View source for Legal Framework of Concentrating Solar Power (CSP) Utilization


= Economic barriers =
<div><span style="font-size: 0.85em;">CSP today is usually not competitive in wholesale </span><span style="font-size: 0.85em;">bulk electricity markets, except perhaps in isolated </span><span style="font-size: 0.85em;">locations such as islands or remote grids, so in the </span><span style="font-size: 0.85em;">short term its deployment depends on incentives. </span><span style="font-size: 0.85em;">A number of regions, including Spain, Algeria, </span><span style="font-size: 0.85em;">some Indian states, Israel and South Africa, have </span><span style="font-size: 0.85em;">put in place feed-in tariffs or premium payments. </span><span style="font-size: 0.85em;">Spain, for example, lets the producers choose </span><span style="font-size: 0.85em;">between a tariff of EUR 270 (USD 375)/MWh, or a </span><span style="font-size: 0.85em;">premium of EUR 250 (USD 348)/MWh that adds </span><span style="font-size: 0.85em;">to the market price, with a minimum guaranteed </span><span style="font-size: 0.85em;">revenue of EUR 250/MWh and a maximum of </span><span style="font-size: 0.85em;">EUR 340 (USD 473)/MWh. This approach has </span><span style="font-size: 0.85em;">proven effective, as it offers developers and banks </span><span style="font-size: 0.85em;">long-term price certainty, and makes CSP one of </span><span style="font-size: 0.85em;">the less risky investments in the power sector. </span><span style="font-size: 0.85em;">In the United States, the federal government </span><span style="font-size: 0.85em;">recently created the Renewable Energy Grant </span><span style="font-size: 0.85em;">Program, as well as a Federal Loan Guarantee </span><span style="font-size: 0.85em;">Program designed to foster innovation. </span><span style="font-size: 0.85em;">BrightSource became the first CSP provider to </span><span style="font-size: 0.85em;">benefit from this programme, securing USD </span><span style="font-size: 0.85em;">1.4 billion from the US Department of Energy </span><span style="font-size: 0.85em;">in February 2010 for several projects. </span><span style="font-size: 0.85em;">In the long term, however, financing of CSP plants </span><span style="font-size: 0.85em;">may become difficult if investors in technology </span><span style="font-size: 0.85em;">companies do not supply some equity capital. </span><span style="font-size: 0.85em;">Prices for capacity and energy are only guaranteed </span><span style="font-size: 0.85em;">by utilities on a case-by-case basis under </span><span style="font-size: 0.85em;">renewable portfolio standards (the regulations </span><span style="font-size: 0.85em;">that require increased production of energy from </span><span style="font-size: 0.85em;">renewable sources) and these standards are not </span><span style="font-size: 0.85em;">always binding<ref>2010_ International Energy Agency: Technology Roadmap Concentrating Solar Power</ref>.</span></div><div><br/></div>
= Incentives for deployment =
<div><div><span style="font-size: 0.85em;">To support CSP deployment, it is vital to build </span><span style="font-size: 0.85em;">investor confidence by setting a sufficiently </span><span style="font-size: 0.85em;">high price for the electricity generated, and in a </span><span style="font-size: 0.85em;">predictable manner. Feed-in tariffs and premiums </span><span style="font-size: 0.85em;">have proven effective for CSP deployment in Spain, </span><span style="font-size: 0.85em;">and for other renewable energy technologies in </span><span style="font-size: 0.85em;">many countries. The levels of feed-in tariffs or </span><span style="font-size: 0.85em;">premiums must be carefully studied and agreed </span><span style="font-size: 0.85em;">upon with everyone involved, however, as they are </span><span style="font-size: 0.85em;">ineffective if too low and economically inefficient </span><span style="font-size: 0.85em;">if too generous. Renewable energy standards </span><span style="font-size: 0.85em;">might be effective if they are sufficiently ambitious </span><span style="font-size: 0.85em;">and “binding” for utilities – that is, if the financial </span><span style="font-size: 0.85em;">penalties or safety valves are set at appropriate </span><span style="font-size: 0.85em;">levels in case of no or imited compliance. </span><span style="font-size: 