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Can CSP Make
A Comeback?

By some measures, concentrating solar power (CSP) in the U.S. experienced a slow 2012, with no large projects coming online and some others encountering difficulties. But as the industry begins 2013, CSP is still a notable force in the industry.

The Google-backed Ivanpah CSP project, billed by developer BrightSource Energy as the largest CSP plant in the world, recently reached the three-quarters completion mark. BrightSource and the project’s engineering, procurement and construction contractor, Bechtel, broke ground in October 2010.

According to an email update from the company, more than 2,100 construction workers are currently on-site, busily installing pylons, heliostats and control-system software. Final commissioning is expected this year.

The completion of Ivanpah - which, like many utility-scale solar plants, has faced lawsuits and was required to change its site design in order to mitigate possible environmental impacts - is sure to give the CSP industry reason to celebrate.

Future thermal plants, however, may be able to make their case even more convincingly and offer even more value. Two recent reports - including one from the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) - tout the value of including thermal storage with CSP plants.

NREL’s analysis found that adding just six hours of thermal storage capacity can offer utilities significant gains over using power from PV plants or CSP plants without storage. Additional capacity and operational value could be as high as $35.80/MWh in a scenario with a high level of renewable energy penetration on the grid.

“The additional value comes because thermal storage allows CSP to displace more expensive gas-fired generation during peak loads, rather than displacing lower-priced coal, and because it can continue to flatten the peak load in the evenings when PV isn’t contributing to the mix because the sun has set,” NREL wrote in a summary explaining the report’s findings.

The NREL study, which involved simulating grid operations located primarily in Colorado, marked one of the first times that the value of CSP with storage has been quantified, the lab stated.

Researchers used a production-cost model - the same model traditionally used by utilities. Doing so enables the results to be presented in the “language” that is most understandable and useful to the utilities, noted Mark Mehos, manager of NREL’s Concentrating Solar Power program, in the report summary.

In a separate report, the Concentrating Solar Power Alliance (CSPA), an industry advocacy group, compiles analysis from NREL and other institutions to further make the case for CSP with thermal energy storage.

The CSPA found that according to recent research, storage adds energy and ancillary service value ranging from $5.00/MWh to $10.00/MWh at low renewable energy penetration levels, depending on project design and region. These benefits are in addition to the higher capacity value provided, compared to more variable solar resources.

At higher renewable energy penetration levels - such as those studied as part of NREL’s analysis - the benefits of thermal storage increase. “Some studies have pointed to the possibility of curtailment of solar energy at high penetrations, which could be reduced by maintaining dispatchable solar resources in the portfolio,” the CSPA noted in its report.

Naturally, utilities have always paid close attention to energy costs when evaluating generation sources for their portfolios. The methodology for evaluating those costs, however, may be evolving, according to the CSPA.

When using a net-system-cost methodology, utilities and grid operators take into account system integration and reliability under various conditions. With this type of analysis, understanding the quantifiable benefits of CSP with thermal storage becomes more important, according to the CSPA.

“This report comes at a time when utilities and grid operators are evaluating the true cost and operational impacts of higher penetrations of variable resources,” said Tex Wilkins, executive director of the CSPA, in the report summary.

“The independent research compiled from the national labs and universities, as well as the findings shared by CSP companies, shows that CSP with storage will be a very important, valuable resource for utilities and grid operators as different countries aim to achieve clean energy goals,” he added.

Will CSP gain momentum in 2013? In addition to Ivanpah, several other large CSP projects are also already under development or construction - especially in markets such as India and South Africa.

The NREL and CSPA reports make the data-driven case for storage-supported CSP, but it remains to be seen whether utilities and grid operators will embrace these recommendations and help push the CSP industry forward. - Jessica Lillian

 

Module Production
Costs To Drop

The solar manufacturing industry is reeling from overcapacity, and supply outstrips demand by two to one. The industry needs to drive costs lower in order to overcome diminished subsidies and regain profitability - and the cost reductions it needs are at hand, according to a new report from Lux Research. Module prices have fallen precipitously over the past four years to a low of $0.70/W, but the cost of goods sold (COGS) for modules has not reached this level - resulting in massive losses for most module manufacturers.

“With pressure from competitors, customers and policymakers to drop prices even further, manufacturers need to drive costs down to survive and thrive during the coming years of growth in the demand market,” says Ed Cahill, an associate at Lux Research and the lead author of the report, titled “Module Cost Structure Update: Path to Profitability.”

Copper indium gallium (di)selenide (CIGS) technology has the greatest potential to cut cost, Lux Research says. COGS will fall across the board between 2012 and 2017, but the rate of decline will be the steepest for CIGS, which can shave $0.14/W off the cost to $0.64/W.

Cadmium telluride (CdTe) remains the low-cost leader. Despite the travails of its main champion, First Solar, CdTe thin-film modules will remain the cheapest solar option in 2017, at $0.48/W, down from the current $0.67/W.

