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Consideration And Analysis on The Four Stages of CSP LOCE’s Reduction And Related Realization Conditions

Reported from CSPPLAZA: “Through continuous improvement of efficiency and standardized replication construction,the cost of large-scale CSP plants is expected to reach the current level of photovoltaic and natural gas in a few years.” said Jianxiang Jin, chairman of Zhejiang SUPCON Solar Technology Co.,Ltd. at the 3rd Delingha CSP conference.

The following is the main content of Jianxiang Jin’s speech:

1. the cost decline of PV power plant has reference meaning for that of CSP.

According to statistics: In the past seven years since 2011, the price of PV power has dropped by ¥0.4  to 0.6 ¥/kWh, a decrease of about 50%; the cumulative installed capacity of PV power has expanded for nearly 40 times in seven years, and it is obvious that the expansion of installed scale has contributed greatly to the power price reduction.

2. consideration on the cost reduction of the CSP plant

According to the latest statistics from the State Energy Administration, the average grid-connected electricity price of PV power in China in 2017 is 0.94 ¥/kWh, increasing 0.18% than that of the same period in last year, which indicates that the price of newly grid-connected PV power in 2017 is higher than 0.94 ¥/kWh. This price, which surprises everyone for people always consider the price of grid-connected PV power low. Actually, the price is not that low for it benefits from the government’s extra allowance.

According to the declared data, the price of comprehensive grid-connected natural gas is about 0.83 ¥ / kWh (¥0.67  + 0.16 ) and the peak load regulation price of coal power is higher than 0.85 ¥ / kWh, and in some provinces the price is up to 1.00¥ / kWh.

Compared to PV, CSP industry has more room on standardization and scale development while realization of that is quite challenging.

PV: high proportion of electronic components and high degree of standardization.

CSP: the proportion of mechanical parts is high in composition, a large number of equipment needs to be customized; the standardization of CSP is not only conducive to cost reduction of equipment, but also helping to shorten the design and construction period. The materials such as glass, steel, molten salt and cement, which have little room for reduction, account for less than 18% of the total investment, and the price of all the rest material can be reduced through scale development.

The four possible stages of cost decline on CSP are:

3. the realization condition of the four cost decline stages on CSP.

The first stage appears in 2-3 years later, the grid-connected price reaching 0.95 ¥ /kWh: the newly installed capacity reaches 3-5GW every year, and the subsidy is not in arrears and no light resource is wasted.

Technical route and equipment of the first demonstration CSP project have been verified, becoming mature and reliable with low failure rate.

The remaining 4GW capacity of CSP under the 13th Five-Year Plan has been in place and gets further optimization so that the standardized solution that can be replicated in large quantities is given.

The power generation rate reached 95%. The cost control has been much better, 10% lower than the estimated cost in feasibility study.

At this point, the grid-connected price of CSP has been in the same level of the current national average PV grid-connected price, replacing part of the peak load regulation power of coal.

The second stage appears in 5-6 years later, the grid-connected price reaching 0.8 ¥ /kWh: the newly installed capacity reaches 5-10GW every year, the subsidy is not in arrears, and no light resource is wasted.

The single supplier’s annual installed capacity reaches 1GW, and standardization promotes batch replication. The cost is reduced by 12%.

The degree of standardization has been greatly improved, and the design and construction cycle has been significantly shortened.

Technology progresses, the photoelectric efficiency increases by more than 6%, and generating capacity completion rate is higher than 98%.

The goal that can be realized is: CSP supply at this time, as peak-shaving power, can be connected to the grid with affordable price and completely replace the peak-shaving power supply of natural gas and coal.

The third stage appears in 7-9 years later, the grid-connected price reaching 0.65¥ /kWh: the newly installed capacity is above 10GW every year, the subsidy is not in arrears, and no light resource is wasted.

The photoelectric efficiency is increased by 6% with the continuous improvement of existing technology, and generating capacity completion rate reaches 100%.

Land costs and financing costs have declined in some degree and tax revenue has been given preferential treatment.

Single supplier annual installed capacity is above of 2GW, large-scale replication can be realized, and the cost drops by another 12%.

The fourth stage happens in 10 years later, the grid-connected price reaching 0.35-0.45 ¥/kWh.

The most advanced technologies are applied comprehensively, such as particle absorber, supercritical carbon dioxide cycle power generation, PETE and so on.

Technological breakthroughs bring about a further increase in power generation efficiency by 50%-80%.

CSP gets scale expansion at home, goes mature globally, and realizes 10% cost reduction. Carbon emission trading gets benefits and preferential policies like value-added tax, land, loan interest rates is in full implementation.

At this time, the affordable CSP replaces part of thermal power, becoming the base load power supply and peak-shaving power supply.

4. The impact of taxes, land costs and financial costs on the cost of 1kWh electricity.

Take the electricity cost of 1 ¥ /kWh CSP as an example:

The VAT is halved (8%), and the electricity cost is 0.94 ¥ /kW, dropping by 6 points.

Land Cost Composition (Taking Delingha for example): If the installed capacity of a CSP plant is 100MW, the herdsman compensation, herdsman pension, grassland restoration fee, cultivated land occupancy tax, land use tax (paid annually) totals 11750 ¥ / mu for one time.

If the land cost is 0, the cost of 1kWh power is ¥0.946 dropping by about 5.4 points (the land tax for PV pioneers is 1 point / kWh)

The interest on loans drops by 1 percentage points (3.9%), and the cost of 1kWh power is 0.95 yuan, dropping 5 point.

The above three items add up to a 15.4 point. National and local government policies have great impact on electricity prices.

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