The bright future for solar thermal in Australia

Solar thermal is now poised to compete with new coal and natural gas capacity by the end of the decade.

Outside the city of Port Augusta in South Australia, the firm Alinta Energy runs the ageing brown coal-fired Northern power station. Environmentalists and local campaigners want the plant replaced with state-of-the-art solar power generation. But Alinta would rather solar power were used to pre-heat water for the existing plant, which would then stay in operation for further decades.

In January it was announced that a $2.3 million study would investigate the potential for using Concentrating Solar Thermal (CST) generating technology at Port Augusta. The study is to be funded jointly by the federal government’s Australian Renewable Energy Agency, Alinta, and the South Australian government.

CST technology involves capturing the sun’s heat and using it to create steam, which is then passed through a turbine to generate electricity. Most existing CST installations use parabolic mirrors to focus the sun’s rays on a pipe containing a synthetic oil able to be heated to high temperatures. A more modern method has a field of flat mirrors tracking the sun and reflecting its energy onto a central “power tower” collector, where it is used to heat molten salts.

During the last northern summer, the Gemasolar CST plant in Spain produced electricity continuously, day and night, for a period of 36 days. With molten salts kept in insulated tanks at temperatures close to 600°C, the heat collected by CST installations can now be stored and used to run the turbines at capacity for as much as 17 hours.

In this way, the intermittent nature of the resource — that is, sunlight — is smoothed out. The result is a reliable and highly flexible energy source that can supply both baseload and peak demand, and whose output can be ramped up quickly to meet demand “spikes”.

And while the sharp fall in solar PV costs has overshadowed progress of CST to some extent, prices for CST-produced electricity are also declining rapidly. CST with storage is now poised to compete with new coal and natural gas capacity by the end of the decade. That’s even if the “hidden” costs of fossil fuels — costs that include health damage and environmental devastation — are ignored.

The call to “repower Port Augusta” with CST, in short, can no longer be dismissed as self-indulgent greenie wish-dreaming. The environmental and health case for ending fossil-fuelled power was made long ago. Now, the economic arguments against CST are fading fast.

POTENTIAL

A detailed study entitled Realising the Potential of Concentrating Solar Power in Australia, prepared for the Australian Solar Institute in 2012 by the renewable energy consulting firm IT Power, explores the viability of CST in this country.

CST in Australia, the study explains, has in the past confronted a wide gap between costs and the likely revenue from energy sales. Modelling the “levelised cost of energy” (LCOE) for a hypothetical CST plant, located in western Queensland and without energy storage, the study calculates a figure of $250 per megawatt-hour. Meanwhile, it notes that “maximum revenue streams in main grid-connected markets currently total around $120 per MWh (including renewable certificates)”.

The study predicted the cost-revenue gap will close at some point between 2018 and 2030. Bringing it to an end will be technical advances, increases in available revenues, and the falling cost of equipment as CST is deployed more and more widely around the world. Between 2005 and 2012, the study notes, world CST capacity grew each year at a rate of about 40%.

Illustrating the declining costs of CST is the soon-to-be-opened Crescent Dunes facility, built by the US firm SolarReserve in the American state of Nevada. Even without incentives, SolarReserve senior vice-president for development Tom Georgis said last year, the LCOE for Crescent Dunes would be “well south” of US$200.

With 10 hours of molten salt storage, the 110 MW Crescent Dunes plant is to provide Las Vegas with baseload electricity at a subsidised price of US$135 per MWh. This figure, according to Georgis, is a reasonable estimate of future costs for such plants, since by the time four or five of them have been built, capital costs will have fallen dramatically.

PORT AUGUSTA

In scale and technology, Crescent Dunes provides a close match for the six CST plants that the Australian organisation Beyond Zero Emissions urges for Port Augusta. Facing a “maximum revenue stream” of $120 per MWh, similar plants near Port Augusta would, on this basis, still need subsidies to break even.

