Alinta says solar thermal still too expensive for Port Augusta | RenewEconomy

Alinta says solar thermal still too expensive for Port Augusta

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Alinta says even under most optimistic scenarios, solar thermal with storage still too expensive for Port Augusta.

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Alinta Energy – the owner of two ageing coal fired generators in Port Augusta, South Australia, says its latest studies suggest that solar thermal generation is still too expensive to consider as a replacement plant.

Alinta issued a statement on Wednesday that said a “robust” investigation into specific technology and site options had found that “even under optimistic capital cost and operating cost assumptions there is a significant funding gap preventing solar thermal generation from being economically viable at this time.”

This is despite its new report suggesting that the total costs of a 50MW solar thermal plant with 15 hours storage would be $21o million cheaper than previously thought, now at $577 million.

However, this was still not cheap enough.

“Even under the best plausible capital cost assumptions, construction and operation of a CSP plant as currently costed and designed would have an un-geared Internal Rate of Return of 7%,” it wrote.

“Once debt financing and minimum commercial returns are considered, even this optimistic scenario is well outside of the bounds of a commercially attractive investment.”

If the costs could be reduced by 30 per cent, or capital costs of $403.9 million, it would still fall short. At current levels, it is well beyond the money it could recover from the electricity market.

alinta modelling

Alinta has been under pressure from local groups and environmental NGOs to close both the Playford and the Northern brown coal generator, and replace them with solar thermal technology. Solar towers with storage, such as those being built in Nevada by Solar Reserve, and in Australia by Vast Solar, have been suggested as possibilities.

However, Alinta says the current indications are that the technology is not yet viable. However, it will investigate the matter further, before finalising stage 1 of a feasibility study co-funded by the Australian Renewable Energy Agency.

It said these studies  will also investigate emerging “solar thermal technologies that may be commercial in the near term.” It expects the final report to be released mid this year. Alinta is currently undergoing a sales process from its private equity owners.

Alinta Energy will be holding a Stakeholder Briefing session on the Draft Balance of Study Report in Port Augusta in late April. T

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33 Comments
  1. Chris Fraser 5 years ago

    We ought to keep in mind that rates of return can be badly impacted by assumptions, which may be coloured depending on your viewpoint or perceived need of profit. Perhaps there is an Australian CST provider who could argue another view … ?

    • disqus_3PLIicDhUu 5 years ago

      They’re probably waiting for the result of RC into nuclear, giving them the nod.

  2. David McKay 5 years ago

    There are most certainly technologies that can do much better on cost. I know of 2. I would bet that they have not even considered these in their “robust” investigations. One of these technologies has at least 3 plants operating & additional signed projects in their pipeline.
    Both of these technologies are modular, so generation can start very early in the build, while additional modules are added to reach the 50MW name plate capacity.
    Both have non molten salt storage, so much lower CAPEX & O&M costs.
    I would estimate this 50MW + storage plant could be built for around US$250m.
    I would imagine ALINTA would not want to take on construction risk of any new plant (solar, coal, gas) while undergoing the sale process.

    • barrie harrop 5 years ago

      Alinta has made a request on ABC Adel/TV tonight for $160m grant from Govt,having sucked millions of dollars for State/Federal Govt for studies on this fantasyland affair.

      • Coley 5 years ago

        What do they want the grant for?

        • barrie harrop 5 years ago

          suspect to make it viable?

          • Coley 5 years ago

            The solar plant, or the existing PS?

  3. barrie harrop 5 years ago

    Why am i not surprised it was always a fantasy ,next thing they will be telling us its viable to extend the life of their dirty brown coal past their use by date power plants in Pt .Augusta .

    • Coley 5 years ago

      I imagine this ‘report’ is a justification for that scenario.

      • barrie harrop 5 years ago

        expect to suck more money from Govts,on two museum piece dirty coal fired generators past their use by date,one plant Playford was old before installation over 60 years ago.

    • Michaelinlondon1234 5 years ago

      No reason a collective of local NGO’s and locals can not form a co-operative to set your own power plant up and sell power to them cheaper. I am sure they would welcome it.

  4. Askgerbil Now 5 years ago

    The proponents of non-commercial renewable technology are some of the coal industries best, albeit unintentional, supporters. Ideologically “pure” renewable technologies are of great benefit to manufacturers of coal-fired power stations such as Japan. It uses climate change funds to finance coal-fired power stations in developing economies, boosting demand for its engineering corporations and coal mine investments.

    Its not difficult to design a renewable technology that is commercially superior.

    First step is to discard the thermal storage. If intended to provide 3 days operation without sunlight, the area of solar collectors has to be increased by SIX times what is needed for 12-hours of sunlight-powered operation. That blows the capital cost competitiveness and the maintenance costs too.