Efficiencies are the key driver, Lux Research adds. Manufacturing location has the greatest potential influence on COGS, but overcapacity makes opening new facilities in low-cost countries unlikely. Consequently, increasing module efficiencies will make the most difference, up to $0.09/W for polycrystalline silicon and $0.21/W for CIGS.

 

Oversupply Hurt
Small Chinese Firms

Last year was the most difficult year to date for Chinese solar manufacturers, according to a new report from solar market research firm ENF Solar.

The company says that too many new manufacturers flooded the industry in 2011, with the number of core solar chain producers (ingot, wafer, cell and panel manufacturers) rising from 807 manufacturers to 901 manufacturers.

That influx resulted in a severe price crash as producers fought to keep their factories running. In December 2011, Chinese manufacturers were selling their crystalline panels at approximately $0.92/W, but by December 2012, selling prices had plunged to $0.60/W.

For thin-film panel manufacturers, the situation was even worse, as these companies were unable to lower their cost of manufacturing fast enough, ENF Solar says. Thin-film manufacturers saw their average selling price become higher than that of crystalline panels.

Chinese thin-film panel prices dropped from $0.85/W in December 2011 to $0.74/W in December 2012. Historically, most large customers would only purchase thin-film panels if the costs were significantly lower than crystalline panels. Therefore, much of the thin-film industry has come to a grinding halt, according to the report.

As profits vanished, many manufacturers went bankrupt. During 2012, the number of core solar chain manufacturers dropped from 901 to 704, with a particularly severe drop among panel manufacturers, from 624 to 454 manufacturers. In addition, a further 180 core chain manufacturers went idle.

In the Chinese solar sector, a small manufacturer will generally only take a customer order if it can make a profit, and will generally not produce anything until a profitable customer is in hand, ENF Solar explains. Therefore, when a bubble occurs and orders dry up completely, a small manufacturer will simply shut down and ask its employees to come back in the future when the industry is in better health.

This method is excellent for the industry’s health, as it instantly takes capacity out of the market as it becomes too bloated, the report adds. Although the small players may have contributed to the solar bubble by jumping in without understanding global market supply and demand trends, they also act to remedy an unprofitable market.

ENF Solar also finds that this year is showing signs of increasing demand. As the “solar winter” ends, the industry can expect to see the re-emergence of small, idle manufacturers.

 

Polysilicon Industry
Poised For Rebound

The global polysilicon industry will return to a path of growth and increase its production by 6.5% in 2013, according to the latest analysis from Bernreuter Research. The polysilicon market research firm projects the global polysilicon net demand - including that of the semiconductor industry, but excluding the consumption of inventories - will amount to approximately 250,000 metric tons (MT) this year. The spot price is predicted to rebound to a level of $20/kg to $25/kg by the end of 2013.

Polysilicon manufacturers will profit from the slightly accelerating growth of their largest customer, the photovoltaic industry, which makes up almost 90% of total polysilicon demand, according to the report.

“The global PV market will pick up speed - albeit at a slower pace than we originally assumed,” says Johannes Bernreuter, head of Bernreuter Research and author of the report. “We now expect new PV installations to reach 35 GW to 37 GW in 2013. China, Japan and the U.S. will replace Germany and Italy as the PV growth locomotives.”

In 2012, the polysilicon industry was plagued by overcapacity and a large inventory of 25,000 MT resulting from a production surplus in 2011. In addition, cash-strapped wafer manufacturers dumped their polysilicon stock on the spot market in order to retain liquidity.

The wave of secondary sales from wafer companies and traders accelerated the slump of the spot price: The average rate for high-purity polysilicon crashed by 47% to a record low of $15.35/kg in 2012 after it had already plummeted by 59% in 2011.

Since September 2011, the severe price decay has forced about 50 polysilicon manufacturers - most of them small and medium enterprises in China - to abandon or suspend production, the report says.

In the third quarter of 2012, all top producers began to bow to the price pressure as well and reduced the utilization rates of their plants. According to preliminary estimates of Bernreuter Research, global polysilicon production volume consequently fell to approximately 235,000 MT in 2012, a drop of almost 8% from the output of 255,000 MT in 2011.

“Along with the large inventories and the supply of thin-film modules, those 235,000 MT were nonetheless sufficient for a newly installed PV capacity of 33 GW to 34 GW worldwide in 2012,” says Bernreuter. However, the latest shipment guidance of 13 major public solar module manufacturers points to new installations of only 30 GW to 31 GW.

“The actual result could still be somewhat higher for two reasons: Thanks to a better fourth quarter, several of these manufacturers may have exceeded their guidance, and other producers have possibly gained additional market share,” Bernreuter explains. “If the markets in China and the U.S. had a strong finish, 31 GW to 32 GW are possible.” S