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Global CSP Market Layout and Current Project Development Situation

Reported from CSPPLAZA: Xipeng Hu,Chief Editor of CSPPLAZA delivered a speech on the layout and status quo of global CSP during the 2nd Delingha Concentrating Solar Power Session on September 22. He introduces the distribution and development status of global CSP market, and accordingly offers some advice on the development of China’s CSP market.

He said that CSP is an international and global market, for Chinese market, we need to learn from overseas mature experience and absorb the lessons of failure. China’s CSP enterprises rely on the first batch of demonstration projects to accumulate practical experience, and then depend on the localization of low-cost manufacturing capacity to enter into the overseas market and involve in project constructing in the future, and become the leader of global CSP market possibly.

The following is the full text of the speech:

I would like to thank the organizer’s warm invitation. Today I will talk about the development of global CSP market, so why do I choose this topic? I think that thermal power generation is international and global, both China and oversea countries develop some projects, and it also originates from overseas. In the current point of view, the development degree of foreign countries is better than it of China, so for we Chinese market, we also need to learn from overseas mature experience. Today, I will give a layout on global CSP market, and if there is something unresonable in my talks, please share me with your opinions.

My speech includes several aspects, the first part is the distribution of global CSP market, the second part is the development status of the international market and the third part will talk about the situation of China’s CSP market and what we need to learn.

The map shows the current distribution of global CSP market, the global CSP installed capacity has been up to 5017MW at the end of 2016. Of course, this sketch is relatively small, some small countries and potential markets are not marked. In general, there are 24 countries having built solar thermal power projects, including Spain, the United States, Australia, Canada, Chile, China, Morocco, Saudi Arabia, South Africa, Denmark, Egypt, France, Germany, Algeria, Greece, Israel, Italy, Kuwait, Mexico, Thailand, Turkey, United Arab Emirates and Oman. We can see that many countries have participated in CSP industry.

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Picture: the distribution of global CSP market

I hold the opinion that China is a very important emerging market, China’s CSP enterprises can rely on the first batch of demonstration projects to accumulate practical experience, and then depend on the localization of low-cost manufacturing capacity to enter into the overseas market and involve in project constructing in the future, and become the leader of global CSP market possibly in the future.

The following sheet contains the installed capacity of those countries above. Next, I will sort out the major market. First, Spain is known to lead the development boom of global CSP industry. In 2007, Spain began to build the first commercial project, and there has been 51 CSP plants built so far, what has been put into operation installed capacity is up to 2362 MW. Thus the Spanish market occupies a very large share in the global market which the total installed capacity is 5017MW as just said. There are some major projects in Spain, namely the world’s first molten salt tower project—Gemasolar, and the first parabolic trough plant with energy storage—Andasol, others like PS10, PS20, and La Africana. The owner of La Africana told us that the actual power generation exceeds the expected power generation when we launched a study tour to Spain in May this year.

999999

 Sheet:Data for the installed capacity of global CSP market

  (Note: red for traditional market; blue for emerging market; black for other market.)

At present, people pay less attention to the Spanish market because of its declining. The rising of  Spanish market is mainly owed to the FIT policy released in 2007, which is up to 27 Euro cents / kWh. This kind of electricity price also promots many companies in Spain, especially some engineering companies such as Cobra, Sener, TSK and other companies quickly enter into the field and build power stations. They has become the well-known EPC enterprises in current international market. It can be said that these companies are the earliest to master the core integration technology of CSP plant. I think Chinese companies can also do the same things and become excellent through the practice of a number of commercial projects.The following is a simple layout on the Spanish market by technical distribution. Among all the projects, parabolic rough 46, tower 3 and Fresnel 1 and it does not include small pilot projects. The installed capacity of Spain’s trough project is 50 megawatts, and the first concession project in China—Ordos project is 50 megawatts. Why the capacity is 50 megawatts? That’s because the installed capacity is limited at 50 megawatts by the Spanish government. After that, many emerging countries continues this practice. Spain has also made a significant contribution to the commercialization of tower technology, just said that the representative project—Gemasolar power station, it plays an important role in commercializing the tower molten salt technology, since then the tower has gradually grown up and replace the water quality tower.