    Two alternate approaches work. If you want to halt the construction of new coal power plants and the expansion of coal mining, such compromises are essential:

    One is to use the solar thermal energy to gasify coal and municipal waste. This cuts coal demand by 60 percent and allows the use of high-efficiency gas turbines in a combined-cycle power station. These are 50% more efficient than the coal-fired power plants Japan is building around the developed world now.

    The other is to use an externally-fired gas turbine, again in a combined-cycle power station. This can be heated by concentrated solar thermal energy during sunlight hours, and ANY other fuel – whatever is cheapest – during all other times.

    • barrie harrop 5 years ago

      does it work without Govt subsidies?

      • wideEyedPupil 5 years ago

        what’s wrong with subsidies on RE? solarPV would be five times more expensive than it was in 2005 without them. wind generation would still be more expensive than burning coal and gas without govt subsidies around the world.

        especially those generous subsidies provided in Germany in the early days to get the deployment up and the cost curve downwards started on. .

        solarCST and storage will require the same govt (community) incentives to
        get going. or we could just burn coal and gas?!

  5. jim frank 5 years ago

    How surprising! The incumbent generator pooh-poohs one technology as being too costly without coming up with any alternative. I’m not sure why Pt. Augusta is fixated on concentrated solar thermal when wind & PV could be considered. Transporting coal 250 km from Leigh Creek has to be a loser.

    • wideEyedPupil 5 years ago

      community pressure. solarCST with storage provides dispatch power. in good insolation like at Port
      Augusta that means very high capacity factor and bankability.
      in a 100% renewable SE senario cheap wind and PV needs demand fulfilled in the variability gaps. hence SoalrCST with storage, probably these days you’d hybridise with solarPV also.

      BZE approached the Port Augusta community because they were concerned about the pollution from the coal plants. from there the community grabbed the concept and ran with it. Alinta is trying to
      get a piece of the action by leveraging their ageing assets with govt

      • Andrew Woodroffe 5 years ago

        I suspect the transmission lines carrying a lot of wind generation already, so having some storage would really help. Nevertheless, replacing a significant proportion of the heliostats with PV could bring the price down.

        The studies included discussion with those actually installing CST around the globe?

  6. Raahul Kumar 5 years ago

    This Alinta study is contradicted by other studies, that have found much lower costs.
    The US Sunshot program and the Australian Solar Thermal Research Initiative have found much lower costs, at 6 cents USD/kWh.

    http://solar.org.au/papers/14papers/%2368_final.pdf

    Translated into their units via Frink: That is only $60 USD per MWh. Less than half the price of their lowest projection. 2020 is not too far away either. So the literature on costs by solar researchers disagrees with the conclusions that Alinta reached.

    • Steve Young 5 years ago

      In the document you refer to “The US Sunshot Initiative set a Levelized Cost of Electricity (LCOE) target of 6 cents
      USD/kWh for Concentrating Solar Thermal (CST) Power to be achieved by 2020”. They are not able to build for at CSP at that LCOE.

  7. Mark Roest 5 years ago

    From other comments, it appears that the key stumbling block is molten salt costs. An alternative is to use batteries. By the time the solar thermal portion of the plant is built (probably more than 2 years out), battery costs will be below $200 (USD) per kWh capacity, and the levelized cost of storing and releasing energy will be headed toward 2 cents per kWh. In fact, Tesla expects battery cost to hit $130 in 2017, from what I’ve read. Other technologies under development are expected to be able to beat that number.
    The tower can also be made with far less expense than reinforced concrete. It would be good if someone could provide a cost allocation for the different important components of the proposed system.

    • Askgerbil Now 5 years ago

      Mark,
      Its not simply a matter of the storage cost – whether that is molten salt or batteries. The energy to be stored has to come from somewhere. If one field of heliostats is in-use generating power for distribution, a multiple of that number of heliostats has to be added to generate power to go to storage…

      The capital cost increases by multiples of the normal daily output depending on how many days’ storage is added.

      You could end up building the equivalent of six power stations; One to provide energy, the other five to add energy to some storage system for use at night and on consecutive cloudy days.

