners now competitors?
Cost per watt of energy generated with CSP is significantly higher than costs of energy generated with PV. However, PV alone does not have energy storage capabilities. With the latest advancements in LI battery technology and the reduction in costs that have come with that, batteries have begun being used to augment PV systems to include energy storage solutions. Global deployment of energy storage is expected to double multiple times over the next decade according to Bloomberg New Energy Finance.
The PV + Battery solutions are very competitive and have begun deployment at utility scale. How comparable is it with the cost of traditional CSP energy? Both technologies satisfy the energy generation and energy storage needs and therefore are in direct competition with each other.
The benchmark levelized cost of energy (LCOE), is a standardized method to evaluate the cost of energy produced by a system over its lifetime. For low cost CSP is $103 per MWh in 2020 according to the National Renewable Energy Laboratory (NREL)[9]. The typical CSP parabolic trough plant has the capability to store over 8 hours of energy according to data collated by NREL.
The LCOE of utility scale PV systems without storage in 2019 ranged between $32 and $42, dependent on solar tracking system, per MWh. Below is the predicted LCOE of the two technologies as determined by NREL. The picture is clear that on an energy generation view alone, PV is far more competitive on LCOE.
The added cost for lithium ion (LI) battery storage alongside PV installations brings the LCOE for PV plus battery storage systems to a range of $102 to $139 per MWh for large utility scale systems with 4 hours of storage according to a report by Lazard Asset Management[10]. To compare the two systems equally, more LI battery storage would be required to achieve the 8 or more hours of storage currently seen with CSP technology. With this type of system, LI batteries are expected to last about 10 years, while PV systems and CSP systems can last for 25 years or more. This means batteries will require replacement several times through the life of the PV + Battery system.
Both CSP technology and LI battery technology are expected to continue to improve into the future, through 2050. PV + Battery systems have the advantage of the possibility for distributed deployment due to the lower demand for physical size. Currently, the LCOE of new installations of the two technologies favor CSP technology for large scale storage applications while providing the necessary energy generation and energy storage functionality.
Modern CSP parabolic trough systems achieve an efficiency around 25.2% (Weinstein et al., 2018)[11] while early systems achieved sub 16% efficiencies. With that in mind, when considering expanding electrical generation capacity alone, is it worth considering options to upgrade aging and inefficient parabolic trough CSP systems over deploying new PV systems? If the CapEx required to upgrade older CSP systems to an improved efficiency level (READ: now generating more electricity) at an installed LCOE of less than PV, than yes, it would make sense.
You might be asking at this point, “How might I upgrade my old inefficient parabolic trough plant to achieve better efficiencies for a lower cost than installing a PV farm?”. I may have answers for you in a later update, my team and I are currently researching a technology for this problem and working on a solution for you.
Tell me your thoughts!
In the meantime, tell me what your thoughts are on the new landscape of competition between CSP parabolic trough plants vs. PV + Battery Storage solutions.
Fill out this quick 7 question survey on the energy landscape!
Will PV + Battery technology overtake CSP parabolic trough technology or will CSP still have a place? Tell me in the comments below!
This article was written by Garrett Timberlake. Garrett is a Masters of Business and Science (MBS) student at Rutgers University concentrating in Engineering Management. A big thank you to my Rutgers MBS partners, Phu Huynh, Michael Frischman, and Maximo Mercedes Franco for support with the research and writing for this article.
[4] https://www.eia.gov/energyexplained/renewable-sources/ (assessed Feb. 25th, 2020)
[6] https://www.seia.org/us-solar-market-insight (assessed Feb. 25th, 2020)
[7] https://www.fortunebusinessinsights.com/industry-reports/concentrating-solar-power-market-100751
Comments