csp in the mediterranean - ig partners

8/8/2019 CSP in the Mediterranean - IG Partners

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CSP in the Mediterranean:technology potential and development opportunities

Stefano Barazzetta

Milano, June 2009

This report is solely for the use of the recipients. No part of it may be circulated, quoted or reproduced for distribution

outside the recipients organization without mentioning IG Partners as a source.

v. 29/06/2009


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CSP: THE NEXT BIG THING?

So far solar equals photovoltaic, but:

cost per kWh remains stubbornly high

photovoltaic penetration continues to be very small

CSP holds great promise but faces numerous hurdles

various competing and still evolving technologies with thermal storage as key

2

significant potential for reducing costs and advantage in limited space requirement several players already active

US and Spain current market leaders but enormous potential in the Mediterranean


3/20

SOLAR PV REMAINS EXPENSIVE, AND WITH LIMITED PENETRATION

Europe electricity generation capacity:

total capacity vs. photovoltaic capacity

2000 - 2008

%, GW

Electricity price and PV generation cost comparison

2008

/kWh

0,0% 0,4%

100% = 700 810

3

0,35

0,12

Electricty from PV

Average EU-27 price

*

*: average of costs related to low latitudes with high solar irradiation and high latitudes with low solar irradiation

Source: Eurostat (2009), Epia (2009), Eia (2009)

100,0% 99,6%

2000 2008

PV capacity

Total capacity


4/20

CSP: CONCENTRATED SOLAR POWER

CSP plants concentrate solar radiation to produce electricity via a steam turbine*

Concentrate thesolar radiation

Absorb the solarradiation and

convert in into

thermal energy

Transfer thethermal energy to

a conversion unit

Convert thethermal energyinto mechanical

energy

Convert themechanical energy

into electricity

using a generator

Process

Collector

(e.g. mirror)

Receiver

(e.g. absorber tube)

Heat transfer medium

(e.g. oil)

Conversion unit &

Steam TurbineElectricity generatorComponents

CSP process and components

Working principles and features of CSP a solar reflector field consisting of mirrors

(parabolic shape or flat) concentrates solar

radiation onto a receiver (i.e. absorber tube in

which synthetic oil or an other medium flows, or

a central receiver tower holding the heat transfer

medium)

the heated transfer medium is pumped througha heat exchanger generating steam which drives

a steam turbine to produce electricity

during the cycle, the transfer medium can also

go through a heat exchanger to charge the heat

storage system: molten salt (or another storage

medium) can be heated and used afterwards to

retrieve thermal energy for operation during thenight

4*with the exception of the dish technology where a Stirling engine generates electricity

CSP: parabolic troughtechnology

Different technologies

are available, at different

levels of maturity

CSP plants are usually

large-scale plants (10/50

MW and beyond, up to300 MW), best suited for

utility-scale applications


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Parabolic trough Power tower Dish/engine Linear Fresnel

Bolic

Base technology Central tower receiver Several units each withStirling engine

Flat shape mirror

Commercial Installed

Capacity [MW]519 31 - 1,4

Status commercialproven/

commercial

pilot/

provenR&D/pilot

CSP: TECHNOLOGY OVERVIEW

Four different technologies, at different levels of maturity and deployment

Capex*[USD/kW]

4.200 9.000 5.600 8.500 5.600 9.000 3.500 7.700

Full Generation

Cost** [USD/kWh]

current: 0,12-0,17

future: 0,06-0,08

near term: 0,12-0,38

future: 0,06-0,08

near term: 0,12

future: 0,06

near term: 0,10

future: 0,08

Plant/Unit Size

min/max [MW]10-300 10-200 0,03-1 1-200

Area requirements

[ha/MW]

without storage: 2,5

with storage: 4,0


with storage: 6,5

second best

after linear Fresnel


with storage: n.a.

