at kearney report

CSP Cost RoadmapCSP COST ROADMAPWe finally made it !

N. Benz, ESTELA General Assembly

July 15, 2010

27 companies organized in ESTELA awarded A.T.Kearney

for a Cost Roadmap Study

A.T. Kearney 10/02.2010/30376d 3

• Usage of parabolic dish and stirling engine which simplifies overall system concept (modularity)

• High net solar to electrical efficiency

• Suitable for both small stand-alone, decentralized off-grid power systems as well as large grid connected power systems

• Concentration of solar radiation on a point receiver at the top of a tower

• Enables operation at high temperature level and provides heat storage capabilities

• Usage of parabolic shaped mirrors to concentrate solar radiation on linear tube receiver

• Commercially proven technology with heat storage capacity

• Usage of flat mirror design, which is easier to produce

• Efficiently enables other industrial uses like steam processing

• Provides heat storage capabilities

Concentrated Solar Power (CSP) comprises four technolo-gies with different characteristics

CSP technologies – overview

1) Compared between the different CSP technologiesSource: ESTELA project team; A.T. Kearney analysis

Industry roadmap – report summary

Level of technological maturityComparably high1) / large scale systems in place

Comparably low1) / large scale deployment not yet proven

Dish StirlingSolar TowerParabolic Trough Linear Fresnel

A.T. Kearney 10/02.2010/30376d 4

Each technology has its own value proposition and therefore different deployment optima

Technology comparison


Parabolic Trough Solar Tower Dish Stirling Linear Fresnel

Value proposition

• Commercially proven and bankable technology

• Maturity level and operational experience

• Modularity

• Large number of EPC providers

• Commercially proven and bankable technology

• Efficiency

• High operating temperatures

• Modularity

• Efficiency

• Low water consumption

• Cost effective for steam generation

• High land-to-electricity ratio

• Usability of space below support structure due to linear design

Source: ESTELA project team; A.T. Kearney analysis

Application/ deployment focus

• Centralized grid access locations

• Locations with hybridization possibilities



• Decentralized off-grid power systems

• Locations with water scarcity




• Industrial location with steam processing needs

A.T. Kearney 10/02.2010/30376d 5

CSP industry possesses the advantage of putting bets on several serious and forward moving technologies

Project/commercialization roadmap(projected start of commercial/large scale operation)

1) Technology not considered in cost modeling as it is expected to be substituted2) Technology not considered in cost modeling as viability needs to proven and commercial data not yet sufficiently availableSource: ESTELA project team; A.T. Kearney analysis

Technology 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Parabolic

Trough

Solar Tower

Dish Stirling

Linear Fresnel

Technology in commercial operation today – furtherprojects planned

In commercial operation today –technology expected to be substituted, no further projects planned1)

Synthetic aromatic fluid

Molten Salt

Molten Salt

Stirling engine

Saturated steam1)

Superheated steam

Superheated steam


Superheated steam2)

New technologies – Pressurized air, solar fuels, …2)

Technology in advanced stage of development but not yet in commercial operation, viability needs to be proven –commercial projects planned

Technology in early state of development, viability needs to be proven – commercial projects yet to be planned

Saturated steam

http://images.google.de/imgres?imgurl=http://upload.wikimedia.org/wikipedia/commons/6/64/Dish_Stirling_Systems_of_SBP_in_Spain.JPG&imgrefurl=http://commons.wikimedia.org/wiki/File:Dish_Stirling_Systems_of_SBP_in_Spain.JPG&usg=__z-GloWJXUw35HO_EB0Zpp2L5X1o=&h=494&w=671&sz=355&hl=de&start=2&um=1&itbs=1&tbnid=jpfY_3NoEGI0YM:&tbnh=102&tbnw=138&prev=/images?q=Dish+Stirling&um=1&hl=de&tbs=isch:1

A.T. Kearney 10/02.2010/30376d 6

2010 2015 2020 2025

40

80

60

20

0

+65%

+21%

60

30

+15%

121

With the increasing commercialization of technologies, CSP industry is expected to face a steep capacity ramp-up

CSP capacity forecast(projected, installed capacity in GW, global)

xx% CAGR = compound annual growth rate of base case scenario

CSP industry will significantly build up capacity until 2015 with 12GW –validated with currently project pipeline

Base case scenario is expected to reach 30GW in 2020 and 60GW in 2025

Parabolic Trough as proven tech-nology will remain the dominant technology with a share of ≥50% in 2025

Solar Tower is expected to catch up and gain a share of ≥30%

Dish Stirling and Linear Fresnel are expected to have a cumulative share between 10-20%



A.T. Kearney 10/02.2010/30376d 7

Current installed capacity and projects mainly located in the US and Spain – capacity in MENA will increase strongly


Focus countries with (high) CSP potential

Equator

Tropic of Cancer

Tropic of Capricorn

CSP capacity – installed capacity and project pipeline (in GW, until 2015)

Australia

Inst.

cap.