0.85em;">While incentives need to be gradually reduced to </span><span style="font-size: 0.85em;">foster less expensive CSP electricity, revisions need </span><span style="font-size: 0.85em;">to be announced in advance to enable producers </span><span style="font-size: 0.85em;">to adapt. Furthermore, while governments may </span><span style="font-size: 0.85em;">want to limit the benefit of incentives to specified </span><span style="font-size: 0.85em;">overall project capacities, they should not </span><span style="font-size: 0.85em;">arbitrarily limit plant size, as scaling up plant size is </span><span style="font-size: 0.85em;">one important way of reducing costs. </span><span style="font-size: 0.85em;">Similarly, governments should avoid arbitrarily </span><span style="font-size: 0.85em;">setting hybridisation rates; instead, they should </span><span style="font-size: 0.85em;">establish ways to limit incentives to the solar </span><span style="font-size: 0.85em;">fraction of CSP power. As PV power and CSP use </span><span style="font-size: 0.85em;">the same resource, they should enjoy the same </span><span style="font-size: 0.85em;">incentives so that choices efficiently match the </span><span style="font-size: 0.85em;">quality of the solar resource with energy needs. </span><span style="font-size: 0.85em;">Governments should also design and implement </span><span style="font-size: 0.85em;">incentives for solar process heat for industrial </span><span style="font-size: 0.85em;">applications of all kinds and, at a later stage, for </span><span style="font-size: 0.85em;">the various solar fuels that concentrating solar </span><span style="font-size: 0.85em;">plants can deliver. </span><span style="font-size: 0.85em;">Regardless of whether the electricity sector </span><span style="font-size: 0.85em;">belongs to state-owned or partially state-owned </span><span style="font-size: 0.85em;">monopolies or is fully deregulated, governments </span><span style="font-size: 0.85em;">could encourage all utilities to bid for CSP </span><span style="font-size: 0.85em;">capacities. Governments should also consider </span><span style="font-size: 0.85em;">other options to help initiate or develop CSP </span><span style="font-size: 0.85em;">capacities, such as: offering suitable land or </span><span style="font-size: 0.85em;">connection to the grid or to water resources; </span><span style="font-size: 0.85em;">waiving land property taxes; and helping ensure </span><span style="font-size: 0.85em;">the availability of low-cost or at least reasonably </span><span style="font-size: 0.85em;">priced loans. </span><span style="font-size: 0.85em;">Utilities, for their part, should reward the </span><span style="font-size: 0.85em;">flexibility of CSP plants, i.e. their ability to dispatch </span><span style="font-size: 0.85em;">electricity when needed. Capacity payments </span><span style="font-size: 0.85em;">represent a simple option for doing this. Storage </span><span style="font-size: 0.85em;">has a cost, and should be valued at grid level, not </span><span style="font-size: 0.85em;">plant level. Policy frameworks should encourage </span><span style="font-size: 0.85em;">this necessary evolution<ref>2010_ International Energy Agency: Technology Roadmap Concentrating Solar Power</ref></span><span style="font-size: 0.85em;">.</span></div><div><br/></div>
= <span style="font-size: 0.85em;">Addressing </span><span style="font-size: 0.85em;">non-economic barriers</span> =
<div><div><span style="font-size: 0.85em;">Obtaining permits and grid access are the main </span><span style="font-size: 0.85em;">challenges for new CSP plants. Access to water or </span><span style="font-size: 0.85em;">gas networks for backup may be difficult in some </span><span style="font-size: 0.85em;">locations, and will certainly become important if </span><span style="font-size: 0.85em;">large numbers of CSP plants are deployed in desert </span><span style="font-size: 0.85em;">regions. </span><span style="font-size: 0.85em;">Nearby residents do not usually object to permits, </span><span style="font-size: 0.85em;">although the synthetic oil of trough plants and </span><span style="font-size: 0.85em;">molten salts are classified as hazardous material </span><span style="font-size: 0.85em;">in some jurisdictions. Before permits are given, </span><span style="font-size: 0.85em;">however, all environmental impacts must