But because the Port Augusta plants would feature energy storage, the picture becomes more complex. In Australia’s National Energy Market, electricity is not all equal.

Electricity demand in Australia is characteristically “peaky” — that is, it tends to vary sharply depending on temperature and the time of day. On hot summer afternoons, grid demand can more than double as air conditioners run at full capacity. Energy retailers pay steep prices for the extra power needed to avoid blackouts.

At present, peaking energy in Australia is largely supplied, at disconcerting cost, by starting up gas-turbine generating plants. But solar power — PV as well as CST — has the innate advantage of providing a good match for the extremes of Australian energy demand, since it produces at its maximum in the early afternoon of clear summer days.

With energy storage, CST can also supply the continuing heavy demand as the afternoon wears on. Then it can power the stoves and television screens of the evening peak.

For operators of CST plants with heat storage, to follow demand closely, and to maximise returns, is not much more difficult than opening and closing a valve.

IT Power’s head of solar thermal Dr Keith Lovegrove said: “A system configured for peaking could earn twice the average pool price.

The most striking advantages of CST with storage appear when the grid is hit by sudden, acute power shortages. Generators able to dispatch energy at such times can receive spot prices above $10,000 per MWh.

Modelling in IT Power’s 2012 study puts the average price that would have been commanded by CST electricity dispatched from storage into South Australia’s energy market between 2005 and 2010 at $136.9 per MWh. For this portion of its output, a Crescent Dunes-type installation built in the next few years at Port Augusta would be likely to cover its costs fully.

VALUE

There’s more. When energy planners weigh their options, they have to look beyond direct cost comparisons to the “value” provided by different generating systems, taking the broad needs of energy supply into account. For CST, these “value” considerations can be highly favourable.

In Australia, CST with storage could do away with the need for a great deal of expensive grid upgrading. Expanding and improving the grid to cope with summer peaks represents the key reason — many would say excuse — for spiralling household electricity bills.

Early in February a research group led by the Australian Solar Thermal Energy Association released a study examining the potential for using CST to cope with increases in grid demand and to relieve problems with voltage and frequency. Installed at key points, CST was seen as able to reduce the need for new poles and wires.

“CST could be a viable alternative to traditional network augmentation in more than 70% of the cases examined,” a spokesperson for the researchers is quoted as saying. The study puts potential savings on network investment at $800 million, with a reduction in greenhouse emissions of 1.9 million tonnes per year.

The 2012 IT Power study said about 14 to 15 gigawatts (thousand megawatts) of CST capacity could realistically be installed in Australia without a major grid expansion. Average grid demand in Australia is about 21.5 gigawatts, suggesting that with reasonable levels of energy storage, CST could cut deeply into Australian greenhouse emissions at quite bearable cost.

The versatility of CST with storage also makes it ideal as a complement for wind energy, filling in during the times when wind speed drops. Keith Lovegrove further notes that molten salt storage systems deliver 30-40% better efficiency if supplied with extra heat to keep them near their optimum temperature. This suggests that during nights when surplus wind energy is available, temperatures in the tanks could be topped up using electrical heating, raising the net output of the renewables sector.

CST ON THE MARCH

New CST construction in Spain and the US, the countries that have led the industry in the past decade, is expected to flag over the next few years due to reduced government incentives. But CST technology is on the march in developing countries where the solar resource is large and energy demand strong. Notable construction is under way in Chile, Morocco, China, the United Arab Emirates and South Africa. India’s National Solar Mission plans to have 7 gigawatts of CST capacity by 2017. Heat storage is a standard feature of these new projects.

The main driver of the CST industry in coming years, however, is likely to be Saudi Arabia, which aims to build 25 gigawatts of CST capacity by 2032.

All in all, there’s no need for supporters of “repowering Port Augusta”, or of other clean energy initiatives that rest on CST, to fear accusations of woolly-minded impracticality. The technology is largely mature, and the economics promise to become compelling.