Folie 1

Financing Concentrating Solar Power -Subsidy or Investment?

Franz Trieb

Stuttgart, 15.06.2010

Folie 2

A Strategy for CSP Finance

Folie 3DLR 2009

Challenge 1: Investment replaces fuel consumption

fuel

Power BlockElectricityPower

Block

Solar Field1

Solar Field1

Investment ($/kW): 4700 8000 11300 14600Capacity Factor : 25% 45% 65% 85%

Storage1

Solar Field2

Storage1

Solar Field2

Solar Field3

Storage2

Solar Field3

Storage2

Solar Field4

Storage3

Solar Field4

Storage3

fuel

Power BlockElectricityPower

Block

Solar Field1

Solar Field1

Investment ($/kW): 4700 8000 11300 14600Capacity Factor : 25% 45% 65% 85%

Storage1

Solar Field2

Storage1

Solar Field2

Solar Field3

Storage2

Solar Field3

Storage2

Solar Field4

Storage3

Solar Field4

Storage3

fuel

Power BlockElectricityPower

Block

Solar Field1

Solar Field1

Investment ($/kW): 4700 8000 11300 14600Capacity Factor : 25% 45% 65% 85%

Storage1

Solar Field2

Storage1

Solar Field2

Solar Field3

Storage2

Solar Field3

Storage2

Solar Field3

Storage2

Solar Field3

Storage2

Solar Field4

Storage3

Solar Field4

Storage3

Solar Field4

Storage3

Solar Field4

Storage3

Solar Field4

Storage3

Solar Field4

Storage3

Fuel

Folie 4

0

10

20

30

40

50

60

Year

The

rmal

Ene

rgy

Uni

t C

ost

[$/M

Wh]

.

Crude Oil Price

Natural Gas Price

Coal Price

www.oilnergy.com

Challenge 2: Known immediate cost but unknown future savings

Folie 5

0

5000

10000

15000

20000

00:0

008

:00

16:0

022

:00

04:0

012

:00

16:0

000

:00

time

Win

d P

ow

er

(MW

)

-2000

-1500

-1000

-500

0

50000

:00

08:0

016

:00

22:0

004

:00

12:0

016

:00

00:0

0

time

Intr

a-D

ay,

La

st P

rice

($

/MW

h)

Challenge 3: Fix Cost but Non-Fix Revenue

German power market during the first week-end of October 2009

Folie 6

Challenge 4: Initial Cost Levels above Market Price

Ragwitz 2009

0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300

Wind offshoreWind onshore

Tide & WaveSolar thermal electricity

PhotovoltaicsHydro small-scale

Hydro large-scaleGeothermal electricity

Biowaste(Solid) Biomass

(Solid) Biomass co-firingBiogas

[$/MWh]

500 - 2000

Folie 7

1. Long-term investment (20-40 years) not only for the power plants but also for their „fuels“.

2. Unknown future savings compared to volatile and unpredictable conventional fuel prices.

3. Known long-term cost but unknown long-term revenues if electricity output is fluctuating and sold at spot markets.

4. Additional cost of early plants cannot be recovered under conventional market conditions and less if competitors are subsidized.

Pioneers are punished by market forces because markets are adapted to conventional power schemes.

Investment Challenges

Folie 8

Base Load Capacity MW 4000Base Load Annual Electricity GWh/a 30000Base Load Fuel Cost (Coal + NG + HFO) $/MWh 15.0

Medium Load Capacity MW 2500Medium Load Annual Electricity GWh/a 10000Medium Load Fuel Cost (Coal + Fuel #2) $/MWh 35.0

Peak Load Capacity MW 1000Peak Load Annual Electricity GWh/a 2000Peak Load Fuel Cost (Diesel + Fuel #2) $/MWh 60.0

Cost Escalation of Fossil Fuels %/a 1.5%Specific Power Block Investment (B+M) $/kW 1200Specific Power Block Investment (Peak) $/kW 400Project Rate of Return % of Inv./a 10.0%O&M Rate % of Inv./a 2.5%Fuel Efficiency Base & Medium Load % 35.0%Fuel Efficiency Peak Load % 30.0%

Reference LCOE of CSP in 2010 $/kWh 0.280Reference Direct Normal Irradiance kWh/m²/y 2400CSP Progress Ratio % 88.0%Exchange Rate $/€ 1.19

Model Case Power Park:

Folie 9

0

1000

2000

3000

4000

5000

6000

7000

8000

0 2000 4000 6000 8000

Hour of Year [h]

Po

wer

[M

W]

Folie 10

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2010 2020 2030 2040 2050

Year

LC

OE

($ 2

01

0/k

Wh

)

Peak Load LCOE

Medium Load LCOE

Base Load LCOE

Average LCOE

Model Case Cost Structure

Folie 11

0.00

0.05

0.10

0.15

0.20

0.25

0.30

2010 2015 2020 2025 2030 2035 2040 2045 2050

Year

Req

uir

ed C

SP

Tar

iff

($2

01

0/k

Wh

)

0

200000

400000

600000

800000

1000000

1200000

Glo

bal

In

stal

led

Cap

acit

y (M

W)

.