be </span><span style="font-size: 0.85em;">evaluated, including loss of animal habitat, water </span><span style="font-size: 0.85em;">use, visual impact and </span><span style="font-size: 0.85em;">species. The pace of the permitting process is the </span><span style="font-size: 0.85em;">most frequent problem. In California, for example, </span><span style="font-size: 0.85em;">environmental analyses on federal or state land </span><span style="font-size: 0.85em;">can take 18 to 24 months. </span><span style="font-size: 0.85em;">Similarly, grid access problems are not caused by </span><span style="font-size: 0.85em;">utilities, which like the guaranteed, dispatchable </span><span style="font-size: 0.85em;">nature of CSP, but by slow planning and </span><span style="font-size: 0.85em;">permitting processes.</span><span style="font-size: 0.85em;">Governments must act decisively to streamline </span><span style="font-size: 0.85em;">procedures and permits for CSP plants and </span><span style="font-size: 0.85em;">transmission lines. It is especially important </span><span style="font-size: 0.85em;">to build a network of HVDC lines to transmit </span><span style="font-size: 0.85em;">electricity from CSP plants in sunny regions to </span><span style="font-size: 0.85em;">less sunny regions with large electricity demand. </span><span style="font-size: 0.85em;">The global success of CSP depends on interested </span><span style="font-size: 0.85em;">countries, producers and consumers sharing a </span><span style="font-size: 0.85em;">common vision<ref>2010_ International Energy Agency: Technology Roadmap Concentrating Solar Power</ref>.</span></div><div><br/></div>
= <span style="font-size: 0.85em;">Addressing </span><span style="font-size: 0.85em;">non-economic barriers</span><br/> =

<span style="line-height: 1.5em; font-size: 0.85em;">Obtaining permits and grid access are the main </span><span style="line-height: 1.5em; font-size: 0.85em;">challenges for new CSP plants. Access to water or </span><span style="line-height: 1.5em; font-size: 0.85em;">gas networks for backup may be difficult in ome </span><span style="line-height: 1.5em; font-size: 0.85em;">locations, and will certainly become important if </span><span style="line-height: 1.5em; font-size: 0.85em;">large numbers of CSP plants are deployed in desert </span><span style="line-height: 1.5em; font-size: 0.85em;">regions. </span><span style="line-height: 1.5em; font-size: 0.85em;">Nearby residents do not usually object to permits, </span><span style="line-height: 1.5em; font-size: 0.85em;">although the synthetic oil of trough plants and </span><span style="line-height: 1.5em; font-size: 0.85em;">molten salts are classified as hazardous material </span><span style="line-height: 1.5em; font-size: 0.85em;">in some jurisdictions. Before permits are given, </span><span style="line-height: 1.5em; font-size: 0.85em;">however, all environmental impacts must be </span><span style="line-height: 1.5em; font-size: 0.85em;">evaluated, including loss of animal habitat, water </span><span style="line-height: 1.5em; font-size: 0.85em;">use, visual impact and effects on endangered </span><span style="line-height: 1.5em; font-size: 0.85em;">species. The pace of the permitting process is the </span><span style="line-height: 1.5em; font-size: 0.85em;">most frequent problem. In California, for example, </span><span style="line-height: 1.5em; font-size: 0.85em;">environmental analyses on federal or state land </span><span style="line-height: 1.5em; font-size: 0.85em;">can take 18 to 24 months. </span><span style="line-height: 1.5em; font-size: 0.85em;">Similarly, grid access problems are not caused by </span><span style="line-height: 1.5em; font-size: 0.85em;">utilities, which like the guaranteed, dispatchable </span><span style="line-height: 1.5em; font-size: 0.85em;">nature of CSP, but by slow planning and </span><span style="line-height: 1.5em; font-size: 0.85em;">permitting processes. </span><span style="line-height: 1.5em; font-size: 0.85em;">Governments must act decisively to streamline </span><span style="line-height: 1.5em; font-size: 0.85em;">procedures and permits for CSP plants and </span><span style="line-height: 1.5em; font-size: 0.85em;">transmission lines. It is especially important </span><span style="line-height: 1.5em; font-size: 0.85em;">to build a network of HVDC lines to transmit </span><span style="line-height: 