Solar thermal seeks U.S. breakthrough

July 29, 2010 8:06 AM PDT

by Reuters

Solar thermal power could be close to a breakthrough in the U.S. market, but only if developers can shave costs to beat back competition from photovoltaic solar systems and attract the huge sums needed to finance the renewable energy plants.

While the new technology has been touted as a solution toward moving the United States away from its dependence on fossil fuels, it has so far stumbled because of the high price tag for the massive plants.

Solar thermal companies like BrightSource Energy and eSolar, both of which count search giant Google among their investors, and Spain's Abengoa Solar, have technology that concentrates the sun's rays to heat water into steam and drive a generator.

A solar thermal plant, like this 200-megawatt Abengoa facility in Spain, uses a vast array of mirrors to concentrate the sun's rays.

(Credit: Abengoa Solar)
Traditional photovoltaic modules made by companies like First Solar and Suntech directly convert sunlight into electricity, and make up the largest chunk of the solar market.

Backers of solar thermal have said it would claim the lion's share of large-scale projects in the United States, but a sharp drop in photovoltaic panel prices has drawn much of the market's interest to that technology.

"With panel prices coming down so much for solar PV, solar thermal does not look as cost-competitive anymore," Wedbush analyst Christine Hersey said.

Solar thermal is economical only on a large scale, lifting total project costs into hundreds of millions of dollars, while PV systems can be built piecemeal in smaller steps that are easier to finance.

"It does not make sense to do a [thermal] plant that is less than 100 megawatt," Cowen & Co. analyst Rob Stone said. "That is because of the cost of the steam plant that goes with it."

PV, however, can be used for a wide range of applications, from very large to very small.

"In terms of ubiquity, PV is ultimately going to be the most widely deployed technology just because it's going to show up ranging in size from 500MW projects all the way down to solar cells on the roof of a hybrid vehicle," Stone said.

One megawatt (1 million watts) is enough to power about 800 U.S. homes.

Federal support
The International Energy Agency predicts that several hundred gigawatts of solar thermal power will be built by the middle of the century. (A gigawatt is 1 billion watts.)

Spain is currently the global leader in thermal solar development, with hundreds of megawatts slated for construction.

China is likely to move quickly into the field and is expected to launch a tender for project in the coming weeks, and a European consortium has announced plans to build a massive project in the Sahara Desert.

In a solar thermal facility, mirrors on the ground direct sunlight to a tower in order to generate steam energy.

(Credit: BrightSource Energy)
The U.S. utility market for solar is also expected to grow sharply over the next few years, but that will be possible only with government support, which solar thermal companies have been lobbying for.

BrightSource recently won $1.37 billion in federal loan guarantees, while Abengoa got $1.85 billion in conditional loan guarantees.

"The loan to Solana [a 280-megawatt plant in Arizona] is really an investment in America's environmental future because that loan will be repaid," Fred Morse, a senior adviser to Abengoa, said on a recent conference call.

Morse said those government guarantees were crucial to move the nearly 30 thermal solar projects sought by companies into operation.

"Billion-dollar projects cannot be financed today by commercial banks," he said.

With investment hard to come by, solar thermal technology has been losing ground.

"PV has been increasing and solar thermal has been dipping, as a percentage of the projects being bid, in the last couple of years," Cowen's Stone said.

Environmental concerns
Even as the technology grapples with high costs and financing worries, there are other concerns as well. To make steam, solar thermal technology uses a lot of water, which can cause problems in areas where the resource is scarce.

"A lot of times, you are putting these solar thermal units in the middle of deserts where water is already a rare commodity," Simmons & Co. analyst Burt Chao said.

BrightSource, for instance, is using its federal loan guarantee for three utility-scale solar thermal plants in the Mojave Desert in southeastern California.

"For technologies where they want to use water, trying to get a project like that approved in the Mojave Desert can be very, very difficult," Wedbush analyst Hersey said.

Story Copyright (c) 2010 Reuters Limited. All rights reserved.

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Topics:Solar.Tags:eSolar,Abengoa Solar,solar thermal,Brightsource.Share:DiggDel.icio.usRedditYahoo! BuzzFacebookTwitter..

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.by Seaspray0 July 29, 2010 9:24 AM PDT
There are other solar thermal solutions out there, notably one that uses a sterling engine and generates around 25 KWatt each. These are smaller scale but I'm guessing the cost per KWatt will be higher. Any word on those?
Like this Reply to this comment .by Bob_299 July 29, 2010 9:59 AM PDT
One advantage about solar thermal is that it is relatively easy to see a solar thermal plant as a viable long-term facility. It relies primary on non-moving parts (such as mirrors and pipes), and the major moving parts are generators to convert kinetic energy into electricity, which is well-established technology. The relative ease of intuitively grasping what is going on in a solar thermal plant is shared by wind turbines.

By contrast, photovoltaic products are based on electronics reminiscent of semiconductor data processing products. One characteristic they seem to share is rapid technological change. This can be good, but it can also be a turn-off for investors concerned about obsolescence and rate of replacement.

Once solar thermal or wind-turbine facilities are built, the investment is made. A well-built solar thermal plant might continue to operate for a generation without substantial upgrading. By contrast, photovoltaics will foreseeably require relatively frequent upgrades as the technology improves. This suggests that what we are seeing today is the natural path. Photovoltaics are increasingly being used in niche applications, smaller installations off the power grid, while large solar thermal and wind-turbine installations are being developed to provide power to the grid.

Photovoltaics may continue as a niche technology for a generation, until the technology is sufficiently advanced to overcome, through a "destructive innovation," solar thermal and wind-turbine installations as a technology of choice for providing power to those who are currently customers of the power grid.

Like this Reply to this comment .by NocturnalCT July 29, 2010 12:54 PM PDT
Actually each mirror on a plant like this gets moved to aim the sun into the 'oven'. A PV plant can work without this mechanical aspect (although less efficient) but clearly a solar thermal can not. Each mirror has to be aimed individually. Not that hard but it's not a trivial task that can be done with simple mechanical means. Each mirror needs to have independent alt/az control that very smoothly aims the beam. If the motion is not smooth the long distance between mirror and tower means the beam sways back and forth, spreading the energy and perhaps missing the tower part of the time.

I like these thermal plants but they're not as trivial as you make them sound. Then again large scale power generation hardly ever is :)

As far as the desert goes I'm not sure what the deal is with the water. So you start with a few tanker trucks full of the stuff and it goes in a closed system. Every now and then you top it off with another tanker truck. Now if they intend for this to be an open system (steam escapes after driving the turbine) then that's just a dumb design and indeed that'll cause trouble in the desert.
Like this .by gerrrg July 29, 2010 3:02 PM PDT
Do they have a special net for dead birds flying too close to the tower?
Like this Reply to this comment .by hopeful41 July 29, 2010 8:04 PM PDT
As far as government support goes, WE ARE BROKE.