Putting my eggs in the CSP basket

For some reason, I'm very selective in the level of attention span I give to lecturers. If I don't find it interesting or helpful, I simply nod off in class. It's not very good manners I know...but this bitter cold UK winter makes me wanna sleep, all the time!

Today's class on innovation was one of those....I turned on my laptop to surf the net to stop myself nodding off. I read some articles related to my research dissertation, which I want to write on the potential of concentrating solar power under the CDM. The more I read, the more I realised that I need more contacts from industry and more knowledge and skills on economic and financial modelling, which the course has not given me at all. It began to dawn on me how naive I am, and how much is out there I don't know.

Came across this brilliant article called "A roadmap for selecting host countries of wind energy projects in the framework of the clean development mechanism" by P. Georgiou in the journal Renewable and Sustainable Energy Reviews. It was so good that I simply wanted to replicate and apply the same methodology for CSP technology. Basically, Mr. Georgiou set out with the same aim as me (but for wind technology), only that he finished earlier than me and has had it published. And thankfully so because if I had gone ahead with my ideas, it would have been child's play compared to Mr. Georgiou.

I had imagined tackling my dissertation by doing a case study of the Abu Dhabi Shams 1 100 megawatt CSP project, and applying it to China. I envisioned assessing potential suitable geographic locations for CSP in China, estimating costs and infrastructure requirements, calculate the potential revenues from selling CERs in the carbon market, comparing cost competitiveness with wind and hydropower of similar scale under the CDM, and assessing other non-economic barriers and investment risks perceived by the market.

That sounded pretty good until I read Mr. Georgiou's paper, which went many steps further. Mr. Georgiou did not limit his analysis on one country (I plan to only assess CSP potential in China) but used various stage tests to assess many countries, filtering out countries that could not meet minimum standards. The stages he used were:

Stage 1: geographic suitability test
Stage 2: preliminary financial analysis (IRR modelling)
stage 3: CDM eligibility condition
stage 4: final financial analysis
Stage 5: multicriteria decision analysis (MCDA)

This approach seemed so logical, professional and innovative compared to my fragmented methodology. What really had me worried was that I had no idea how to calculate IRR (discount rate) or baseline emission factors for CDM projects, nor had I even heard of MCDA, which apparently has plenty of literature behind it and is a common tool for considering non-economic factors in investment decisions-making.

Further, after reading Mr. Georgiou's article and also "PV v Solar Thermal" by Dr. Jonathan A. Lesser of the economic consulting firm Bates White, LLC, I am more or less convinced that CSP is not commercially viable in China even if 'supported' by the CDM. It appears that I have been overly bullish on the prospects of CSP when it faces some critical problems in implementation and cost efficiency:

1. CSP (assume parabolic troughs) requires extensive amount of land, estimated to be around 1,900-acres for a 280 MW plant. This have may detrimental environmental impacts on local biodiversity and wildlife.
2. CSP also requires copious amounts of water for wet cooling towers, estimated to be around 600-700 million gallones per year for a 280 MW plant. Dry cooling is an option but it decreases efficiency of the plant by up to 25%, increasing the cost of producing electricity.
3. Some elements of CSP such as molten salt storage are yet to be tested on large commercial scale and more learning is required.
4. It appears that more than 4GW of installed capacity needs to be built before CSP can reach scale economies to produce at cost of 10¢/kWh, which would make it competitive with CCGT gas (but not yet dirty coal).

However, I think I will still press ahead with my dissertation proposal, simply because analysis needs to be done for this technology, which people like Vinod Khosla are touting as the long-term answer to displacement of fossil fuels. To be frank, only nuclear, large scale wind and CSP stand any chance of ever competing with coal or gas fired power plants for baseload electricity generation, which at least industry still needs. Whatever the outcome, it is close to the best we have in a carbon-constrained world.