1000 824639000

95000

240000

417500

595000

772500

950000

CSP Required Tariff Model

Folie 12

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

2010 2020 2030 2040 2050

Year

LC

OE

($ 2

01

0/k

Wh

)

LCOE of CSP at DNI2400 kWh/m²/a

Average LCOEwithout CSP

B

Break Even with Average Cost

Folie 13

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

2010 2020 2030 2040 2050

Year

LC

OE

($ 2

01

0/k

Wh

)

LCOE of CSP at DNI2400 kWh/m²/a

Peak Load LCOE

Medium Load LCOE

Base Load LCOE

Average LCOEwithout CSP

B

B1

B2

B3

Break Even with differentload segments

Folie 14

0

5000

10000

15000

20000

25000

30000

2010 2020 2030 2040 2050

Year

Lo

cal

Inst

alle

d C

apac

ity

(MW

) .

Peak CSP Capacity

Medium CSP Capacity

Base CSP Capacity

Peak Fuel Capacity

Medium Fuel Capacity

Base Fuel Capacity

Case 1: 100% Substitutionin peak and medium load segment by CSP

Folie 15

0.07

0.08

0.09

0.10

0.11

0.12

2010 2020 2030 2040 2050

Year

LC

OE

($ 2

01

0/k

Wh

)

Average LCOEwithout CSP

Average LCOE withCSP

Average LCOE withPeak CSP

a

b

c

Case 1: 100% Substitutionin peak and medium load segment by CSP

Folie 16

Calculation of Annual Solar Sharein the Initial Phase

Folie 17

0

1000

2000

3000

4000

5000

6000

7000

8000

0 2000 4000 6000 8000

Hour of Year [h]

Po

wer

[M

W]

Peak LoadMedium LoadBase Load

1st Step: The Load Curve is devided into Peak, Medium and Base Load

Folie 18

In higher time resolution it looks like this for a summer week

0

1000

2000

3000

4000

5000

6000

7000

8000

5100 5120 5140 5160 5180 5200

Hour of Year [h]

Po

wer

[M

W]

Peak LoadMedium LoadBase Load

Folie 19

0

1000

2000

3000

4000

5000

6000

7000

8000

1 3 5 7 9 11 13 15 17 19 21 23

Hour of Day

Lo

ad

(M

W)

Peak Load

Medium Load

Base Load

Solar

Peak Load

Folie 20

2nd Step: The peak segment is separated and then, the lower part is covered by CSP (solar or hybrid), while the upper part (residual capacity) is covered by conventional peaking plants

0

200

400

600

800

1000

1200

1400

0 2000 4000 6000 8000

Hour of Year [h]

Po

wer

[M

W]

Peak LoadPeak SolarPeak Hybrid

Folie 21

In higher time resolution it looks like this for a summer week

0

200

400

600

800

1000

1200

1400

5100 5120 5140 5160 5180 5200

Hour of Year [h]

Po

wer

[M

W]

Peak LoadPeak SolarPeak HybridPeak Residual

Folie 22

3rd Step: Medium Load is separated and the lower part covered by CSP

0

500

1000

1500

2000

2500

3000

0 2000 4000 6000 8000

Hour of Year [h]

Po

wer

[M

W]

Medium LoadMedium SolarMedium Hybrid

Folie 23

In higher time resolution it looks like this for a summer week

0

500

1000

1500

2000

2500

3000

5100 5120 5140 5160 5180 5200

Hour of Year [h]

Po

wer

[M

W]

Medium LoadMedium SolarMedium HybridMedium Residual

Folie 24

4th Step: Base Load is separated and the lower part covered by CSP

0

500

1000

1500

2000

2500

3000

3500

4000

4500

0 2000 4000 6000 8000

Hour of Year [h]

Po

wer

[M

W]

Base LoadBase SolarBase Hybrid

Folie 25

In higher time resolution it looks like this for a summer week

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5100 5120 5140 5160 5180 5200

Hour of Year [h]

Po

wer

[M

W]

Base LoadBase SolarBase HybridBase Residual

Folie 26

Load Segment Peak Load Medium Load Base Load TotalInstalled Capacity (MW) 1285 2455 4000 7740Electricity Production (GWh/a) 1925 10004 30095 42024CSP Capacity (MW) 600 1700 3200 5500CSP Solar Multiple 1 2 3.5 --CSP Storage (h) 6 8 18 --CSP Solar Share (GWh/a) 1159 6574 21313 29046CSP Fuel Share (GWh/a) 537 3124 6560 10221Residual Capacity (MW) 685 755 800 2240Residual Electricity (GWh/a) 230 306 2222 2758Solar Share 60% 66% 71% 69%

Calculation of Annual Solar Share Summary

Folie 27

0

5000

10000

15000

20000

25000

30000

2010 2020 2030 2040 2050

Year

Lo

cal

Inst

alle

d C

apac

ity

(MW

) .

Peak CSP Capacity

Medium CSP Capacity

Base CSP Capacity

Peak Fuel Capacity

Medium Fuel Capacity

Base Fuel Capacity

Folie 28

0.07

0.08

0.09

0.10

0.11

0.12

2010 2020 2030 2040 2050

Year

LC

OE

($ 2

01

0/k

Wh

)

Average LCOEwithout CSP

Average LCOE withCSP

Average LCOE withPeak CSP

a

b

c

Case 2: Partial Substitutionof Fuel by CSP