So what brings down Spanish market? In 2012, the policy changed terribly, the entire Spanish financial crisis led that it cannot provide these renewable energy projects with huge financial subsidies. The new CSP projects will no longer enjoy the price subsidies, and 7% energy tax are levied for those projects have been completed and put into operation, while eliminating the FIT price support for the part of natural gas-fired of the operation plants. At that time, the Spanish market allowed the CSP plant with the allocation of natural gas fill the burning which the proportion is not more than 15%. The revenue of the operated plants falls sharply and there is no longer economic feasibility for the new plants after the release of the policy.

We can see that the long-term high tariff subsidies are unsustainable, of course, China’s overall economic situation is still very good, although the gap of renewable energy subsidies has been there, but we are still confident in the credit of the Chinese government. With the declining of its market, the local CSP companies are forced to move to emerging markets, and this is one of the reason for the rapid development of the emerging market. China’s current project development also adopt this kind of fixed price subsidy, which is somewhat similar to that of Spain, but China is not a comprehensive subsidy, just for the demonstration projects, thus the government’s subsidy pressure is controllable.

Then, the United States.Actually, the US market is the earliest to develop CSP projects.In 1984,the world’s first commercial trough power station SEGS1 was established, until 1991 there had been 9 projects which the total capacity of 354MW. But since then the extraction cost of shale gas and natural gas in the United States fell sharply, in addition that the gas generation costs plummeted, for this reason, the US renewable energy market entered into a slow pace period.

Around 2008, the US solar market began to develop rapidly, the Americans realized the economic advantages of large-scale development of CSP projects, so they carried out a few large-scale projects, including Ivanpah (392MW), Mojave(280MW), Solana(280MW), Genesis(250MW)and CrescentDunes(110MW).The success of these large projects advance the larger installed capacity of global CSP projects. There has been 22 commercial CSP projects in the United States so far, and the total installed capacity of 1.83GW. The main contribution of the United States to the CSP market is to push the CSP plant to large-scale development and verify its commercial feasibility.

After 2014, the US CSP market went down, the main reason is its policy. The policy support for the development of the US solar thermal power projects mainly comes from ITC policy and the US Department of Energy’s loan guarantee policy.Under this condition, its CSP market has a rapid development. But around 2014, the US market rumored that ITC policy would expire at the end of 2016, while another important loan guarantee policy was terminated, all of this led to the stagnation of the entire US CSP projects. Of course, the good news announced in 2016 that ITC policy has been extended to the end of 2021. In addition, the US market offers great support on the research and development of CSP technology, such as Sunshot plan promotes the rapid development of CSP technology.

In general, the ITC policy and loan guarantees support the development of the US CSP market. In November 2016, Solar Reserve announced that it would build a Sandstone tower thermal power plant with a capacity of 2GW in Nevada, and the project is still in progress. Besides, the cost of CSP has been falling and it can also drive the US market to pick up, so we think the US market has its potential.

Up till now, people pay more attention to the the emerging markets, and among them the projects of Middle East and North Africa(MENA) develop the best. There has been totally 18 projects under construction in MENA currently with trough 11 and tower 5, the total installed capacity of 1330MWe, adding the latest Dubai 700MW announced a few days ago, the total installed capacity has been more than 2000MW. There are totally 10 MENA countries developing CSP projects: Morocco, the United Arab Emirates, Saudi Arabia, Tunisia, Israel, Kuwait, Algeria, Egypt, Jordan and Oman.

The CSP installed capacity of Morocco is currently the largest in the MENA region,where two commercialized CSP projects, 160MW NOORⅠparabolic trough plant and 20MW AinBeni Mathar ISCC plant, have been built, 200MW NOORⅡparabolic trough plant, 150MW NOOR III tower plant and 380MW NoorMidelt CSP-PV hybrid power plant are being developed. With the involvement of China’s SEPCOIII Electric Power Construction Corporation, the NOORⅡ and NOORⅢ have attracted much attention.

