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Why new coal? Solar towers + storage beats it on all counts

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The US-based developers of the world’s leading solar tower and storage technologies has expressed surprise that Australia’s federal government is pursuing “new coal” plants, saying that solar towers with storage beats coal on just about all fronts.

Tom Georgis, the head of international development for SolarReserve, says solar towers and storage can match and beat coal on capability – providing baseload and flexible generation – and match new coal on cost, and provide zero emissions output as a bonus.

“This is just not a direction that financial markets are heading in,” Georgis told RenewEconomy in an interview on Tuesday, during a visit to Australia, where the company is hoping to build a $700 million, 110MW solar tower and storage facility in Port Augusta, and in other states too.

“In our opinion it is almost backward looking,” Georgis said, adding that carbon capture and storage in electricity generation is unproven and not cost-effective, and coal generation needs to take account of the impact of mining, and of emissions.

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The Australian energy industry, including fossil fuel generators, have reacted to the Coalition’s push for new coal plants with a mixture of surprise and disbelief, saying any such plant is “uninvestable”.

Bloomberg New Energy Finance has estimated costs at between $138/MWh and more than $200/MWh, and significantly higher with CCS. It and others say estimate emissions reductions are grossly over-estimated.

SolarReserve says its own technology costs are “well under ” coal, even without CCS. It has been coy about its costs in Australia, having never built a plant here before, although CEFC executive director Simon Brooker told a Senate inquiry this month that a cost of around $150/MWh was being talked about for a first of its kind plant. Costs would then fall quickly as others are built.

SolarReserve is believed to be participating in a South Australian government tender for 75 per cent of its electricity needs, competing mostly with new gas stations and existing mothballed ones. It has talked with both the CEFC and ARENA.

Interestingly, Engie, the owner of the mothballed Pelican Point gas station near Adelaide considered to be its biggest rival in the tender, reportedly told the same inquiry on Monday that running the generator would not be economic, even with a government contract, because of the cost and availability of gas.

This may have prompted S.A. energy minister Tom Koutsantonis to say some positive things about solar towers and storage last week. Both the federal Coalition and Labor have promised to help promote solar towers, but have done nothing since the election.

Georgis says SolarReserve has already beaten gas generators on price in a tender in Chile last year, and is confident it can beat new gas generation in Australia too. Its main issue lies in the length of a contract, which will be crucial in its ability to secure finance.

Georgis again underlined the capability of solar towers and storage, and its ability to provide baseload power, power on demand, bulk storage, and use its steam turbines to provide the ancillary services normally delivered by fossil fuel generation.

He says battery storage will make sense for short-period needs, and as a cheaper option to network upgrades and for accompanying solar in distributed generation, but battery storage could not deliver or compete on price for bulk storage.

Pumped hydro was also unlikely to provide a “baseload” option, and was reliant on arbitrage opportunities (pumping water up hill while prices were low, and generating power when prices were high) to make it economic. Solar towers, on the other hand, had zero fuel costs.

SolarReserve has been operating its Crescent Dunes plant in Nevada – its first – for more than a year and the 100MW facility is delivering power to Las Vegas between the hours of noon and midnight. Its 1,100MWh of storage in that one plant is more than all the battery storage capacity in the US.

It is building a similar-sized facility, Redstone, in South Africa, and is bidding in a tender this year in that country to provide peaking power. About three 150MW solar tower facilities, with storage, are expected to be mandated.

In Chile, where the huge solar resources and resulting increased output pushes costs well below $100/MWh, SolarReserve is bidding another four or 5 towers in an auction scheduled later this year, and in Dubai it will compete for an auction for two 100MW solar tower facilities.

In China, mandates for 1GW of solar tower pilot plants have been awarded and SolarReserve is negotiating to provide its technology and services. It already has an MOU with Shenhua, the world’s biggest coal generator, for 1,000MW of plants and China plans another 5GW of solar towers and storage in the next 5 years.

Morocco is currently building solar towers and storage, albeit with a competing technology, and is looking to tender for more as part of its ambitious renewable energy target.

“The conclusion is that for a lot of international tenders, you have got to have storage,” Georgis says. “This is a viable technology, and cost-effective. It has most of the performance characteristics that customers need – baseload power, peaking capabilities and transmission and grid stability and reliability.

