Concentrated Solar Challenged by Lowering PV Costs; Hybrid CPV Challenging Fossil Fuels

Advances in solar panel technology, reduced manufacturing costs, and government support have all helped drive solar power costs down in recent years, thanks in part to California’s mandate that 20% of the state’s power come from renewable sources by 2010. Though the state fell just short of its goal at 18%, the effect on the solar power industry has been profound, especially on concentrated solar power (CSP), a technology that uses sunlight to produce steam in order to generate electricity.

“Since 2008, the price of photovoltaic (PV) solar modules has fallen by more than half,” GTM research analyst Brett Prior told Reuters, “whereas the cost of building a CSP plant is about the same today as it was three years ago.” That has caused one solar power plant after another to make the switch from CSP to solar panels. Just this year, four projects in California, which represent approximately 1,850 megawatts of solar power generation, have made the switch.

According to Prior, CSP generates power at 15-16¢ per kwh, whereas PV produces at 12-13¢, with further declines foreseeable. Since a PV plant costs less to build, less to maintain, produces more, and is easier to finance (banks trust PV because it has a long track record) one might wonder whether CSP is on its way out?

CSP technology comes in many forms for many applications. “Power towers” use mirrors to direct sunlight towards a tower that produces steam for generating electricity. Setting up this technology sometimes proves difficult because it means razing large tracts of land; a particular problem in environmentally-sensitive areas. Solar Millennium is one company facing this difficulty. They’re considering redesigning their project in Kern County because the California Energy Commission wouldn’t approve it, due to concern about its impact on native species. In cases like this, PV would likely get the nod because of its flexibility in site-locating a project.

Thermata, a start-up funded by Bill Gross’ Idealab, has developed an innovative technology that generates steam for industrial processes used in paper mills and chemical plants. According to their research, approximately 17% of all industrial energy is used to power industrial boilers. With a product that can produce steam for less expense than natural gas, and is easier and cheaper to install than other CSP systems, the start-up hopes to grab a share of this huge market.

Hybrid-technology concentrated photovoltaic (CPV) looks so promising that some think it may become the first PV technology to achieve cost parity with fossil fuels. It works by concentrating light (via mirrors) onto solar panels, requiring 1/10 as many panels to do the job.

Despite solar PV’s improving cost competitiveness, CSP technology still has room to grow. Using fluids rather than panels, CSP technology is able to generate electricity cheaply. It can make use of existing thermal power plant infrastructure and use fossil-fuel backup systems for better reliability. Finally, it can generate both heat and power, using a technology called integrated solar combined cycle.

If the power plant sector fails, CSP can still be used for other applications, such as industrial processing. When any market takes a nosedive, those players who are able to diversify survive and thrive. The internal competition between competing solar technologies will only lead to the improvement of both, making them all the more competitive against the biggest competition — fossil fuels.