0.0

Pipe-

line

0.5

MENA

Pipe-

line

0.8

Inst.

cap.

0.0

Spain

Pipe-

line

2.5

Inst.

cap.

0.3

US

Pipe-

line

8.0

Inst.

cap.

0.4

RoW

Pipe-

line

0.5

Inst.

cap.

0.1

Source: Interviews with industry experts; A.T. Kearney analysis; NREL

Current capacities and planned pro-jects mainly locatedin US and Spain1)

MENA expected to ramp up in mid term

DNI levels ≥2,000 are prerequisite for the deployment of CSP

A.T. Kearney 10/02.2010/30376d 8

50-65%

70-95%

45-60%

First major cost reductions are expected in 2013 – tariffs1)

are expected to decrease by 40-55%-points until 2025


Expected tariff1) development 2012 – 2025(in % compared to reference plants 2012, excl. impact of DNI)

CSP cost reduction

• Main drivers for reduction

Deployment of new technologies

Economies of scale

Efficiency improvements

Cost reductions

• Effects vary across the different technologies and between dispatchable and non-dispatchable plants

1) Tariff = minimum required tariffSource: ESTELA project team; A.T. Kearney analysis

40%

50%

60%

70%

80%

90%

100%

2025202020152012

-40-55%

-35-50%

(Conservative)outlook

Validated/ proven improvement measures

Main drivers for tariff reduction

Economiesof scale

• Economies of scale• Implementation of

major technological improvements

Cost & efficiencyimprovements

-5-30%

A.T. Kearney 10/02.2010/30376d 9

1) Tariff = minimum required tariff; 2) Referring to 2010-2013 according to planned commercialization date of each technology (reference plants)Source: A.T. Kearney analysis

Tariff1) reduction will be driven by cost and efficiency improvements as well as economies of scale


Projected tariff1) development – by measure / over time(tariff1), in %)

100%

45-60%

LCOE2025

21-33%

-points

10-15%-

points

Economiesof scale

18-22%-

points

1st large scale plants2)

EfficiencyCost

-40-55%-points

Cost & efficiency improvements

28-37%-points

Plant scaling currently not applicable in Spain with current regulation

Cost and efficiency improvement cannot be strictly separated as both are interdependent in most cases – cost improvements refer to component, plant engineering and O&M cost reductions

Economies of scale and cost & efficiency partially overlap

A.T. Kearney 10/02.2010/30376d 10

Highest potentials of technological improvements are expected in the thermal generation and storage system


Functio-nalities

Technol-ogy

Solar collection system

Thermal generation system

Storage systemElectrical

generation system

Parabolic Trough

• Mirror size and accuracy

• Optimized support structure design

• Receiver characteristics

• Alternative working fluid

• Higher operating temperature

• Alternative storage reservoir designs and storage medium compositions

• Turbine efficiency

SolarTower

• Field configuration and heliostat size optimization

• Optimized tracking system costs

• Alternative working fluid


• Improved cycle technology

• Alternative storage reservoir designs and storage medium compositions

• Turbine efficiency

DishStirling

• Optimized support structure design

• Optimized mirror sizes for various solar resources

• Storage development• Engine efficiency and

capacity

LinearFresnel

• Automatic mirror assembly

• Optimized mirrors

• Receiver characteristics


• Storage development • Turbine efficiency

Source: ESTELA project team; CENER; A.T. Kearney analysis

High

Initiative improvement potential:

Medium Low

Overview on main technological/efficiency improvement measures

A.T. Kearney 10/02.2010/30376d 11

Major reduction potential is seen in engineering and planning cost, thermal generation and storage system cost


Overview on main cost reduction measures1)

(excluding economies of scale, reduction until 2025 – in %)

Functio-nalities

Tech-nology

Engineering / planning

Solar collection

system

Thermal generation

system

Storage system

Electrical generation

systemO&M cost

Parabolic Trough 32-36% 14-18% 26-30% 25-29% 8-12% 18-22%

SolarTower 41-45% 13-17% 18-22% 20-24% 5-9% 15-19%

DishStirling 27-31% 25-29% n.a.

not yet

applicable37-41%2) 15-19%

LinearFresnel 35-39% 21-25% 23-27%

not yet

applicable3-7% 15-19%

1) No major cost reductions for project development cost expected, construction cost are expected to increase with increasing labor cost2) Dish Stirling excluded from cross technology overview as Stirling engine is not comparable to turbine technology and cooling systems differ significantlySource: ESTELA project team; A.T. Kearney analysis