1.5em; font-size: 0.85em;">electricity from CSP plants in sunny regions to </span><span style="line-height: 1.5em; font-size: 0.85em;">less sunny regions with large electricity demand. </span><span style="line-height: 1.5em; font-size: 0.85em;">The global success of CSP depends on interested </span><span style="line-height: 1.5em; font-size: 0.85em;">countries, producers and consumers sharing a </span><span style="line-height: 1.5em; font-size: 0.85em;">common vision. </span><span style="line-height: 1.5em; font-size: 0.85em;">Such projects need to result in win-win situations. </span><span style="line-height: 1.5em; font-size: 0.85em;">It would seem unacceptable, for example, if all </span><span style="line-height: 1.5em; font-size: 0.85em;">solar electricity were exported overseas while </span><span style="line-height: 1.5em; font-size: 0.85em;">local populations and economies lacked sufficient </span><span style="line-height: 1.5em; font-size: 0.85em;">power resources. Newly built plants will have to </span><span style="line-height: 1.5em; font-size: 0.85em;">fulfil </span><span style="line-height: 1.5em; font-size: 0.85em;">develop local economies. Meanwhile, the returns </span><span style="line-height: 1.5em; font-size: 0.85em;">from exporting clean, highly valued renewable </span><span style="line-height: 1.5em; font-size: 0.85em;">electricity to industrialised countries could help </span><span style="line-height: 1.5em; font-size: 0.85em;">cover the high initial investment costs of CSP </span><span style="line-height: 1.5em; font-size: 0.85em;">beyond the share devoted to exports. CSP would </span><span style="line-height: 1.5em; font-size: 0.85em;">thus represent a welcome diversification from oil </span><span style="line-height: 1.5em; font-size: 0.85em;">and gas exports, and help develop local economies </span><span style="line-height: 1.5em; font-size: 0.85em;">by providing income, electricity, knowledge, </span><span style="line-height: 1.5em; font-size: 0.85em;">technology and qualified jobs. </span><span style="line-height: 1.5em; font-size: 0.85em;">Possible energy security risks for importing </span><span style="line-height: 1.5em; font-size: 0.85em;">countries must also be carefully assessed. Large </span><span style="line-height: 1.5em; font-size: 0.85em;">exports would require many HVDC lines following </span><span style="line-height: 1.5em; font-size: 0.85em;">various pathways. The largest transfers envisioned </span><span style="line-height: 1.5em; font-size: 0.85em;">in this roadmap, from North Africa to Europe, </span><span style="line-height: 1.5em; font-size: 0.85em;">would require by 2050 over 125 GW of HVDC </span><span style="line-height: 1.5em; font-size: 0.85em;">lines with 50% capacity factor – i.e. 25 distinct </span><span style="line-height: 1.5em; font-size: 0.85em;">5 GW lines following various paths. If some were </span><span style="line-height: 1.5em; font-size: 0.85em;">out of order for technical reasons, or as a result of </span><span style="line-height: 1.5em; font-size: 0.85em;">an attack, others would still operate – and, if the </span><span style="line-height: 1.5em; font-size: 0.85em;">grid within importing and exporting countries </span><span style="line-height: 1.5em; font-size: 0.85em;">permits, possibly take over. In any case, utilities </span><span style="line-height: 1.5em; font-size: 0.85em;">usually operate with significant generating </span><span style="line-height: 1.5em; font-size: 0.85em;">capacity reserves, which could be brought on </span><span style="line-height: 1.5em; font-size: 0.85em;">line in case of supply disruptions, albeit at some </span><span style="line-height: 1.5em; font-size: 0.85em;">cost. Furthermore, the loss of revenue for supply </span><span style="line-height: 1.5em; font-size: 0.85em;">countries would be unrecoverable, as electricity </span><span style="line-height: 1.5em; font-size: 0.85em;">cannot be stored, unlike fossil fuels. Thus, exporting </span><span style="line-height: 1.5em; font-size: 0.85em;">countries, even more than importing ones, would </span><span style="line-height: 1.5em; font-size: 0.85em;">be willing to safeguard against supply disruptions<ref>2010_ International Energy Agency: Technology Roadmap Concentrating Solar Power</ref>.</span>
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= CSP Dropbox =

= References =

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