Cheap photovoltaics are eating solar thermal's lunch

According to a recent report from Pike Research, of the 6,886 MW of CSP projects awarded in the United States since 2004, 36 percent have been replaced with PV. That's more than the number which are actually under construction (1,532 MW, or 21 percent of announced projects), and all of those required the backing of the U.S. DOE loan guarantee program.

With this recent track record, and no prospect for new approvals under the program since September 30th, it seems likely that less than half of 3,400 MW of projects in the pipeline will actually be built as CSP projects.  In the worst-case scenario for CSP, DOE loan guarantees will prove to have been essential, and the entire CSP pipeline vanish or be replaced by PV.

It Wasn't Supposed to be This Way

Many renewable energy advocates (myself included) have long seen CSP as core to the decarbonization of the electric grid.  That's because CSP has something relatively unique among renewable power technologies: with the addition of relatively inexpensive thermal storage, it can be dispatchable.  Dispatchable power, usually provided by natural gas turbines on the current electric grid, is what allows utilities to match supply and demand.  The addition of variable sources of supply such as PV and wind only makes dispatchable resources more important.

CSP held the promise of squaring the circle: scalable, potentially inexpensive, dispatchable zero-carbon power.  Even PV advocates such as Ken Zweibel, now head of the GW Solar Institute, but then the President of thin film PV start-up PrimeStar Solar co-authored a "Solar Grand Plan" for Scientific American which relied on CSP as a key component in his vision of a solar powered North America.

What Happened

The difference between the grand visions and today's reality are legion.  First, as the Pike study points out,

The biggest threat to resumed growth in CSP is the dropping prices of PV modules. PV module prices continue to drop beyond 50% of their peak in mid-2008. In addition, the established track record of PV is more attractive to financial backers.

but the authors hold out hope that 

CSP may overcome competition from PV by reducing costs as the result of bigger scale and two technology propositions that increase operating revenue and profits: hybridization with fossil fuel plants through a process called Integrated Solar Combined Cycle (ISCC) and utility-sized energy storage capabilities.

I'm less sanguine.  I now see four other difficulties for CSP going forward:

1. Dispatchable carbon-free power may be essential to a carbon-free electric grid, but today we are at much lower penetrations.  
2. Dispatchable natural gas generation is widely available and cheap to operate with today's low gas prices and the absence of any price on carbon.  
3. Dispatchable generation is most useful for balancing load if there is a robust transmission link between the generation and the load in question.  Since CSP requires direct sunlight and considerable land areas, it is confined to remote parts of the arid Southwest, typically far from population.  Given the difficulty and long time lines required to build new transmission in the US, CSP's potential dispatchability remains limited. 
4. Smart grid technologies such as Demand Response (DR) are advancing rapidly, and are, in many cases, able to match demand to supply at much lower cost than CSP.  Lithium-ion and lead-acid battery technologies are also angling for a slice of the grid stabilization pie, especially in conjunction with better load forecasting techniques.  While DR and batteries have difficulty matching CSP for cheap mass energy storage, they have a competitive advantage when it comes to supplying power for short term grid stabilization.  

Conclusion

As long as there is cheap natural gas available for long-term storage, and smart grid techniques filling in the short term gaps, CSP's high-energy thermal storage is a solution looking for a problem. This is especially true given that the "problem" (mismatch between supply and demand) occurs at the source of demand (population centers), not in the uninhabited desert where CSP plants are invariably located.

The Pike report forecasts that CSP construction will rebound by the end of the decade.  I'm not so sure.  Technologies improve and get cheaper as they are deployed.  With CSP deployment stalling, and smart grid and PV deployment accelerating, why should be assume that CSP will ever catch up?

If CSP development does stall, it will be a tragedy, because smart grid technologies will be less able to compensate for the variability of PV and wind as they reach high grid penetration.  At that point, mass energy storage such as that available with CSP will become essential, and if we have not been developing CSP technology along the way, mass energy storage may be much harder to implement than we would hope.

NOTE: This article was first published on Forbes.com. I also added some thoughts on what it might mean for electricity generation in general on my blog at Clean Energy Wonk.

http://www.renewableenergyworld.com/rea/news/article/2011/12/cheap-photovoltaics-are-eating-solar-thermals-lunch