Clean Power

Published on June 14th, 2013 | by Zachary Shahan


CSP For 5.57 Cents/kWh

June 14th, 2013 by  

One of the key assumptions in determining the cost of electricity from a power plant is how long that power plant will be operational. Almost universally, that estimate is too low. But I think this “mistake” is particularly strong when it comes to solar power — both solar photovoltaics (PV) and concentrated solar thermal power (CSP).

In the case of CSP, the Solar Energy Generating Station (SEGS) project in Southern California, provides a great example of how CSP plants can just keep going and going.

Solar Energy Generating Systems solar power plants III-VII at Mojave Desert, California. Image & Caption Credit: Alan Radecki Akradecki

Solar Energy Generating Systems solar power plants III-VII at Mojave Desert, California.
Image & Caption Credit: Alan Radecki Akradecki

SEGS was put into service in the 1980s (yep, about 3 decades ago). With capital costs paid off and its initial power purchase agreement (PPA) over, owners of the project have been able to put in bids for new electricity sales agreements that outcompete its competitors. In fact, it is now selling electricity to Southern California Edison for a very low rate.

Marc Ulrich, VP of Trading and Energy Operations at Southern California Edison (SCE), told CSP Today that SEGS is now selling electricity to SCE for about 5.57 cents per kWh. That’s a very, very low price.

“SEGS are getting paid about 6 cents a kilowatt hour, for energy they deliver to SCE. I rounded it up: it’s current rates are 5.57 cents, during the winter period. Next month in June we’ll go into summer period and prices will change again,” Ulrich said.

Pricing over the course of 30 or so years gets much more complicated, of course. But the point of the matter is that, even today, CSP plants can be competitive with any other form of electricity. Pretty exciting news.

The Energizer Bunny…

Notably, SEGS hasn’t been running without any changes for 30 years. It has benefited from numerous upgrades that have made it more efficient and able to keep competing.

“As the plants have aged, the cost of operations shifts from recouping the initial capital investment to maintaining and replacing ageing equipment,” says Brad Bergman, General Manager of Cogentrix, which owns two of the nine SEGS projects. “As we replace older materials in the solar field, we are able to take advantage of newer, advanced components that more efficiently convert the sun’s energy into electricity.”

While a CSP plant will need such upgrades, a CSP plant has a much simpler system than a coal or nuclear power plant. Plus, it doesn’t have fuel costs. So, the life of a CSP plant (like would be the case with a PV plant) can more easily be extended for cheap, keeping it competitive on the market.

Power Plant Lifespan & Cost Over Time

Power plant lifespan and cost over time are critical pieces of the cost of electricity equation. In study after study, the lifespans of solar energy projects are consistently underestimated, and the cost of the project over time is consistently overestimated. I understand there are sometimes financing reasons for that, but for the most part, the method and results are simply incorrect. How to solve the problem? Regarding the research, I’ll leave that to the researchers. But for us “lay experts,” I think it’s important we make this point loud and clear time after time in order to bring more reality to the energy discussion.

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About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

  • Theo Ong

    Even with free PV and batteries, solar power is too expensive. CSP is worse.

    I have the numbers to prove it.

  • kensingtongreen

    This is exciting. According to the SunShot Program, the current CSP price is 13 cents per kWh and the tendency is that it can only go one way – down.

  • JamesWimberley

    You are wrong to think that the horizon makes much difference to the LCOE. Discounting at 5%, the difference in NPV between an asset with a constant return that vanishes in a puff of smoke after 25 years and one that runs for 200 years is 40%; at a more usual business discount rate of 10%, it’s only 10%. The difference between a life of 25 and 35 years is rarely significant financially.

    However, we should still use realistic lifetimes. For solar, it’s 40 years. For the civil engineering component of high-speed rail lines – tunnels. viaducts, cuttings, embankments – it’s at least 100. Hundreds of trains into London run every day over infrastructures built 150 years ago.

  • Bob_Wallace

    “SEGS is now selling electricity to SCE for about 5.57 cents per kWh”

    That’s for a plant built 30 years ago and paid off, is it not? Hard to use that number to project yet to be built plant costs.