Storage possibility Y Y N Y

Announced pipeline

up to 2016 [MW]4.500/6.000 2.600/3.000 1.400 1.800 480/750

Key Developers

Solargenix, Solel

Solar Millennium

Abengoa, Sky Fuel

Solucar/AbengoaBrightSource Energy

eSolar, Torresol

Stirling Energy Systems

Infinia, Abengoa

Ausra, Novatec Biosol,

Solar Power Group

5*: /USD = 1,4 - Deutsche Bank (2009) estimates; **U.S. generation costs estimates; Acciona has a 55% stake in Solargenix ; Torresol is a JV between Sener and Masdar

Source: DLR (2007), McKinsey (2008), Sandia National Laboratories (2008) , Cleantech (2008), SolarPaces/Estela/Greenpeace (2009), Deutsche Bank (2009)


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THERMAL STORAGE IS KEY

Thermal storage allows CSP to supply electricity even when the sun does not shine and

to dispatch energy predictably and on demand, significantly improving plant revenues

Heat is stored in molten salt (or other media) and can be retrieved for operation during the

night: the plant is able to produce electricity for a longer number of hours

PROs CONs

increases the load factor from 30% to

50% and beyond

not fully tested at commercial level

plant-specific (at the moment): tailor

NO THERMAL

STORAGE

power production

California demand

PEAK

LOAD__

6*Thermal storage additional capex for the Andasol 1 plant amounts to about 40/kWh (5% of total plant cost), but reduces the electricity cost by 11%; using concrete instead of molten salt as

storage medium is estimated to reduce additional capex to 20/kWh; ** at Andasol 1 (200 ha in total), thermal storage footprint is 50 ha

Source: Sandia National Laboratories (2008), CSP Today, Photon, Scientific American, SolarPaces/Estela/Greenpeace (2009)

a ows to pro uce more va ua e

electricity is very efficient(> 90%)

made solutions are expensive

increases the capex* and land

requirements of the plant **

Higher

electricity

value

WITH

THERMAL

STORAGE

Plant YearStorage

hours Technology

PS20 (solar tower) 2009 1 steam

Andasol 1(parabolic trough)

2008 7,5 molten salt

PS10 (solar tower) 2007 1 steam

Thermal storage: commercial installations Thermal storage

Andasol 1 plant


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CSP: GREAT PERSPECTIVES, WITH SOME SERIOUS HURDLES

PROs CONs

a (partially) mature technology, notwithstanding

still open to many improvements: economies of

scale have not yet been reached

best positioned to exploit the potential offered

by solar energy, several times larger than the

current and future world electricity demands

more cost-effective than solar hotovoltaic and

location specific: high potential in the US, lower

in Europe, enormous in North Africa

not yet cost-competitive with conventional

electricity sources

capital intensive: financing may constitute a

major hurdle in the actual economic downturn

CSP is a viable CO2-free alternative to PV for large-scale infrastructure

7

competitive with other renewables sources scalable and with thermal storage possibility

allowing dispatchable power, i.e. electricity

predictable and on demand(unlike other

renewables): both ofgreat interest for utilities

hybridization potential for deployment together

with traditional technologies or as retrofit to

existing plants

many government incentives already in place

huge pipeline of projects around the world, and

growing: Spain and US are the leaders

huge quantities of water needed for the cooling

process: dry-cooling technologies are underdevelopment, but not mature yet

components bottlenecks possible in the medium

term (i.e. receivers, mirrors, etc..)

typical large-scale deployment reliant on the

development ofintegrated and dedicatedgrids/connections

performance negatively affected by wind and

dust


8/20

CSP HAS THE POTENTIAL TO BE COST COMPETITIVE WITH CONVENTIONAL

POWER SOURCES

Technology developments, learning curve effects, economies of scale and politicalsupport may help CSP electricity generation costs to decrease significantly

10,8

7,0

5,0

CCGT

Nuclear

Coal

Comparison of electricity generation costsUSD cents/kWh

Conventional

plants

8Note: CSP generation costs refer to the US; in Europe costs are higher (> 0,20 /kWh for parabolic trough plants), but quickly decreasing

Source: Deutsche Bank (2009), team analysis

4,0

5,0

6,0

8,5

9,115,1

17,0

49,0

Large Hydro

Geothermal

CSP - FUTURE

Biomass

On-shore WindOff-shore Wind

CSP - TODAY

Photovoltaic

Renewableplants

- 65%


9/20

CSP: WHICH LOCATION?

