Which Solar Technologies Will Have the Most Investment Appeal?

Government policies in the US and Spain jumpstarted CSP – what will happen now its over?

In the last few years, according to Logan Goldie-Scot, a Bloomberg New Energy Finance analyst at CSP Today, most recent asset finance deals in solar technologies have been for concentrated solar power (CSP) in Spain, through its Feed in Tariffs, and in the US, through the Recovery Act loan guarantee program.

But, just as investment has been affected by changes in climate legislation in Australia, investment in both Spain and the US are about to change, because these policies are ending.

In Spain, investment jumped as developers were able to take advantage of feed-in tariffs, which made projects very bankable. But Spain cut back on its Feed-in Tariffs as its unrelated financial troubles increased.

In the US, developers were able to take advantage of the Department of Energy’s loan-guarantee program begun in 2009, which significantly reduced financing costs. Over $40 billion worth of new solar development was developed as a result in the US, an unprecedented investment by the US government. Going from just one – to forty-one CSP projects in the last few years; the US is now poised to overtake Spain, according to the Solar Energy Industries Association.

But US government support for renewable investment is now sharply curtailed due to the return to power of the Republican party, with its long time antipathy to clean tech innovation.

Although solar PV is what most people think of when they think of solar, most utility-scale solar developed in the recent solar boom (Luz Rises Again as BrightSource in California) has been CSP. Although there are various kinds of CSP solar thermal technologies, they all basically concentrate light using simple mirrors to focus sunlight to create steam to drive turbines.

Some CSP technologies use dishes, some use long parabolic troughs, some also provide additional storage using salt, enabling solar power production at night. The technology is ideal for the MENA region with its vast deserts and upcoming Desertec project.

So far most CSP investment tended to favor “proven” trough technology, which uses a long concave mirrored trough. It has had several decades of successful operation, pioneered by the Israeli solar engineer Luz in California in the 80s. But novelty rules the field, from CSP protected within glass housing to the use of CSP to boost oil production in dying oil fields.

A new complicating factor in financing CSP is that PV prices have dropped so much this year, killing off competitors with more innovative technologies. In the future CSP may not always be the cheapest solar technology available, regardless of type.

However, storage brings a new wrinkle. Since, unlike PV, CSP uses steam and turbines to make energy – it has the potential to supply cheap energy storage at night using molten salt, giving CSP a cost advantage over PV because heat storage is cheaper than electrical storage.

The addition of thermal energy storage is increasingly becoming an area of investment interest, because of the flexibility and grid stability it brings to an intermittent if clean source of energy. Storage eliminates the need for polluting power production at night to supplement solar power. So CSP may not suffer from the competition of ever cheaper PV.

Related stories:

BrightSource and Luz II Create World’s First Solar Thermal Field
Masdar Awards $600 Million Contract for ‘World’s Largest’ Thermal CSP Project
Middle Eastern Oil Companies To Try Solar CSP to Boost Oil production