Integration of CSP and PV: The way forward?
Three projects combining CSP and PV technologies have been announced in Chile and South Africa over the last year. Developers involved indicate this integration offers significant advantages in terms of providing lower energy tariffs and securing grid stability.
CSP Today looks into these benefits as well as the challenges associated with developing these projects.
The projects
In May 2014, the US-based developer SolarReserve announced its Copiapó CSP-PV hybrid project in Chile. It will be comprised of two 130 MW CSP solar towers with 14 hours of molten salt-based storage, combined with a 150 MW PV plant that is integrated into a facility which provides 260 MW of 24/7 baseload power.
The company also revealed it is working on the development of two additional sites, involving projects combining CSP and PV technologies. The projects will total 800 MW and will be developed in the country within the next four years.
Similarly, in December 2014, the same company and its Saudi Arabian partner, ACWA Power, were awarded preferred bidder status for their Redstone CSP Project, under Window 3.5 of South Africa’s Renewable Energy Independent Power Producer Procurement Program (REIPPPP).
Although it will operate as a standalone project (it is a 100 MW solar tower with 12 hours of molten salt-based thermal energy storage), it is planned for construction adjacent to two SolarReserve PV projects: Lesedi, with 75MW, and Jasper, with 96MW.
In the same month, Abengoa announced it had been awarded a contract for the supply of 950 GWh/year for 15 years in the Distribution Companies Supply tender held by the Chilean National Energy Commission. In order to meet its commitment, the company stated it will build two plants, Complejo Atacama 1 and Complejo Atacama 2.
Each one will include a 110 MW CSP tower plant and a 100 MW PV plant. Regarding TES, Atacama 1’s CSP plant will have 17.5 hours, whereas Atacama 2’s CSP plant will have 15 hours.
Lower prices for dispatchable energy
Elisa Prieto Casaña, director of strategy at Abengoa Solar, states that the major advantage of integrating CSP and PV technologies is a reduction in prices while remaining dispatchable. “We have developed a technological product called Smart Solar Plant (SSP), which will provide the grid with dispatchable energy at a much lower price because it will combine CSP & PV-sourced energy, batteries as well as Abengoa’s proprietary control technology,” she says.
The SSP she refers to is “a design that allows the operator to manage the energy produced by the power plant in a different way, controlling the electricity output so that it can fit perfectly into the grid and operate 24/7 if required. It also provides grid support and allows for a harmonized interaction with the grid,” she adds.
As for the question of how to determine the right combination/amount of CSP and PV, Prieto indicates that it depends on several factors, including the grid’s characteristics, the power system requirements and the clients’ need for dispatchable energy. “The more PV-sourced energy you add, the less dispatchable it will become but at the same time it will also be cheaper,” she says.
Regarding the economic value of this integration, the tariffs awarded in Chile’s latest tender are quite revealing: Abengoa’s was US $114.821 MWh (in Spanish), which is approximately $11.5 c/kWh. The company was awarded the supply in block four, which is a 24 hours supply block. The average tariff for the four blocks tendered was $107 MWh, including blocks 1 and 2 for intermittent renewable energy sources only, and blocks 3 and 4 for round-the-clock energy production sources.
Kevin Smith, CEO at SolarReserve, adds that the Chilean electricity market has very particular characteristics that encourage hybrid projects. “As it is unsubsidized, you bid against coal or natural gas plants to provide round-the-clock supply,” he says.
Matching demand profile and generation
Another advantage of CSP and PV integration cited by interviewees is that it would allow for a better match of the country’s demand profile. “The concept of balancing PV with CSP ‘inside the fence’ ensures that the transmission system remains reliable, secure and efficiently utilized,” which is of critical importance “to meet the needs of Chile’s largest and most important industries, such as mining,” Smith says.
Figure 1 is an example of the daily load profile in Chile’s North Electricity System (SING) over the months of January, February, March, April and December. The country’s northern area is home to the mining industry, where Abengoa and SolarReserve’s projects are going to be developed. The absence of strong peaks is a noticeable feature.
Figure 1. Hourly power demand SING 2011 – 2012
Source: Informe mensual de operación eléctrica.
In South Africa, on the other hand, the daily electricity demand has two peaks, one in the morning and another more pronounced during the evening (between the hours of 16:30 and 21:30, which has been defined as peak time), in both summer and winter.
To incentivize developers to supply this demand, in 2013, the Department of Energy of South Africa established a two-tier tariff for CSP projects with and without storage. Therefore, developers have a base tariff of ZAR 1.65/kWh (approx. $13 c/kWh calculated at 27/3/2015), with a higher tariff (270% of the base tariff) applied for supplying energy during peak time and no payment for supplying energy between 22:30 and 5:00 hrs. (CSP Today Markets Report 2015 – South Africa).
In this regard, the proximity between the Redstone CSP Project and the Jasper and Lesedi PV plants means they share transmission links, which is “the first step” in creating an integrated facility, Smith said.
“Combining the two technologies also reduces the overall LCOE by incorporating cheaper PV during the day and maximizing CSP’s steam turbines during the night and peak demands. Additionally, the PV can be brought on-line relatively quickly, incrementally providing electricity generation as well as a return on investment”, he added.
Other advantages of integrated CSP-PV projects include the reduction of resource assessment costs given the similarities of the two technologies, as opposed to hybridizing CSP with wind or biomass, for instance. Similarly, developers would optimize costs associated with ground preparation and solar field cleaning costs.
Regulatory and financing challenges
There are two fronts which developers should work on to go ahead with combined CSP-PV projects. Firstly, the regulatory standpoint poses a challenge as governments and utilities are often reluctant to adopt two technologies instead of one at a time.
“The challenges [to develop integrated CSP-PV projects] have to do with doing it all at once rather than one by one. In South Africa, for instance, they have a pool of PV projects, a pool of CSP projects, a pool of wind projects, etc., and they aren’t doing it in an integrated way,” says Smith.
Secondly, securing financing means for their CSP-PV integrated projects is a challenge. In a recent piece published by CSP Today as part of the ChileSol 2015 conference; commercial and multilateral banks were consulted on the likelihood to provide funds for hybrid projects and they pointed out the relationship between investment capital and return.
“If they are proportional, you can justify the project,” commented María Hermida, deputy manager of Business Development at Corpbanca, a local commercial bank. Likewise, Elizabeth Robberechts, lead investment officer at the Inter-American Development Bank, argued that hybrid projects make sense to maximize the benefits of the thermal storage component and added that the IDB is considering these projects.
In conclusion, the tariff offered by Abengoa in Chile for their most recent integrated CSP-PV projects are telling of a new trend. The integration, as noted by our sources, offers significant advantages in terms of reducing electricity prices while feeding the grid with dispatchable energy.