CSP plants need high sun radiation: desert areas offer the highest potential

CSP

suitability

Direct Normal Irradiation*

2 2

* Direct Normal Irradiation (DNI) is the sunlight that is not deviated by clouds, fumes or dust in the atmosphere and which reaches the Earths

surface in parallel beams for concentration

Source : Schott (2008), team analysis

9

Unsuitable < 2.000 < 5,5

Suitable 2.000


10/20

CSP OFFERS AN ENORMOUS POTENTIAL WITH LIMITED LAND USE

CSP has a limited footprint, far smaller than required by other renewables

9.000.000

Area needed to satisfy the current world electricitydemand through different renewable energy sources

km2

A desert area of 80 km x 80 km dedicated to CSP couldproduce in a year as much energy as contained in all Middle

East oil production (9 billion barrels/year)

World electricity demand* can be met through a desert area

of 300 km x 300 km (as small as 0.23% of all world deserts)

NORTH AFRICA HAS AN ENORMOUS POTENTIAL LIMITED LAND USE

*19.000 TWh/y (2008)

Source : DLR (2006), U.S. Department of Energy, World Resources Institute/Goldman Sachs (2009), Desertec (2009), team analysis

10

90.000270.000

2.520.000

CSP Photovoltaic Wind Biomass

30% 90% 840% 3.000%

Areas of the size as shown by the red squares would be

sufficient for CSP plants to generate as much electricity as

consumed by the World and by EU-25 respectively

% on

Italys

surface


11/20

CSP OFFERS HUGE GROWTH PERSPECTIVES IN THE SHORT TERM

CSP is gaining momentum after two decades of dormancy: 550 MW in operation*,

1 GW in construction, more than 10 GW in the pipeline

Solar installed capacity

%, GW

3%14%

84,515,5

CAGR

08-15

57%

500RoW

Spain

CSP: cumulated capacity forecast

MW

6.200

100% =

*70 MW installed during 2009 (spanish plants PS20 ,Puertollano and PE1 started operations)

Source : Emerging Energy Research (2009), EPIA (2009), McKinsey (2008), Cleantech (2008)

11

97%86%

2008 2015e

CSP

PV

25%

274 354 354 419 419 750

2.000

61419

750

3.700

200

1990 1995 2005 2008 2009e 2010e 2011e

USA

354 354480

838

1.700

274


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CSP VALUE CHAIN AND KEY PLAYERS

The CSP arena is evolving rapidly, with the entry of technology-focused start-ups and

increasing interest from utilities: further integration downstream and upstream is expected

Project Development Project Financing EngineeringTechnology

procurementConstruction

Operation &

Ownership

Qualify site, feasibility study,

paperwork, economic and

technical analysis

Devise viable financing

structure and provide

for financing

Detail planning &

implementation, plant

layout, advisory

Technology supplier:

receiver, mirrors,

structure, thermal

storage, etc..

Construction

works

Hold, buy and sell

shares in the power

plant, operate plant

EBIT margins estimate 25%-50% 40%-65% 5%-20% 5%-25% 5%-15% n.a.

KEY PLAYERS

SOLEL IL X X X (X)

SOLAR MILLENIUM DE X X X X X X

Source : Deutsche Bank (2009), team analysis

12

ABENGOA S.A. ES X X X X X X

SOLARGENIX US/ES X X X (X)

SENER INGENERIA ES X (X) X (X)

ACCIONA ES X X X (X) X X

SKYFUEL US X X X (X) (X)

BRIGHTSOURCE US X X X (X) X

AUSRA US/AU X X X

SCHOTT SOLAR, FLABEG DE X

MAN FERROSTAL DE X

ACS COBRA ES X X X

IBERDROLA, EDP, PG&E various X

X: core business; (X): minor activities


13/20

MARKET: TODAY THE U.S. AND SPAIN ARE UNDISPUTED THE LEADERS

After the first plants during the 80s, CSP is coming back, driven by oil price volatility,

climate change concerns, and new incentive schemes

California 1985-1992

9 parabolic trough plants built for a total of 354 MW: the plants

were provided with natural gas back-up (SEGS plants)

