Why Areva wants to hang out with Kepco
Forget about industrial interests abandoning the CSP industry. Areva’s recent agreement with Kepco shows there are still big-hitters out there willing to bet on the industry.
The Areva press release ran to four paragraphs and included just a single mention of CSP. Make no mistake, though: Areva’s agreement to cooperate in the renewable energy sector with the Korea Electric Power Corporation (Kepco) was a red-letter day for the solar thermal industry.
“Areva will identify with Kepco the commercial opportunities in its fields of expertise in renewable energy: offshore wind, energy storage, concentrated solar power and biomass,” said the announcement.
What was implicit, though, was that while a year ago major industrial interests were leaving the sector, some big multinationals still see an opportunity to build business in CSP.
Areva Solar, which acquired the US developer Ausra back in 2010, claims it has 300MW of CSP capacity “currently being installed,” including Asia’s largest project, a 250MW (two 125 MW projects – one of which is nearing completion) installation for Reliance Power in Rajasthan, India.
Under the terms of the memorandum of understanding signed this month, Areva will open up its renewable energy portfolio to Kepco to give the Korean power company a chance to participate in the projects and gain renewable energy experience and income.
Kepco is South Korea’s largest electric utility and is known worldwide for its expertise in the nuclear industry. In many international markets, however, sentiment towards nuclear is waning while there is growing interest in renewable power.
The utility already has overseas interests in onshore wind but has obviously decided to rely on Areva, one of its global partners in the nuclear industry, to extend its reach into other renewable energy sectors.
“We’ve decided not to communicate too much,” cautions Rémi Coulon, chief commercial officer at Areva Renewables. “However, Kepco has decided to grow aggressively into renewables.
“The partnership we have struck with them creates a forum where we present to them potential projects where our solutions would be used by future clients and if there is interest by Kepco then we are looking to them then financing that project, being a co-owner of that project.”
What this essentially means is that Kepco will have first refusal as a lead investor on renewable energy projects where Areva technology has been or is likely to be selected.
Coulon is keen to stress that Kepco’s involvement is not in technology development; for the time being, the idea is for the utility to come in as an investor and for Areva to provide the technology know-how.
The alliance not only represents a vote of confidence for CSP in general, but also for one of the industry’s less common technologies: linear Fresnel.
The French industrial conglomerate is commercialising two flavours of linear Fresnel: one using a steam cycle and one, piloted at Sandia National Laboratories, based on molten salt.
Jayesh Goyal, global vice president of sales for Areva Renewables, believes the company’s success in India is a proof point that linear Fresnel still has a valid place in the CSP market and adds that the company is currently looking at a significant new business pipeline.
“In terms of new projects, in India we are looking to develop the Reliance phase II project,” he says. “There are also two more projects that are expected to be released by the Ministry of New and Renewable Energy, so we are actively tracking those.”
These projects will be offered up to Kepco for investment. Plus Areva expects some of the projects that failed to come to fruition in the first round of India’s Jawaharlal Nehru National Solar Mission programme might be offered anew to developers.
Madhavan Nampoothiri, founder and director of RESolve Energy Consultants in Chennai, goes some way to confirm this intuition. “From what I understand, three projects are unlikely to get commissioned,” he says.
“So a re-bid is an option, but I don't expect another round of CSP allocation happening in the next year.”
Areva also has other markets in its sights. Besides potential opportunities in JNNSM phase II, it is looking forward to bidding 100MW in South Africa’s round 3b renewable energy allocation coming up in March 2014.
And while in Saudi Arabia there is still uncertainty over the timing of a likely King Abdullah City for Atomic and Renewable Energy tender, Areva is watching the Middle East region closely for potential projects. Goyal cites Kuwait, Oman and Qatar as markets of interest.
“Finally, if we look at the US there aren’t any major new standalone plants but there are a couple of booster opportunities using steam augmentation,” Goyal says. “Those are typically directly purchased by the utilities so they are not opportunities we will be presenting to Kepco.”
Never mind. What is clear is that Areva believes there is plenty of promise ahead in CSP. And Kepco, which is not exactly a born-yesterday business, thinks so too.
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