Let’s have a look at the other markets in the MENA region. At present there are two CSP projects being built in Israel:the AshalimPlotB (121MW) tower plant is under construction and scheduled to be operational in 2017, and the AshalimPlotA (110MW) parabolic trough plant is also under construction and expected to be put into operation in 2018. As for the three pictures on the right, the topside is a conception of one tower project of Dubai 700MW CSP project which we have just mentioned. The picture of the Morocco NOORⅠ project is in the middle, and the project in the lower right corner’s picture is not a CSP project, but an EOR project in Oman, which uses solar energy,instead of natural gas to drive the extraction of heavy oil. We have talked with the stuff of Sinopec about this technology and they believe that this technology has the potential to be developed in China. This representative Oman project is currently the world’s largest solar EOR project.

The Dubai’s 700MW project that we have just mentioned is currently a hot news and recently people were discussing how the bid 7.3 cents/kWh was created. In fact, it is related to some of the boundary conditions of the project and we will give a detailed exposition in the follow-up report.I think such a bid price is not a strange thing for the industry and can be achieved as long as there are enough external environmental conditions. As for the Saudi market with great potential, there are two ISCC power plants under construction: Duba1 project with 50MW CSP installed capacity and 50MW WaadalShamal power plant, which are expected to be put into operation in 2017 and 2019 respectively. Although the CSP market of Saudi Arabia has a great potential, the market development is relatively slow currently.

Next, we will talk about the South African market. Through the government’s REIPPPP program,South Africa has completed successfully the construction of a number of projects. Currently there are seven projects with a total installed capacity of 600MW, of which four have been completed. This table lists some of the construction situations of these projects. Now there are also some changes in the South African market. South Africa’s entire power system is controlled by ESKOM, which thinks that it have absorbed too much high-cost renewable energy power, resulting in an increase in business costs. Agreements of South Africa’s local electricity price are signed directly with ESKOM and sometimes it is not particularly willing to agree on the government-led electricity price. ESKOM may want to build a power plant by itself or save money by the acquisition of cheaper traditional electricity. REIPPPP started in 2011, with a total investment of 200 billion ZAR, of which a quarter are from overseas investors. The planning total installed capacity of REIPPPP is 2.3GW and the CSP installed capacity light and heat power generation projects accounted for 600MW. But after three rounds of tendering, REIPPPP was shelved by Eskom’s refusal to sign the PPAs agreement with 37 independent power producers (IPPs). As the largest power company in South Africa, Eskom supplies 95% of electricity for the region and is the only power purchaser of REIPPPP’s many power generation projects. Its previously refusal to sign the PPAs agreement is somewhat irreverent to the power system monopoly phenomenon and the interests of the dispute of South Africa and the reduction of social electricity consumption in recent years.

After coordination, now the South African sets the upper limit for the power price of the acquired solar projects in the future . the relatively low upper limit of the power price affected the development of some projects and may make a impact on the economic feasibility of the CSP projects.

Let’s talk about the Australian market. Some time ago SolarReserve signed the agreement to develop South Australia’s Port Augusta 150MW CSP project and the Australian market caused widespread concern. The realization of the very very low 6 cents/kWh also relies on the basis of some boundary conditions. The discussion of electricity prices must not be separated from the differences of the financing costs, taxes, tariff agreements and other aspects , which all have a great impact on the power price.

It is also necessary to say something about the picture on the right side. On October 6, 2016, the first commercialized CSP project located in South Australia and dedicated to the supply of clean energy for the desert farm was officially put into operation. This is also a special use of solar thermal, which uses solar thermal to creat a solar farm. In addition to generating power, the project can also supply heat, establish the solar greenhouse system and product agricultural products such like tomatoes.

The following focus is the Indian market. Why do I want to focus on the the Indian market? Actually there is no big movement in the Indian market.One common ground of the the emerging markets that we just said about is that they called for international bidding for their projects and the bidding companies can be local and international. Their purpose is clear, that is ,whoever can give me the lowest-cost electricity will build the project. But it is limited in the Indian market , just like in the Chinese market,where the owners of fist batch of demonstration projects are all domestic enterprises. India is also a developing country, whose conditions of all aspects are similar with China, so it is worth learning from the Indian market for the Chinese market. Of course, the Indian market is currently valuated as a failure, so we would hope to learn more lessons from its failure.

