The objective of the study was to derive a comprehensive industry roadmap assessing the cost and technology development potential for solar thermal electricity (STE), and reveals the growing potential of solar energy to gradually replace conventional energy sources in the medium term and offer a solution that is cost-competitive with other renewable energies. As STE becomes cheaper, its manageability will also become a factor that differentiates it from other clean energies. STE can stored for hours using molten salts and other heat absorbing materials, enabling fluctuations in output from solar thermal electric power plants as clouds cover the sun or at night to be smoothed out, thereby ensuring a continuous supply of electricity.
Moreover, plants can be developed which combine solar power with other energy sources such as biogas. These hybrid plants also enable plant operators to provide a constant output of electricity which grid operators demand.
After a pioneering and demonstration period starting as far back as the 80s, STE is now entering a commercial ramp-up phase with 3,000 megawatts (MW) of generation capacity and new large-scale projects of over 50 MW being deployed around the world – currently mainly in Spain and the USA.
“The STE industry’s innovation efforts from the past decades are now yielding fruit. What we see today is a proven and ever more attractive industry that is right on track to soon seriously challenge conventional and other renewable energy sources,” says José Alfonso Nebrera, President of Estela.
In light of its competitive advantages, the AT Kearney study concludes that solar thermal electricity has a bright future. "A best-case scenario involves the potential creation of 100,000 to 130,000 new jobs as a result of the STE industry roadmap. Of these, 45,000 would be permanent full-time jobs in operation and maintenance," says Jan Stenger, Head of High Tech - AT Kearney Central Europe and author of the study.
Based on the current rate of development, AT Kearney estimates that production costs will halve over the next 15 years. In fact, the study shows that the cost of generating solar thermal electricity could drop by more than 30% in 2015 and by over 50% in 2025.
100 GW by 2025
The consultancy firm predicts that over the next 10 years, the solar thermal electric sector will develop a successful business model that challenges conventional energy sources and other renewable energies without the need for feed-in tariffs. “According to the study, in a best-case scenario and with the proper support STE could reach a global installed capacity of up to 100 gigawatts (GW) by 2025”, adds Nebrera.
Spain is outright leader at the forefront of the global solar thermal electric industry and plans to consolidate this position moving forward, contributing not only to achieving Spain’s 2011-2020 Renewable Energy Plan, which is expected to map out the installation of 1,000 MW of solar thermal electric capacity per annum as from 2014, but also help reach President José Luis Rodríguez Zapatero’s target of 1 million jobs in the green economy by 2020.
Helping hand still required
However, STE will need some help along the way if it is to achieve the growth the industry hopes. While it is at the top of utilities’, governments’ and decision-makers’ agendas, it is critical that governments foster the deployment of STE technology by addressing the essential energy policy enablers. “The creation and maintenance of legal frameworks such as feed-in tariffs, for instance, is absolutely pivotal and not only mitigates initial investment risks but also encourages future investments and fosters innovation,” says AT Kearney.” Moreover, energy legislation should be reviewed so that it does not hinder adequate STE plant development.” Here, the consultancy firm cites Spain, where plant sizes were limited to 50 MW, thereby restricting the achievement of economies of scale.
In addition, in the long term high-voltage direct-current (HVDC) connections should be deployed to enable large-scale energy distribution from countries where STE can achieve very competitive cost levels, leveraging on high radiation (e.g. Southern Europe and MENA), to countries which do not possess sufficient solar resources (e.g. Central Europe). This facilitates the development of both supply and demand drivers for STE.
Finally, AT Kearney concludes, it is important to establish national and cross-national cooperation and market mechanisms to foster STE deployment and to support the exchange of green electricity in order to create further outlets for STE-produced power.
The European Union is talking a lead in providing just such support to the STE sector. In November, it announced it is planning to invest around €1.2 billion in three new pan-European energy research infrastructures, including a concentrated solar power (CSP) installation based in Spain.
The solar research infrastructure EU-SOLARIS will be based at the Advanced Technological Centre for Renewable Energy (CTAER) in Spain, with laboratories in Germany, Greece, Italy, Portugal and Turkey also participating. It will focus on developing new technologies for STE. CTAER is located in the Desert of Tabernas, in the province of Almeria in south-eastern Spain. With direct annual insolation above 1900 kWh/m2 and an average annual temperature of around 17°C, it is well placed to trial solar power technologies.
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