Lost in translation: Explaining the value of solar thermal | RenewEconomy

Lost in translation: Explaining the value of solar thermal

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The latest AETA report highlights the fact that the current costs, cost reduction potential and value of CSP technology are not yet properly understood.

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The hope is that the Australian Energy Technology Assessment (AETA), the first iteration of which was released by the Bureau of Resources and Energy Economics (BREE) earlier this week, should enable a more balanced, rational and transparent approach to electricity generation technology cost assessment in Australia to emerge over time.

To be reviewed formally every two years and more frequently if required, and with its modeling tools accessible for general use, the AETA should, over time, become a valuable interactive tool to support the design of a future energy system that represents the best economic and environmental options for Australia.

For solar thermal power in Australia, the first AETA contains both encouragements and disappointments.

The AETA’s authors ignored the best available data and analysis of current costs and likely cost reductions for solar thermal power in Australia, from the major report ‘Realising the Potential for CSP in Australia’, funded by the Australian Solar Institute and released on June 6.

The CSP Report found a baseline cost of $252/MWh represents the most conservative, least technical-risk CSP technology built at a ‘most favourable’ site in Australia.’ This compares with the AETA’s finding, for the same technology, of $322-$393/MWh; 30-55 per cent higher.

No explanation is provided in the AETA to reconcile such a significant difference.

The second disappointment is that the AETA continues a prevailing approach of Government energy policy development in Australia which considers levelised cost of energy (LCOE) as the only relevant measure of economic worth of energy generation technology. It assumes that electricity must be produced the instant it is needed. It follows from that logic that at the critical determinant is the cheapest possible generation cost.

This over-reliance on LCOE as a determinant of policy has significant weaknesses that have led Australia, in recent years, down the path to a very expensive electricity system.

The quality of analysis of value – as opposed to simply cost – of different generation technologies will have deep and lasting impacts on Australia’s economy and environment.

With upwards of $120 billion in electricity network investment forecast to 2030, and the need to replace virtually all Australia’s current generation fleet by 2050, there is an urgent need to move away from over-reliance on levelised cost comparators and adopt more nuanced measures that take account of the value generation output from different technologies, in the context of the future electricity system.

Australian industry and consumers are suffering very steep electricity price increases driven mainly by two inter-related forces – increasing peak electricity demand, and the consequent need to massively upgrade electricity distribution networks. These forces have been created by an excessive focus on LCOE and ‘instant generation’ costs.

The very different future the AETA acknowledges will be about dispatchable electricity capacity, positioned in the optimal places to drive network efficiency, and able to generate at times when the generation output is of most value. The future will be about a combination of low-cost technologies that generate supply whenever their motive resource is available (wind power and solar PV being a major portion), supported by technologies with the ability to release electricity into the system at optimal times to most cost-effectively meet demand.

And that means the future must include energy storage.

The ‘Realising the Potential for CSP in Australia’ report highlighted that the value of solar energy can be more than 40% greater than electricity randomly generated, and dispatchable solar energy – using thermal energy storage – 100 per cent greater. Research in Australia and internationally continues to show that solar thermal generation with energy storage can support the reliability and stability our future electricity networks will require.

While the authors of the AETA acknowledge that Australia is heading rapidly towards a very different energy future, there is not yet an acknowledgment of the central role of energy storage in that future. The AETA does not create any facility to value energy storage capability.

The combined impact of over-statement of CSP current costs, understatement of future CSP cost reductions, and the failure to take account of the value of solar thermal power generation and commercially available CSP energy storage, means that this first AETA fails to accurately represent the comparative value and advantages for Australia of solar thermal power development.

The AETA and the draft Energy White Paper released in December 2011, read together, illustrate the belief in energy bureaucracy that power from things we can dig up, process and burn is better than power from sources we don’t need to dig up.

In a matter of less than a year since the draft Energy White Paper was released, the data as to reducing solar PV power costs has reached that tipping point – it has become so compelling that it simply can no longer be ignored.

That the AETA acknowledges a very different energy future for Australia, and recognises the vital role of solar power in that future, is profoundly to be welcomed.

The challenge now for the solar thermal energy industry is to redouble efforts to show that current costs, cost reduction potential and the value of solar thermal power have not yet been properly understood and incorporated into the AETA’s analyses – and to continue to work towards the data tipping point.

Andrew Want is the CEO of Australian solar thermal developer Vast Solar, and is the Chair of the Australian Solar Thermal Energy Association (www.austela.com.au). Andrew is a member of the Review Reference Group for the report ‘Realising the Potential for CSP in Australia’

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  1. Gary 8 years ago

    I believe it would be in the best interest of the suppliers of CSP and CPV to start talking to each other, because it seems to me, that they have a great deal in common.
    There appears to me, that they both share some really good synergies in my opinion?

    Why not use a hybrid system, one where they both use a central tower with a receiver on it and they also use flat panel mirrors with two axis tracking on them, why not have two or more receivers on the same tower, one consisting of CSP and the other CPV, a system where the suns rays could be directed at either receiver, depending on the situation at hand, a system where you got the best of both worlds, depending on the conditions, one where you had storage for night time use or when conditions were not conducive to good CPV power production, but one where the better efficiency of CPV power production was used when full sun was available during peak loading times on hot sunny days,when everyone switches on their air con at the same time,you could concentrate the rays, or at least a good percentage of them onto the more efficient CPV receiver to gain maximum efficiency, but still have the advantage of having storage available as well, where you got the best of both worlds,but with the benefit of reduced costs overall per MW/Hr.

  2. Bonzo 8 years ago

    If the current state of the CSP industry in Australia ever needed a simplifying metaphor it’s the dearth of gold medals our Olympians have secured so far in London. Arguably the latter is due to complacency of sports administrators 4, 8 or even 12 years ago when the country rode high on the hog in medal tally terms due to years of prior investments in training and talent development. It’s hard to worry about the future when basking in today’s glory. The outcome in London, despite occasional flashes of individual brilliance, is an object lesson in upbeat Aussie rhetoric giving way to superior international competition. Now, switch to CSP. While it may well be easier to use fuel dug out of the ground to power Australia’s energy needs today other countries are right this minute busily preparing for a carbon constrained future, investing in skills and technologies that will put themselves at the front of the cost/value curve that AETA seems to have overlooked, so far.

    • Concerned 8 years ago

      Bonzo exactly. Lets stop subsidising expensive imported PV and fund the CSIRO, Universitys and promising private players with adequte research funds.
      How many billions have been, and are being wasted on the current folly.
      Let us also look into the use of biomass, which is abundant in this country.Gasification for the production of 24 hr power and also liquid fuels.

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