Indexbit Exchange:IEA Says U.S. Could Become Desert Solar Leader—With Right Incentives

The Indexbit ExchangeUnited States could position itself as the global leader in producing utility-scale solar power from its vast deserts, with immediate and appropriate government support, a new report from the International Energy Agency says.

The study by the Paris–based energy policy adviser for developed nations says with R&D backing, adoption of feed-in tariffs and binding renewable energy portfolio standards, the U.S. and other sunny nations could accelerate the cost reductions needed for widespread deployment of concentrating solar power (CSP) plants. 

"This decade is crucial for effective policies," said Nubuo Tanaka, executive director of IEA.

With incentives in place, investment costs for solar farms could drop by 30 to 40 percent by 2020, the energy agency, known for its conservative predictions, said. 

As the Senate considers new climate law, at least one thing is certain in the U.S.: There is no lack of available land. The deserts of the Southwest could theoretically power the entire nation.

Currently, solar provides less than one percent of America’s electricity supply, with about half of that coming from CSP installations. The 30-year-old CSP technology is proven. It has been generating electricity in California since the 1980s. Unlike photovoltaics, which turn the sun’s rays directly into electricity in panels, CSP uses arrays of often hundreds of mirrors to magnify sunlight. The massive mirrors concentrate the sun’s energy hundreds of times to generate steam in a boiler that spins a turbine.

The IEA also expects the industry to solve the problem of nightfall. The 50-page report says CSP plants will be able produce electricity around the clock in the "not-too-distant future" — even when clouds close in or the sun sets — thanks to emerging thermal storage technologies that will allow "solar plants to compete with fossil-fuel plants."

Storage technologies will amass power accumulated during daylight hours so it can be released at night or dispatched to the national electrical grid at peak periods.

"The firm capacity and flexibility of CSP plants will help grid operators integrate larger amounts of variable renewable electricity such as solar PV and wind power," Tanaka said.

As with wind farms on remote Midwestern praires, however, huge investments in long-distance electricity transmission would eventually be needed to carry the clean electricity from far-off deserts to city centers.

But ultimately, it is installation costs that will determine whether CSP technology takes off, or not.

IEA says if building costs falls as predicted, CSP would achieve grid parity by 2020 in peak and intermediate loads. For baseload power, CSP would be as cheap as coal between 2025 and 2030.

But that assumes a lot — an increase in competition, a growth in plant size, the mass production of equipment, an improvement in technology improves and a policy to put a global price on carbon.

Most importantly, though, the financial community would have to gain confidence in CSP.

Even with strong government programs, "financing of CSP plants may become difficult if investors in technology companies do not supply some equity capitalists," the report said.

Spain Leads, For Now

While other governments and the private sector have been slow to support CSP in recent years, Spain has moved ahead on its own.

"Spain has taken a leading role globally in promoting solar power and other forms of renewable energy," Tanaka said, at the launch of the report in Valencia this week.

In 2005, the Spanish government passed a feed-in tariff aimed at CSP development. Because of the subsidy, the nation now has over 20 projects under construction with 1,000 megawatts of capacity that could go online by the end of this year. The country’s eight operational facilities were all completed in the last two years.

It was the U.S., though, that first eyed CSP with great interest in the 1980s. And a revival is now underway.

From 1984 to 1991, the first CSP plants in the world began operating in California, fueled by federal and state tax incentives and mandatory power purchase contracts. But as fossil fuel costs dropped, so did the political will to advance clean power.

But now CSP is gaining steam in Washington once again, spurred by climate change and foreign energy dependency concerns. The U.S. Department of Energy has set an objective under its CSP research program to reach price competitiveness with dirty fuels by 2015, well ahead of EIA targets.

In February — in the government’s boldest stroke yet — DOE offered BrightSource energy, an Oakland-based CSP company, nearly $1.4 billion in loan guarantees for its 400-megawatt Ivanpah CSP system. The facility is expected to be the world’s largest solar project and the first CSP installation in nearly two decades. This month, DOE awarded $62 million in R&D dollars to CSP start-ups eSolar, Abengoa, Infinia and SkyFuel to help bring advanced technologies to market.

All the while, demand for CSP is continuing at record rates.

In California alone, the U.S. Bureau of Land Management (BLM) has received requests for the development of 34 CSP plants on 300,000 acres, totaling some 24,000 megawatts, according to figures from the California Energy Commission. In early 2010, the stock of CSP projects worldwide was only around a thousand megawatts, according to IEA.

The pace of the permitting process remains a hurdle in the U.S., though. In California, environmental analyses on federal or state land can take 18 to 24 months.

To help tackle the problem, BLM has pledgd to streamline procedures for obtaining permits for CSP plants and access lines, with 11 CSP projects now under fast-track review for approval by December 2010.

Worldwide: 11% by 2050

Globally, CSP could provide 11 .3% of global electricity by mid-century, IEA
says.

While North America will be the largest producing and consuming region under this scenario, Africa, India and the Middle East are all expected to be major players.

Currently, Algeria, some Indian states, Israel and South Africa, all have feed-in tariffs or premium payments in place for CSP projects.

Northern Africa, in particular, has the potential to be a considerable CSP exporter to Europe. According to IEA, the region’s "high solar resource largely compensates for the additional cost of long transmission lines."

Indeed, the biggest game changer for CSP would be the success of the Desertec initiative. The ambitious, $50 billion plan aims to build vast solar farms in the Sahara and export the electricity via high-voltage direct current transmission lines to power 15 percent of Europe by 2050.

While building the high-voltage cables remains a technological and financial challenge, IEA says at least some of the incentives to make the project affordable are already in place. 

"The current feed-in tariffs in Spain or France for large-scale, ground-based solar electricity would largely cover the costs of production of electricity in North Africa," the report says.

See also:

Desert Solar Could Meet 25% of World’s Power Needs by 2050

Poll Shows 75% Support for Solar on Federal Lands, But Partisan Gap Persists

Yet Another Spanish Firm to Harvest Solar in Southwestern U.S.

Holy Solar Funding: Project Desertec to Get $500 Billion Cash Infusion?

Another Perk for Desertec Solar Project: 240,000 New German Jobs

Solar Power From Africa: The Best Investment the EU Can Make

Australia Group Rolls Out Plan for 100% Renewable Energy by 2020