In Australia, SolarReserve is also pursuing opportunities in other states, particularly those with high state-based renewable energy targets such as Queensland and Victoria, and those with high solar resources, such as Western Australia.

“We have always promoted that solar towers and storage can do all the above, firming and shaping, ancillary services, provide the power, peak or baseload, bulk storage and deliver zero emissions,” Georgis said.

“We are certainly much more cost-effective than the mis-named ‘clean coal’ technology.”

 

   

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  • john

    One would expect that zero input energy with storage should be cost competitive with any type of generator that is dependent on energy cost input.
    As to why it comes to $150/MWh is a bit of a question mark to me.
    Perhaps the small number of builds has resulted in such an elevated cost of production due to having to pay for the tooling to develop this technology.
    I would have thought that somewhere in the $40 to $80 would be more like the expected outcome.

    Mind even at $150 for peak demand it would be cheap against the high bids being used in most Australian states.

    • danielspencer

      Yep, John. I’d say a lack of building in country. If ARENA/CEFC chipped in the price would come down & allow more projects to be built…

      • FeFiFoFum

        Still seems hellishly expensive.. $700mil for 100 MW ?

        Plus CEFC just provide finance that needs to be repaid, but on favourable terms.
        Any cost reduction will be from any available grant money that ARENA allocates to the project.

        And ARENA may not have much left in the cupboard after they are forced to fund coal projects by the government 🙂

        • brucelee

          Yeah totally… Large scale solar would be around, 1.7M x nameplate right? So the cost more storage based, but damn, those figures would hand it to the deniers

  • howardpatr

    Josh Frydenberg – on behalf of the Prime Minister and his LNP Government, especially the RWRNJs within the Liberal and National parties I have nothing to say about this fake news.

  • Chris A

    At $150Mw then that is not cheap energy. Unless that is just build cost? And it won’t compete with gas at a more reasonable price of $7GJ rather than the current nonsense due to gas moratoriums and export. I’m enthusiastic about the technology but it has to do better on pricing than that to support our heavy industry.

    • solarguy

      Your just talking about fuel cost for gas! Solar has NO fuel cost! How much to build the gas plant? How much electricity can be produced from a GJ of gas?

      Get real Chris, no new build gas plant will be cheaper than CST or PV or Wind. For that matter no existing gas plant either!

      • Chris A

        That was my question. Is it $150mwh over 12 hours for 10years? Not even SA has those peak prices. So this won’t lower base prices for industry and that’s the only reason to build the thing really since distributed solar and batteries are going to eat up domestic consumption. You can’t compete with $0 transmission. Why would I build this when I have already sunk capital into existing gas?

        • Richard

          You wouldn’t build it, you would just go out of business. But that is the free market economy. Kind of sucks right now if your neck deep in coal or gas, no wonder they are all squealing so much.

          • Chris A

            That’s my concern. We are going to leave a whole heavy industry that was built around affordable electricity in the lurch. That’s why Paul O’Malley (Bluescope) is calling it a looming Catastrophe. Are we seriously saying that all the technology out there (Clean Coal, Coal, Gas, CTS, PV etc) is only going to be cost effective at >$100MW/hr when we have historically enjoyed prices less than $40? That is catastrophic for our economy. And that’s my point. At ~$150MW’hr (if thats what it is) no one can afford it at an industry level, and it doesn’t compete with home batteries and storage in the domestic market because of transmission. Better off investing craploads in energy efficiency until the technology gets cheaper.

          • Mike Shackleton

            We historically enjoyed petrol at 30 cents a litre. We historically were able to buy loaves of bread for the same price. Inflation is a bitch.

            Compare like for like in the current environment with new equipment. Not a new CST facility against a 1960s coal fired plant.

          • Chris A

            Last time time I checked inflation was 2% not 100% over two years and out of step with other developed economies on energy

          • You’re absolutely right about energy efficiency. Should be a no brainer no matter technology we using.
            $150/MWh is a guide for its previous application, so probably lower, and any future pants will be much lower still. Remember it most likely competing with gas, and pelican point – the most efficient gas generator – says it is not economic at those sort of prices. At the moment, prices are even higher than that across all states because fossil fuel generators are maximising their profits. So we need new technologies, new competitors to keep them in check. When solar towers get down to $100/MWh or less in Oz, as they surely will, they will wipe the floor of coal and gas because of their price and flexibility. But they got to be built.