Electricity production costs decreased by about 2/3, from 0,44

$/kWh for the first 14 MW plant to 0,17 $/kWh for the last 80

MW plant

Spain 2007-2009 Spain ha set a 500 MW CSP target for 2010, and has approved a 0,27 /kWh 25

years feed in tariff for CSP

Between 2007 and 2009 the first European CSP plants have started operations:

PS10 (11 MW) and PS20 (20 MW), solar tower technology

Andasol 1 (50 MW) and Puertollano (50 MW), parabolic trough technology

PE1 (1,4 MW), the world first linear Fresnel commercial plant

The current pipeline includes at least 12 plants in construction for a total of 800

MW, plus about 2.000 MW near construction, 8.000 in authorization, 3.500announced

USA 2007-2009 In 2007 Nevada Solar One (67 MW, parabolic trough) starts operations, the first CSP

plant built in the U.S. since 1991

CSP development is mainly driven by RPS (Renewable Portfolio Standards), which

oblige utilities to source certain shares of electricity from renewables

More than 5.000 MW are in construction/pipeline

Source : ENEA (2008), CSP Today.com, SolarPaces/Estela/Greenpeace (2009), team analysis

13


14/20

Country CSP

potentialTWh/y

% on EU

demand

CSP IN THE MEDITERRANEAN: AN ALMOST LIMITLESS SOURCE OF ENERGY

Electricity generation potential from CSP in North Africa is practically unlimited:

Algeria alone has a potential as large as 9 times the world electricity demand

Europes potential is far lower, but still enough to meet half of the continents current

electricity demand

Country CSP

potentialTWh/y

% on EU

demand

NORTH AFRICA EUROPE

World Electricity Demand

2008

TWh/y

Algeria 169.000 5.200%

Lybia 140.000 4.300%

Egypt 73.000 2.250%

Morocco 20.000 615%

Tunisia 9.000 276%

Total

North Africa 411.000 12.600%

Spain 1.278 39%

Portugal 142 4%

Turkey 131 4%

Cyprus 20


15/20

CSP IN THE MEDITERRANEAN: CURRENT PIPELINE

Country Installed

capacity

MW

Planned

capacity

MW

Feed-in

tariff

Note

Spain 132 > 10.00027 c/kWh 25 years

(max 50 MW plants)

five plants in operation (3 opened in 2009)

about 800 MW in construction

Algeria - 265 N natural gas/CSP hybrid* plants under development: two

20 MW plants are in construction and three 75 MW plants

have been planned (ISCSS*)

In the Mediterranean 5 plants are currently in operation, all of them in Spain: several

other plants are in construction or in the development phase

* two hybrid configurations are possible: in SEGS plants a small natural gas component, up to 25% of the total power production, is installed along with the CSP component; in ISCSS plants a smallCSP component is integrated into a traditional gas plant, to produce up to 15% power during peak hours

** the constraint is the total plant footprint (max. 2mil m 2), which limits the size of the plants to approx. 125 MW

Source : CSP Today (2008), team analysis, SolarPaces/Estela/Greenpeace (2009)

15

Greece - 50 24 26 c/kWh 50 MW plant in construction in Crete

Egypt - 40 N 40 MW natural gas/CSP hybrid plant (ISCSS) in

construction

Morocco - 20 N 20 MW natural gas/CSP hybrid plant (ISCSS) in

construction

Portugal - 727 c/kWh (< 10 MW)

16-20 c/kWh (> 10 MW) 7 MW plant planned

Italy - 5 22-28 c/kWh - 25 years(max 125 MW** plants)

