By Bob Moser, Americas correspondent

Solar Trust of America announced in May its decision to form a joint venture with leading PV developer SolarHybrid AG. It is the latest - and largest - shift by a CSP developer towards more trusted PV.

The three main attributes that utilities and its customers want in a power source are competitive energy cost, ancillary services that support the power grid, and delivery upon demand. Current energy markets have placed the greatest focus on energy cost from intermittent renewables.

Concentrated solar power's cost has been, fairly or unfairly, priced as an intermittent energy source, because of an enduring skepticism about solar's ability to deliver uninterrupted power, on demand. Yet indeed CSP can provide some ancillary services and, with large-scale storage, power on demand. But will the price be right?

CSP priced out of the market

“Unless CSP can truly deliver cost-competitive storage and sell the associated ancillary and dispatch services, it will have a very hard time competing with PV on energy price, where currently all the attention is,” said Arnold Leitner, founder of SkyFuel and ALNP. “To be blunt, energy from CSP is currently simply being priced out of the market.”

The size factor for plants also works against CSP, which is restricted by available locations that can house a 250 MW utility-scale plants and have a market for that much power: “There's also limited demand for these plants, something we call 'lumpiness,'” Leitner said. “With electricity demand dramatically down and barely recovering in the American West, there's just not enough growth to absorb this added capacity being offered.”

Another factor trending against large-scale solar like CSP is that more and more renewable electricity contracts in the Southwest aren't being awarded by utilities, but by small power generation companies, including municipalities and rural cooperatives. Their demand is sometimes so small that a typical CSP plant of 250 MW could cover their small markets five times over, Leitner said.

STA was partly drawn to get its foot in the PV market in anticipation of a reduction in global PV pricing that should occur this year or next, as EU nations like Germany change their feed-in tariffs. The new joint company, named SolarHybrid of America, believes it has a winning ticket no matter which way solar development goes in the US by being technology agnostic.

With the ability to tailor utility-scale solar projects to whatever size and technology-driven price point that a client requires, along with vertical integration and self-sufficiency throughout the company, the new SolarHybrid may be in the driver's seat of the entire industry, says Uwe T. Schmidt, chairman and CEO of STA.

Challenges around water for cooling CSP, the speed at which a PV plant can be built compared to CSP, and PV's proven technology are all reasons investors may trust a PV bet over one on CSP.

“Price matters. Solar panel prices have fallen by more than 40% in the last 2 years alone and panel makers claim their prices will drop further by a comparable amount. Show me a CSP company today that dares to forecast such cost reductions,” Leitner said. “There's no point in denying these realities, because they are indeed the acting drivers, they do influence decisions, and some projects are being converted from CSP to PV.”

STA and SolarHybrid will always focus on big-scale utility projects, Schmidt says, but the company will fully explore hybrid solutions on future sites. “Topography requirements for PV are different from CSP requirements, and one can go to somewhat smaller real estate that's closer to population bases with PV than with CSP,” he said. “There's (unused) property on our CSP (sites) where we think we could place PV panels.”

Rational policy requirement 

Leitner doesn't see carbon pricing on the horizon in the US, but believes all renewables need such a policy to gain traction in current energy markets. Without large-scale storage, renewable energy as a whole may fail to meet expectations. This is where CSP is different. But as Leitner points out, “markets and policies can stay irrational longer than the technology companies can stay in business.”

“Both with coal globally and natural gas in North America being cheap, there isn't a market for 'baseload' solar thermal power yet – or never,” Leitner added.

“I say never, because by the time CSP with large-scale storage comes of age, super-cheap PV and electric battery storage may take over. That said, I holding my hopes out for molten salt in power towers, in parabolic troughs as recently demonstrated in Italy, or, in the future, in linear Fresnel systems, which enables more cost competitive storage  … but these technologies must first prove that they collect cheap energy and that they can cost-effectively bulk store it.”

Schmidt says more analysts and energy policy forecasters should look at the true cost profile of coal versus solar. When comparing a 1,000 MW coal plant to a 1,000 MW CSP plant, at first glance there's higher capital expenditures for the solar project, but the cost of coal logistics over the next 40 years should be considered, he says.

What remains to be seen is whether some or all forms of CSP can meet or beat the cost-of-energy challenge that PV poses, while also making the market value CSP's ancillary services and long-term storage for dispatchable power, Leitner says. CSP can evolve further by progressing in areas like battery storage, short-term and mid-term forecasting for utilities, and hybridization models with natural gas to ensure backup capacity.

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Rikki Stancich: rstancich@csptoday.com