          • Richard

            Unfortunately we are in a difficult transition period. In 5- 10 years renewable plus storage unsubsidised will be cheaper than all forms of base load in the US, according to Lazard’s(independent market analysts). That means it will be sooner in Australia. No one is going to
            put up money into fossil of any type with that coming down the line . Especially in
            A country blessed with renewable resources like Australia. We are going to have to ride it out in the mean time.

          • Brad Sherman

            I think we are talking about how to replace old generators at the end of their useful life, e.g. Hazlewood. Crescent Dunes sells into the grid at 13.5 cents/kWh, I think, and I imagine the contract is for 20-25 years. Cheap coal/gas power is a legacy of using power plants that have already been fully amortised, isn’t it? You cannot assume past experience applies to future conditions. The point is that you cannot build and operate a replacement coal fired power plant for less that the cost of building and operating CST over the lifetime of the plants. At least, that’s how I understand it.

            I believe Solar Reserve has also proposed a 2GW station for somewhere selling into the grid at 8 cents/kWh. CCS would cost at least 10 cents as of a few years ago when it still couldn’t be rolled out and used reliably. On top of that ultra-supercritical coal plants will probably have to charge at least 8 cents/kWh and then you have to add on the minimum 10 cents for CCS.

            New investment in coal makes absolutely no financial or environmental sense anymore given the alternatives available today.

        • solarguy

          Cresent Dunes was built for $US135 MWH. Transmission isn’t zero cost.

    • stalga

      The AEMO recommended wholesale price average for 2016 comes out at ~$126, the recommended peak price is on par, but we all know about recent price spikes.

      So, gas plants cover a lot of these peak periods (the exact % I don’t know) indicating price parity at least. Downsides are, reliability issues in the heat, risk of explosion and both supply and price uncertainties. The global gas price is lowish already, though the outlook is fair to good, so there is little, reason to assume gas prices will fall in the short to medium term. Also, CSG moratoriums have popular support, I can’t see them being lifted anytime soon

      Solar towers and storage have none of these downsides and they are now proven technology. They have both superior baseload capabilities and greater reliability. The quoted price is likely a projection, meaning that will be the expected price in, say 2019, when the plant becomes operational.

      On top of this, the solar with storage option has a very low carbon footprint, so to me the new technology is a winner on all fronts.

    • stalga

      Heavy industries can use wind or solar without storage a lot of the time and there is plenty of time to plan to provide good conditions for them. Gas is the villain for industry at present, why not seek a better alternative? Industry won’t suffer one bit.

    • lin

      “Crescent Dunes plant in Nevada – 100MW facility, 1,100MWh of storage”
      I suspect that 150MW is peak output, and the storage capacity would be more like 1600MWh. But presumably peak output and storage capacity can be tuned to requirements.

  • solarguy

    So go for it!

  • Ken Dyer

    You would think that any government with half a brain would commit to technology like this in a heartbeat.

    Having just watched Insight about the plight of 1000 workers about to lose their jobs at Hazelwood, one came quickly to realise that not only does the Latrobe Valley sits at the heart of one of the biggest electricity distribution networks in Australia, it also has an enormously qualified, skilled, stable and permanent electrical workforce and community that is just begging for an opportunity to move into the next phase of producing electrical energy. Wake up politicians,and use some of those funds to help the Latrobe Valley.

    • Richard

      The problem is, the solar resource down there isn’t great compared to other places in Vic

      • Ian Milliss

        The sun doesn’t shine in the Latrobe Valley? Who knew?

        • brucelee

          The UK has more total solar that Australia. Only Per capita Australia wins.

    • Mike Shackleton

      I don’t think governments should be in the business of providing employment to people in specific locations just to offset job losses in an area. But the opportunities should be created elsewhere and enticements made to allow people to move.

      • Ken Dyer

        Mike, I think the point I am making is that there is already a highly skilled workforce as well as highly developed energy infrastructure in place. With minimal retraining, that workforce would be able to quickly adapt to the new renewable technologies. I would further point out that many of these people and their fathers and grandfathers have worked in the industry and they have a deep investment in their community. How do you entice someone to move when they have invested their life and their savings in an area? I don’t know. The beauty about renewable technology is that you can take advantage of existing infrastructure – you do not need to do any greenfield development – just find an open area and either build windmills or solar panels.