27-45% 13-29% 18-30% 20-29% 3-12%2) 15-22%

Project CAPEX

A.T. Kearney 10/02.2010/30376d 12

Engineering and planning, power block and project development cost are expected to drive economies of scale


Economies of scale(reduction of CAPEX/GWh annual output – in %)1)

x1

100%

x10x5x4x3x2

9-22%2)9-26%8-23%6-17%

21-24%2)

Main levers for eco-nomies of scale

• Engineering/planning cost

• Power block

• Project development cost

Multiple of reference plant output

1) Plant scaling refers to plant sizes from 50-500MW; 15MW Linear Fresnel plant has been excluded from overview2) Solar Tower only scaled up from 50-200MW, Linear Fresnel from 15-250MW1)


A.T. Kearney 10/02.2010/30376d 13

60

65

70

75

80

85

90

95

100

105

110

2,000 2,2002,100 3,0002,9002,8002,7002,6002,5002,4002,300

Electricity cost of CSP decrease significantly with increasing irradiation level (-4.5% per 100kWh/m²a)

Tariff/LCOE development over DNI level(in % compared to reference plant location Spain)

Tariff decrease about -4.5%-points with an increase of DNI by 100kWh/m²a due to increasing plant output

At DNI of 2,500 kWh/m²a tariff range between 81-83% compared to reference plant location in Spain (DNI 2,084 kWh/m²a), e.g. in Saudi Arabia

At DNI of 2,700 kWh/m²a tariff ranges between 74-75% compared to reference plant location, e.g. in Algeria

Source: A.T. Kearney analysis


• Portugal

• United Arab

Emirates

• Italy

• Greece

• Southern

Turkey

• Spain • Tunisia

• Arizona/US

• Saudi Arabia

• Morocco

• Nevada/US

• Australia • California/US

• Algeria

• South Africa

DNI in

kWh/m²a

Reference plant location –

DNI 2,084 kWh/m²a (100%)

-33-35%

-18-19%

-24-25%

-4.5% per 100 kWh/m²a

• Chile

A.T. Kearney 10/02.2010/30376d 14

500

1.2-1.3

4,000

2.4-2.5

3,000

1.8-1.9

2,0001,000

2.0

1.5

0.0

0.6-0.7

5.0

4.0

3.5

2.5

3.0

1.0

0.5

4.5

6.0

5.5

0.3-0.4

Transmission cost from MENA countries with higher DNI levels to EU countries do not outweigh LCOE advantages

HVDC transmission cost1)

(in €/MWh)

1) Includes cost of transmission losses –Note: transmission cost for HVAC not considered; cost efficient HVDC connection considered as prerequisite for large scale deployment CSP in MENA region; Source: A.T. Kearney analysis; Industry analysis

e.g. Egypt –

Spain

e.g. Morocco

– Spain

e.g. Algeria -

Spain

e.g. Southern

Algeria – Spain500 km

Distance MENA–Central Europe – 3,000-3,500 km


Distance

in km

Cost advantage of CSP production in MENA countries due to higher DNI levels

HVDC trans-mission cost

0.5–3.5

1.1–4.1

1.7–4.7

2.3–5-3

2.6–5.6

r=3,000km

r =

500km

r=1,000km

r=2,000km

Tropic of cancer

A.T. Kearney 10/02.2010/30376d 15

Dispatchable CSP technologies will compete against conventional energy sources (CCGT and hard coal)

Cost comparison of dispatchable CSP against conventional (Spain, LCOE, in €c/kWh)


Hard coal

Dispatchable CSP technologies are expected to compete against CCGT and hard coal as peak to mid load provider

On the long run, CSP cansubstitute CCGT as peak to mid load provider

Further hybridization can support cost competitive dispatchability

Introduction of additional CO2-penalties would further drive competiveness of CSP

CSP – dispatchableCCGT

Assumptions: DNI 2,084 kWh/m²a; inflation included (CPI -0.5%); storage 5-20hrsPlant sizes increase according to projected ramp-up; CCGT – 25 years, Hard coal 40 years plant runtimeSource: ESTELA project team; A.T. Kearney analysis; EPIA

Assumptions: Constant CO2-emissions cost of €38/t from 2015 onwards

0

5

10

15

20

25

30

2010 2015 2020 2025

Includes cost and efficiency improve-ments and economies of scale

13-1612-15

12-14

Gas price

€22/MWh >€40/MWh >€55/MWh >€60/MWh

2012

A.T. Kearney 10/02.2010/30376d 16

Within RES portfolio, CSP technologies compete against non-dispatchable wind and PV as peak load provider