5 MW pilot hybrid plant in construction in Sicily

TOTAL 132 > 10.000


16/20

EUROPE NORTH AFRICA GRID INTERCONNECTIONS

The deployment of long range electrical interconnections will be required in

order to import electricity from North Africa to Europe

Algeria and Germany have

announced the construction of a3.000 km long / 6 GW connection

between the cities of Adrar and

Aachen, for a 2 bil investment

The only existing electrical connection in the

Mediterranean links Spain with Morocco In August 2008 Italy and Tunisia have signed an

agreement to deploy an electrical link

3 more EU-North Africa links have been announced

16

Electrical international links in the Mediterranean

Source : German Ministry of Environment / Mediterranean Observatory of Energy (2008)

Aachen

(Germany)

Adrar

(Algeria)


17/20

FEASIBILITY STUDIES AND PROJECTS

Many feasibility studies for the deployment of CSP in the region have beenconducted and others are in progress: the interest in CSP is growing fast

Project/

Objective

Source Description Target Investmentbil

Average

CSP CapEx

mil /MW

Development of CSP in

MENA

(2009 in progress)

World Bank* concept note for a CSP scale-upprogram in the Middle East and

North Africa region (plants +

electrical links)

1 GW

within

2015

CSP+links:

4,5/6,2

4,5/6,2

Completion of current Emerging estimates the investments neededto com lete the current lobal CSP

14 GW CSP: 60 4,3

17

(2009)

Research

pipeline (about 14 GW) 2019

Mediterranean

Solar Plan

(2008 in progress)

Estela/

Union of the

Mediterrane

an

promotes and estimates the

investments needed to develop CSP

technology in the Mediterranean

region (plants + electrical links)

19 GW

within

2020

CSP: 81

links: 16

4,3

DESERTEC

(2005-2006)

German

Aerospace

Center (DLR)

estimates the CSP potential in the

Mediterranean region, and the

investments and benefits related tothe deployment of 100 GW of CSP in

North Africa and of the required

electrical links to Europe (20

submarine HVDC** lines, 5 GW

each)

100 GW

within

2050

CSP: 350

links: 45

3,5

* World Bank is currently evaluating a 600 mil investment in the program trough the Climate Investment Fund

** High Voltage Direct Current

In June 2009 the reinsurer Munich Re has

announced that it has formed a consortium

together with other German companies

(Siemens, Deutsche Bank, E.On, RWE) to

explore the possibility of turning Desertec

into a real-world project


18/20

Growth of energy demand in the Mediterranean region:

recent estimates* indicate that by 2030: energy demand in the area will grow by 44% vs. 2005 levels

30% of natural gas demand and 40% of oil demand will be met trough imports

DRIVERS FOR THE GROWTH OF CSP IN THE MEDITERRANEAN REGION

Increasing focus on CO2 emissions reduction, oil price volatility, energy

security and global climate regulations are driving the growth of CSP

CO2 emissions growth in the Mediterranean region:

by 2030 CO2 emissions are estimated to grow by 50% vs. 2005 levels

20-20 2020 emissions and renewables package:

committed EU to reduce GHG emissions to at least 20% below 1990 levels by 2020 and to

increase the share of renewables in energy use to 20% by 2020 makes explicit provisions that green electricity imported from third countries may qualify

for the target

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*Source: Mediterranean Observatory of Energy (2008)


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CSP IN THE MEDITERRANEAN: AN ENORMOUS AND UNTAPPED POTENTIAL

Exploiting just 0,2% of the CSP potential in the Mediterranean region would

allow to exceed the current contribution of all renewables in the EU and to

satisfy about 15% of the 2050 EU electricity demand forecast

100% = 3.354 TWh

EU-27 electricity generation2050TWh, %

EU-27 electricity generation2006

TWh2; Solar PV

6; Geothermal 100% =4.600 TWh489 TWh

; n

90;Biomass

309;

Hydro

19

15%

85%

RENEWABLES

CONVENTIONAL

3900 TWh;

85%

700 TWh;

15%

CSP*

ALL OTHER

SOURCES

*Assumptions: 100 GW with thermal storage (average load factor of 80%)

Source: EU energy and transport in figures, Paul Scherrer Institut, team analysis


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