    • Chris Fraser

      The Ford/Holden/Toyota industry collapse showed that the Government isn’t seeking out development (and thus added employment) of emerging industry. The Government would prefer not to touch anything emerging.

    • Ashley Holliday

      They probably have half a brain, but it is their fiscal masters who have interests in coal that want to lock in years of profits from coal before it is outlawed around the world, that they must obey.

    • Miles Harding

      Just such a transition plan is being developed for WA’s Collie township that is facing a simiular problem as the past end of life Muja plants close and then the newwer Blue water plants in 2029(?).
      The principal respources in these areas are the workers, the transmission line and an impressive lunar landscape that the miners were supposed to rehabilitate.
      In WA, there is good potential for solar and wind in the area via short feeder lines to the main transmission hub) as well as, possibly, pumped hydro using the same holes the miners left (oops, were we meant to fill those in?)

      This fits well with transitioning to a renewable energy and tourism precinct, but don’t expect to see any of the LNP cabinet there admiring the wind towers.

  • Matthew O’Brien

    Why new coal??!! Because coal cash flows are already firmly in place. QED.

    – vested corporate management, government and shareholder interests;
    – lobby dollars to all and sundry;
    – scientific research for sale;
    – quarterly accounting and reluctance by the corporate rent seekers “cop the hit” moving away from coal on their watch;
    – Australia have sh*tloads of it and no matter how low the price, kindergarten maths can extrapolate huge profits – which is the teat these w*nkers refuse to wean from.
    – … and they know they will not be held accountable for retarding our progress.

    Lately, the best chance seems to be not courageous common sense but that the effects of climate change on corporate profits are being talked about in board rooms. So greed again – or the fear of less. If we had real accountability it might be harder to find a greedy w*nkers to sign off on anything to do with coal. Put a guillotine outside parliament house Scomo can be first – drop his lump of coal in the basket as he goes down on the wood.

  • BeyondZeroEmissions

    Want more detail about what CST could look like in Port Augusta?
    See: http://bze.org.au/repowering-port-augusta/
    We’re interested in others thoughts on this angle by Susan Kraemer from January in light of recent ongoing and questionable gas industry overtures to ‘partner’ with renewables: ‘Commercializing Standalone Thermal Energy Storage’ Jan 2017

  • Chris O’Neill

    battery storage could not deliver or compete on price for bulk storage

    But if you’re just a ripped-off retail consumer then battery storage is much more competitive e.g. these batteries are $122/kWh (not installed) as long as you buy at least 2 of them.

  • Gary Rowbottom

    $150 MWh is a reasonable estimate of the LCOE (levelised cost of energy, being total lifetime costs of plant divided by lifetime generation), for CST with storage in Australia. For the 110 MW plant proposed by Solar Reserve for Port Augusta a certain amount of (promised) federal funding assistance via some combination of grant/loan from ARENA/FEFC/CEIF would allow the PPA price to be offered lower – and note, fixed bar for a small annual escalation for 20 years or more. They are a little expensive to build, but mainly because of jobs, estimated at 60% Australian content. The first large Australian plant will be more expensive than any subsequent plant. Of course Solastor with their graphite block storage claim they could build a plant at an LCOE of $120 MWh.
    It is the actual winning bid prices that set the current technology costs reliably, we are still waiting to set that mark in Australia.
    The Repower Port Augusta alliance has been advocating for CST with storage in Port Augusta for 5 years, now the SA Government, through its energy tender, can be the long term power user that can make this a reality, and get a foothold for this technology in Australia. As it happens, because there were power stations closed in Port Augusta recently, some of the operating/maintaining workforce could come from those now redundant workers (like myself!), but we may need some additional skilled workers to come here, even for just that one plant. Of course during construction, a lot of workers would need to come from elsewhere. Great for the area having just lost a lot of jobs from the power station closure amongst other things,and the flow on effects.
    So come on SA Government, be the enabling factor to get something built here – do something for the needed large scale energy storage / grid security, and for jobs in regional SA.

  • I’m skeptical that any kind of utility scale energy is better than decentralised, local, distributed energy, using solar + storage + trading with blockchain microgrids. See this petition to express support for local electricity trading: https://secure.avaaz.org/en/petition/The_AEMC_Reconsider_the_change_request_for_local_electricity_trading/edit/