Record-Breaking Cost Reduction for Solar Thermal Electricity Generation

Record-Breaking Cost Reduction for Solar Thermal Electricity Generation

Brussels, 7 June 2017 – The Dubai Electricity and Water Authority (DEWA) announced on 4 June the prices offered from four consortia for the 200-MW fourth phase of the Mohammed bin Rashid Al Maktoum solar park. The lowest bid for the Solar Thermal Electricity (STE) project came in at 9.45 US cents/kWh (approx. 8.4 €cts/kWh). Participating consortia were [ACWA Power (Saudi Arabia), Shanghai Electric (China), BrightSource (USA)]; [Alfanar (Saudi Arabia), Suncan (China)]; [Engie (France), SolarReserve (USA), Power China (China), Sepco3 (China)] and [Masdar (UAE), EDF (France), Abengoa (Spain), Harbin Electric (China)]

Although DEWA will announce the winner in one month, following its assessment of last technical and economical features, a first key aspect is that three of the best bids offered by multi-national players are hitting or even below 10 €cts/kWh while the installed capacity in STE worldwide is just around 5 GW compared to nearly 500 GW for wind and 300 GW for PV. In other words, STE costs were divided by 3 in just 10 years (2007-2017) with just 1% of the market volume for wind and less than 2 % of the market volume of PV!

This comes already after SolarReserve offered 6.54 US cts/kWh in Chile in August 2016 for a STE 120-MW plant, where in addition to the best solar resource in the world, the country’s stable financial status along with US dollar denominated power contracts results in excellent financing and investment terms.

There is no longer any doubt that STE needs now to be seriously considered in any energy transition strategy.

ESTELA already pointed repeatedly to the still-untapped, high cost reduction potential for STE also in Europe – provided that governments would deliver suitable frameworks and credible STE deployment programs also in Europe. This would bring to light the full complementary of STE to the more deployed technologies such as wind and PV as well as STE as the best option for a sustainable and affordable deployment of renewables (solving the storage/ flexibility challenges).

Such cost levels are achievable also in Europe. The offers in Dubai and Chile demonstrate that:

• there is a decisive impact on costs of any clear deployment program driven by credible policies (so in Dubai, adding 1000 MW in STE as support to 4000 MW PV is set to achieve a solar installed capacity of 5 GW in 2030 is coherent with Dubai’s clean energy strategy of generating 75 % electricity from clean energy by 2050 showing balanced ration between variable and manageable resources);

• Southern Europe is absolutely competitive also because of the solar resource quality: the solar resource in Southern Spain is better than in Dubai (only 10% losses due to atmospheric transfer performance between heliostats and tower compared to some 25% in Dubai);

• Size matters: a 200-MW unit would result in even lower costs than with 2 x 100-MW power blocks;

• The local content delivered by STE is of high added value in Europe, Morocco, or Chile, but not all countries value local content such as industrialization and/or business opportunities in the same way: the UAE do not;

• STE at a cost level of about 8 €cts/kWh with up to 15 hours of storage is in Southern Europe clearly both competitive and complementary towards PV and wind, the more STE does not have to consider degradation issues associated with batteries or the repowering of plants – and even more against “clean” fossil generation technologies especially in countries that need importing the primary resource.

“Besides urgently needed ambitious measures to preserve EU technology leadership in STE opening business opportunities for many European companies and jobs for European citizens, European governments and EU institutions should duly acknowledge this development and properly include STE in all transition scenarios towards the Energy Union,” said Dr. Luis Crespo, ESTELA President.


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For more information:
Janis Leung|Communication Manager|+32 28 93 25 96|[email protected]|