Cost comparison of non-dispatchable RES (medium irradiation)(Spain, LCOE, in €c/kWh)

Assumptions: DNI 2,084 kWh/m²a; inflation included (CPI -0.5%); Plant sizes increase according to projected ramp-up;PV cost development based on Paradigm Shift scenario; wind 20 years, PV 25 years plant runtimeSource: ESTELA project team; A.T. Kearney analysis; EPIA


PV industrial system

CSP – non-dispatchable

Wind offshore Wind onshore

Non-dispatchable CSP technologies (w/o storage) will compete against non-dispatchable RES as peak load provider

PV is expected to be the favorite non-dispatchable RES to serve peak demand in regions of medium irradiation, e.g. Spain, due to cost advantages

CSP is not expected to be competitive against wind

0

5

10

15

20

25

30

2010 2015 2020 20252012

14-17

7-11

10-14

Includes cost and efficiency impro-vements and economies of scale

A.T. Kearney 10/02.2010/30376d 17

60

65

70

75

80

85

90

95

100

105

110

3,0002,9002,8002,7002,6002,5002,4002,3002,2002,1002,000

In areas of high irradiation CSP is expected to be competitive as non-dispatchable RES against PV

PV and CSP LCOE development over DNI level (LCOE in % compared to reference plant location Spain)

High outside temperaturelevels limit the efficient deployment of PV in areas of high irradiation due to degradation and efficiency

CSP efficiency increaseswith higher DNI levels

CSP systems access more solar radiation than PV in higher DNI markets, as they track the sun on either a single or dual axis

CSP is expected to be the more cost efficient deployment alternative, also for non-dispatchable solar power, in areas of high irradiation with high temperatures, e.g. US Southwest, North Africa



• Portugal

• United Arab

Emirates

• Italy

• Greece

• Southern

Turkey

• Spain • Tunisia

• Arizona/US

• Saudi Arabia

• Morocco

• Nevada/US

• Australia • California/US

• Algeria

• South Africa

DNI in

kWh/m²a

• Chile

CSP PV in % compared to CSP 2010

Increasing degradation

limits efficiency of PV

PV in % compared to CSP in 2015

2015

2010

A.T. Kearney 10/02.2010/30376d 18

Wind offshore Wind onshore

LCOE for wind including storage are expected to range at a comparative cost level as dispatchable CSP technologies

LCOE wind including storage cost1)

(in €c/kWh)

1) Storage cost (pump, pressurized air, hydrogen) range between €c5-20/kWh in 2010 and are expected to range between €c3-10/kWh in 2025Source: EPIA Set for 2020; VDE; A.T. Kearney analysis


CSP – dispatchable Wind offshore – incl. storage CSP – dispatchable Wind onshore – incl. storage

0

5

10

15

20

25

30

2025202020152010

14-29

10-16

0

5

10

15

20

25

30

2025202020152010

12-27

9-18

11-22

8-15

10-20

12-23

2012 2012

Includes cost and efficiency improvements and economies of scale


A.T. Kearney 10/02.2010/30376d 19

As storage cost for PV are considerably higher, CSP will not compete but complement solar power portfolio


LCOE PV including battery storage cost(Spain, in €c/kWh)

Assumptions: Comparable battery storage capacity, 5-20hrsSource: EPIA Set for 2020; VDE; A.T. Kearney analysis

CSP – dispatchable PV- industrial system, incl. storage

High storage cost drive LCOE for dispatchable PV electricity

Dispatchable PV systems are not expected to be competitive against more cost efficient dispatchable CSP plants

PV and CSP will not compete but rather complement each other in the RES portfolio of areas with high irradiation levels (US, MENA) to serve peak and mid load demand

PV will serve daytime peak demands

0

10

20

30

40

50

60

70

80

2025202020152010

40-70

15-30

20-40

25-55

2012


A.T. Kearney 10/02.2010/30376d 20

Summary

With the ATK-cost road map we have a well founded study, based on experience in developing and

constructing CSP plants and cost development of components.

Main competitor for CSP within Renewable Energies is PV

CSP has to significantly reduce cost in all functionalities: Planning, Engineering,

solar field components, construction. There is no single big lever.

This process has to gain more speed. Cooperation between various players has

to be established and fostered

The key value propostion of CSP is storage. Non dispatchable CSP is barely able to compete

with PV and Wind.

The main competitors within CSP are Parabolic Trough and Solar Tower. Even though the technologies are

complementary in some cases, the race will be thrilling!

Thanks to all the participants of the study for their contributions and for their patience

and thanks to A.T.Kearney for their great job.

at kearney report

Documents

mid load provider

estela project

reference

major cost

heat storage

higher dni

dispatchable

medium irradiation