Cathedrals in the desert: The outlook for Concentrating Solar Power

Today there are 6.1GW of Concentrating Solar Power (CSP) plants operating, with a further 1.2GW under construction or in advanced development. With a subsidy phase-out expected to halt development of new projects after 2021 in Mainland China, there is little activity beyond certain markets in Africa and the Middle East.

Yet, levelized cost of electricity from CSP has dropped by 50% since 2010 and is expected to fall below 75 USD/MWh in 2021. The addition of thermal energy storage (TES) increased the dispatchability of CSP assets. But the technology remains expensive compared to alternatives, except for durations of longer than eight hours.

CSP+TESS still offer relatively cheap long duration storage, but PV and battery hybrids are catching up quickly, due to falling battery prices and much lower charging costs

The only pathway to CSP competitiveness comes through further hybridization with TES and PV, and with design choices and operating strategies that focus on maximizing value rather than just minimizing cost. Technological improvements allowing higher temperatures and efficiencies can contribute but depend on scale and continued build-out. To maximize value, new projects could be built in markets that face high PV penetration, long evening peaks, a lack of other sources of flexibility, as well as high cost of imported gas.

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Francesco d'Avack is a Principal Analyst, Global Power and Renewables, Climate & Sustainability at IHS Markit.

Posted on 30 December 2020

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.