The Indian CSP market began the planning and development in 2010, when India introduced the Jawaharlal Nehru National Solar Mission, planning to build 7 projects with total installed capacity of 470MW. These 7 projects were scheduled to be completed by May 10, 2013. This is somewhat similar with China which plans to complete the construction of first batch of demonstration projects by the end of 2018. The construction period set by the Indian market is a little more than two years. But in fact, there was only one power station completed in time. Then the government granted a 10-month extension,but so far there are still only three projects completed with a total installed capacity of 200MW. Plus the pilot projects, there is currently a total 200 MW installed capacity in India. From 2014 to now, India is understood to start only a CSP-coal intergrated project. The Indian market should be a relatively silent market. As a new market, from a few years’development into a relatively quiet stage, the experiences and lessons of failure of the Indian market are indeed very worthwhile to learn from.

The largest common point between the Indian and the Chinese markets is that the CSP projects planned by the government are developed by local enterprises and the limited development cycle is a little short. The biggest difference is that China’s CSP industry chain is relatively mature and there is no need to rely too much on foreign markets.

To sum up why the Indian market failed:firstly, the construction time given by the government is too short. A two years’ construction period means that the item side need to crash the schedule, which will influence on the quality of the projects;secondly, India did not pay enough attention to radiation measurements at the time and inaccurate data on the irradiation resources made the site selection of many projects didn’t match the expectations seriously; thirdly, the Indian market lacks sufficient technology and experience and the problems and difficulties encountered in the actual development of the project are out of the expectations; fourthly, the lack of professional CSP construction workers makes a great impact on the progress of the project construction; lastly, the equipment purchases of Indian projects are overly dependent on overseas.

Back to the Chinese market, the reason why the progress of China’s first batch of demonstration projects is relatively slow can be listed as follows:the lack of experience for the project tender , the inadequacy of preparatory preparation for the project, the technical problems, the problems of coordination between the project owners and the local governments and the financing problems because of the difficulty to calculate the economyof the projects and give a strong proof, etc.

Next, I would like to introduce the current living situations of private enterprises in the CSP industry chain combining the perception in the research activity for CSPPLAZA VIP members in the past one month. Firstly,because the Chinese CSP market started slowly and still can’t create the profits at present, the enterprises need to rely on their own accumulation of capital, foreign capital transfusion and the support of other business , etc. to maintain the survival. Secondly,the corporate financing has not been significantly improved with the start of the demonstration projects. Thirdly, the frequency of low bidding prices causes vicious competition and benign market environment are not formed. Finally , the domestic key equipment such as melting salt pumps, valves and other products are still not competitive with overseas brands.

Finally, let‘s talk about the development route of China’s CSP industry. In general, the embryonic stage of industry lasts from 2003 to 2010; 2011~2015 is the improvement stage for the industry chain; 2016~2018 is the commercial demonstration stage; after 2019, China may usher large-scale development of CSP.

As for our platform, which was established in 2012, in the past 4 years , we have created Chinese and English sites, WeChat, APP and other online platforms, as well as a number of offline activities brand, gathering more than 90% of the crowd in the industry. Such a media service system has also made contribution for the industry’s development. At present, we are conducting a national VIP member tour research activity. The high value service system for the VIP members was officially launched in November of last year. As of now, there are totally 59 domestic and international membership units joining in our VIP platform, covering the whole CSP industry chain.We have a number of corresponding planning and implementation for offline activities. Each year more than 10 offline activities, including the General Assembly, training, inspection, etc. are held. Currently,the tour research activities are being held and the third phase of the CSP technology training courses will be held in early November and we are willing for everyone’s participation.

As an industry platform, from 2012 to now, I also have a very deep feeling that it may be difficult for everyone in this industry, including ourselves. This market is destined to be more difficult to develop and everyone involving should insist. Every practitioner should be confident and willing to adhere to their decision, then we can work together to promote the industry development. Thank you!

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