      • Mark Roest 5 years ago

        I don’t think that’s quite right. If you were going to use your solar one day, your storage x days, and repeat at infinitum, that logic would hold, but that’s not the design reality. After you install, you accumulate x days (or hours) of storage over time. Let’s assume you put in two days of storage after your weather records tell you that you typically have one-day to two-day storms that block the sun. Let’s also assume that these records tell you that you almost always have 10 days of sunshine between storms, and that you have 5 full time equivalent hours of sun per day. Say you are off grid, and sizing your system to provide all your electricity. You need to size your system to fill the two days of storage over a ten-day period. If you increase the size of your system by 20%, it is like getting one extra full time equivalent hour of sun. So each day you will store 20% of one day’s usage between storms, and you will thus fill storage just in time for the next two days of stormy weather.
        Obviously, you have to follow the rule that says when you build in nature, study nature for at least a year, to know the seasons. (Or, in this case, get a nearby airport’s weather (visibility) records, or get data off the Internet.) If it isn’t as nice and neat as a hypothetical example. you have to choose how much you want to pay for and have room for on your roof — to cover the worst storm in a ten-year time period? To cover only two days, and either camp out, start a generator, or go to a hotel if the storm lasts longer? 🙂

        • Askgerbil Now 5 years ago

          Mark,
          The fossil fuel juggernaut can easily defeat marginal new technology by dropping its prices and sustaining losses from its reserves for as long as it takes to see off the new competitors. That is what happened in the wake of the 1970’s “oil shocks”.

          Just cutting demand for coal by 50 to 60 percent will deal a fatal blow to the industry. There’s no need to aim for a target that is beyond reach.

          Japan is quite successful in signing contracts to build new coal-fired power stations around the developed world. The fate of one aging coal plant in South Australia is not very important in this contest between the entrenched old technology and the new.

          Consider ways to process the energy available in 1 kilogram of brown coal, 8.60 megajoules….

          In a coal-fired power station which is at best 40% efficient, it can produce 3.44 megajoules of electrical energy.

          A solar thermal power station may achieve almost the same efficiency, being able to convert 8.60 megajoules of solar energy to 3.44 megajoules of electrical energy. This power station will have considerable commercial problems to achieve the reliability of the equivalent coal-fired power station.

          An alternative is to use 5.54 megajoules of solar thermal energy to gasify the kilogram of brown coal to create syngas that embodies 14.14 megajoules of energy: 8.60 megajoules from the coal plus the 5.54 megajoules of solar energy.

          Converting this syngas to electricity in a combined-cycle power station which can run at 60% efficiency will produce 8.48 megajoules of electrical energy…

          The addition of just 5.54 megajoules of solar thermal energy has increased the electrical energy produced from 3.44 megajoules to 8.48 megajoules… which is 5.04 megajoules. This is very close to 100% of the solar thermal energy.

          The combined-cycle power station has the reliability of a coal-fired power station, can operate with natural gas if circumstances demand, and cuts demand for coal by 60%.

          The coal industry has no answer to this technology.

          • Mark Roest 5 years ago

            However, I do have an answer to it. You are still extracting a kg of dirty coal from the Earth, and converting it to a form of carbon, then delivering that carbon to the atmosphere, thus spelling doom for life on earth as we would have known it if we were not urbanized.
            You state, re solar thermal, “This power station will have considerable commercial problems to achieve
            the reliability of the equivalent coal-fired power station.” No, it will not, with thermal storage. There are a few fundamental problems with coal’s ‘reliability’ today: 1) We’re going to shut it down in a few years by fiat, if pure economics has not done so earlier, 2) It does not reliably protect people’s health from direct exposure to it or its byproducts, anywhere along its supply chain, 3) It contains all kinds of yucky tars which can eventually gum up the works (I didn’t keep the story, because I didn’t realize this would come up, but I read that a coal plant’s utilization factor is rather low, due to reliability issues), even if it’s not being pushed out of the market by cheaper (on a levelized cost of energy basis) wind or solar power.
            If you really are enamored of combustion, your best bet is to gasify cellulose instead of coal, because its carbon was pulled out of the atmosphere recently, and after you gasify it you can pyrolyze it, making an efficient liquid fuel and biochar, which you can then bury in the ground, making your garden much more productive for the next 500 years or so.
            But instead, I encourage you to look to wind, solar PV, concentrating solar PV, solar thermal, tides, waves, ocean currents, or the run of streams, use the most efficient technology available or help develop even better, and do cogeneration with the heat of the concentrating PV or solar thermal. The wind or flowing water that gets by a turbine is not ‘wasted’, it’s continuing its path in nature, which is sacred and holy whether we are here as stewards or despoilers, or not. Ducting can harness more of it. We just accept that we are getting whatever percent of the Betz theorem we can out of the stream of air or water, and work to do better by tweaking the turbine and / or the generator.