    You recently put up a solar farm selling for about the same price, after subsidies. Once the farm is paid off they should be able to sell for less than 5 cents without subsidies.

  • Ryszard Dzikowski

    If I follow the words of Brad Bergman, then I fear that the current CSP nothing new could be achieved. Because this technology is in use since 1913.

    The future for CSP but can begin with a new technology

    And very much cheaper than previously was thought.

    • Bob_Wallace

      When you have a plant actually producing electricity with this idea then we can determine if it actually produces cheap electricity.

      • WonderPuppy

        Good posts Mr. Dzikowski, and Wallace. CSP is going through some big defeats here in California. Numerous plants that were originally planned for CSP have turned to PV. Why? Because PV has become very cheap and cheap is fashionable in todays economy. However, in the long run, the potential of CSP far exceeds that of PV. I base that mostly on the % of energy conversion that CSP has already reached in a production environment, over 50% vs 15% . The initial low cost of PV installation is what this economy has embraced, but for those thinking long term, CSP is worth it. Also, In my opinion, the parabolic engine CSP should eventually prove to be of great use in the private sector. The large liquid transfer and storage facilities make more sense for long term solutions. We have to thank those in high places who have finally come to realize that Solar is free(minus initialization and maintenance) and is our best energy asset, our best energy investment.

        • Bob_Wallace

          ” in the long run, the potential of CSP far exceeds that of PV”

          Can you flesh that out?

          I see PV as having advantages over CSP –

          1) Rooftop/parking lot/brownfield installation means very low to zero real estate cost and very low transmission costs.

          2) PV installation is rather low-skilled work. It doesn’t require the design and engineering work needed for building a CSP plant. Labor costs for PV must be significantly less.

          3) For the most part PV doesn’t require extensive review and permitting processes.

          4) Very little supporting infrastructure is needed. No roads, fences, etc.

          5) PV is more distributed make its output less variable.

          CSP has the advantage that storage can be built in, but it’s rather limited storage. It can only store the heat produced by the collectors.

          Unless CSP storage is very cheap it will not fair well against more flexible storage which can store electricity created by any of the available technologies. Battery/CAES/pump-up hydro storage can cycle more than once per day while CSP heat storage is limited to one cycle. The more frequently you can cycle your storage asset, the more money you make.

          • Bob,
            The ‘my girlfriend is prettier than your girl friend’ discussion kinda misses the overall point. They are both pretty. Though neither is perfect they are both players in the game that can only go solar as the main source of energy. There are places for both technologies.

          • Bob_Wallace

            It’s not “my girlfriend is prettier than your girlfriend ‘.

            It’s which of these two girls do I want to marry.

            In the case of solar it’s going to come down to which produces electricity for the best price, all things considered. At this point I don’t see a strong case for CSP to win out, but I think we should pursue it for a while to see if significant progress can be made.

            As for PV, manufacturers are predicting a one-third drop in panel prices within the next five years and there is still a lot of BOS cost to be wrung out. CSP is not going to win a trip down the aisle if all it can do is compete at today’s PV price.

          • Fair point. The one thing that I like about the advent of CSP/ molten salt is that it can produce base load power 24/7. Unfortunately that leads to concentrated economics and I like distributed power better.

            My real concern is that we are already “married’ to a fat ugly hag with bad breath. We need to divorce her ASAP and at this point both panels and CSP look a lot better to me.

          • Bob_Wallace

            I also like the ability of CSP to store power. And I’d fall in love with CSP if it could produce electricity for less than PV.

            I’m just skeptical of CSP’s ability to produce cheaper than PV and I suspect CSP storage wouldn’t be cheaper, or as cheap as, large scale battery storage.

            I very much think we should build a few of these beasts. The power the produce will be cheaper than coal or nuclear, so it won’t hurt our price of electricity. And someone may figure out how to make them compete with PV and wind.

          • fireofenergy

            the 3d nature of molten salts are much cheaper than the 2d nature of batteries. Batteries use * and – layers that will not benefit from the third dimension, whereas heat storage does benefit immensely from the third.
            However, batteries are twice as efficient and therefore might prove me wrong because that means half of the solar field required for the same amount of storage.

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