            With new designs and manufacturing technologies, and finance redirected from the fossil fuel industry, we can quickly (within 15 to 20 years of when we commit big dollars) roll out factories to roll out renewable energy systems sufficient to replace the demand left over after we do massive energy efficiency, and rehabilitation of buildings. Then something will happen that your plan can never do: we can all stop buying any fuel at all, other than fuel from waste streams that would otherwise release methane into the atmosphere; with biogas plants we can capture it, and combust it, then capture the CO2 and pipe it into greenhouses to grow plants.
            In other words, with renewable energy, we can totally, absolutely shut down the entire fossil fuel and nuclear power industries by 2040, or 2050 at the latest. No more coal or uranium mining, or oil or gas drilling. No more pollution killing millions of people every year, no more acid rain, no more mountaintop removal in the Appalachians, no more dredging through the Great Barrier Reef to put in fossil fuel terminals. A chance to draw down the carbon we’ve already put into the atmosphere and the oceans, reverse global warming and ocean acidification that threatens the entire ocean food chain, and save as many of our relations in nature as is still possible to accomplish when we finally regain our collective sanity.

          • Askgerbil Now 5 years ago

            You search for perfection will lose the war.

          • Mark Roest 5 years ago

            It’s not a search any more, and it’s not for perfection. That will come a few years up the learning curve. For the first part, I suggest you read the rest of the stories on Renew Economy with an open mind; you clearly are discounting its excellent coverage of the rest of the world’s progress, particularly the investment banks and nations who are openly saying that coal is history — think of it as the walking dead. If you are in Australia, my condolences for the temporary death of your democracy at the hands of your version of the Tea Party; we face the same fight here, so I am not underestimating the adversary. I have joined in the fight, and invite you to do the same.
            Several of the dates on the announcements you use to argue go back to 2012 or earlier. I suggest you search RenewEconomy for stories about canceled coal and oil projects in reaction to the fall in oil prices, and public political pressure. The basic idea is that coal and oil mining and power production companies face continuously increasing costs, and growing political pressure to end their pollution as well as their direct and indirect GHG emissions — to pay to control it, or to pay in carbon and pollutant taxes, thus internalizing the costs to society and life which they have externalized. The projects with higher costs than the market price of energy will increasingly be shelved, as many already have been. After studying the results, I suggest you study the underlying principle: Peak Fossil Fuels.
            I’ve been studying the battery industry and potential market for over 2 years now, as part of a startup. It’s going to break through the cost barriers, if only solely on Tesla’s back, though I’m now convinced there will be at least a few of us. That will harness the power that made coal strong in the first place: price competition. Coal is in a long, drawn-out version of Custer’s Last Stand. I mean really — how long do you think Tony Abbott will hold onto power? How many Australians want to keep paying outrageous electricity rates? The power of non-monopoly capitalism is the power of the creation of choice. That’s real, even though it can and does get perverted by people whose only interest is self-aggrandizement.

          • Mark Roest 5 years ago

            PS: it takes time and effort to turn a supertanker, or a corrupt, domination-addicted industry.

          • Askgerbil Now 5 years ago

            You under-estimate your adversary. The coal juggernaut has the capacity the pay public officials who make investment decisions and to provide subsidised loans for construction of power stations. You unwittingly allow it to expand at will.

            Here are some recent examples of advances made by the coal industry:

            Mitsui to build and run $3.3 billion Malaysia coal power plant. June 4, 2014.
            A consortium led by Japan’s IHI Corp has been awarded a contract for engineering, procurement and construction (EPC) of a 2-gigawatt (GW) coal-fired power plant in Malaysia. September 2, 2014.
            Japan has counted $1 billion in loans for coal plants in Indonesia as climate finance.
            Japanese officials are also counting $630 million in loans for coal plants in Kudgi, India, and Matarbari, Bangladesh, as climate finance.
            Japanese trading house Marubeni will partner with Thai utilities to build a 2-million-kilowatt coal-burning power plant in Myanmar. October 10, 2014.
            Medupi Coal-Fired Power Station, South Africa. The power plant will have six units that will together generate 4,800MW. The first unit is scheduled to be commissioned in early 2012. The remaining units will be commissioned at regular intervals of nine months, with the last due for completion in 2015. The plant will be the largest dry-cooled coal-fired power station in the world. It is expected to be operational for nearly 50 years. Medupi, whose total installed capacity is expected to be 4,764 MW when fully complete, would be the first power station that South Africa has built in 20 years. Eskom has been implementing regular power cuts to cope with power shortages. March 27, 2015.
            Nigerian Minister of Power Bart Nnaji said that the government will build three coal-fired power stations in Enugu, Kogi and Gombe states, each with a 3,000 megawatt capacity, to diversify the nation’s electricity sources. September 12, 2011.

  8. Mark Roest 5 years ago

    @raahulkumar:disqus
    Could you please provide links to the two estimates, if they are handy?

  9. Michaelinlondon1234 5 years ago

    Just remember your umbrella and rotisserie spike if they go through with it. Plenty of free roast bird and insect.

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