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CSP market to double by 2020
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UK Queen’s Speech: EMR proposals and GIB imminent
I
N HER speech setting out UK Government’s legislative priorities, the Queen talked up the importance of the forthcoming Electricity Market Reform, and confirmed that the Government will establish the Green Investment Bank, which will be headquartered in Edinburgh and seeded with an initial £3bn (US$4.84bn) of public money. The UK’s forthcoming Energy Bill aims to reform the electricity market to enable large-scale investment in low-carbon generation capacity in the UK, and deliver security of supply, in a cost-effective way. Making reference to it in the speech, the Queen said, “my Government will propose reform of the electricity market to deliver secure, clean and affordable electricity and ensure prices are fair”. Key elements of the reform package include: • A Carbon Price Floor (announced in Budget 2011) aiming to put a price on carbon, and provide a stronger incentive to invest in lowcarbon generation now;
• the introduction of new longterm contracts (Feed-in Tariff with Contracts for Difference) to provide stable financial incentives to invest in all forms of low-carbon electricity generation. A contract for difference approach has been chosen over a less cost-effective premium feed-in tariff; • an Emissions Performance Standard (EPS) set at 450g CO2/kWh to reinforce the requirement that no new coal-fired power stations are built without CCS, but also to ensure necessary short-term investment in gas can take place; and • a Capacity Mechanism, including demand response as well as generation. Commenting on the forthcoming Energy Bill, a Department of Energy and Climate Change (DECC) spokeswoman said: “This is crucial legislation...reform [ing] the electricity market...in a more cost-effective way, while reaping the economic benefits”. DECC added that the Bill is designed to provide investors with
long-term certainty and incentives to invest in low-carbon. By the end of the month DECC says it will publish a draft Energy Bill for pre-legislative scrutiny. It aims to have the bill passed into law by next year, and covering low-carbon projects as early as 2014. Gaynor Hartnell, Chief Executive of the Renewable Energy Association (REA), said: “We look forward to seeing the details of the Energy Bill. This is of immense importance to project developers in renewables, as the measures it puts in place will eventually replace the Renewables Obligation. Many of the projects in development now are working to a timescale that takes them into the new regime, and they need to know the detail as soon as possible. The new arrangements aim to deliver a stable price for renewable electricity generators, irrespective of what happens to electricity prices. If all works as intended, it should make project development less risky and means that the public pays no more than it needs to for green power.”
CSP market to double by 2020
T
HE MARKET for concentrating solar power (CSP) is set to more than double by 2020 despite the current lull, according to analyst Pike Research. The CSP sector has been marked by volatility since its revival in 2004, and the ups and downs are likely to continue through the remainder of the decade, as the price of ‘rival’ solar photovoltaic (PV) modules continues its dramatic decline. Pike Research nevertheless believes that the worldwide annual revenue for CSP systems will increase dramatically, from US$2.1 billion in 2012 to US$5.1bn in 2013, before dropping again in 2014 and beginning a gradual recovery. By 2020,
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May/June 2012 | Renewable Energy Focus
the cleantech market intelligence firm forecasts, revenue will reach US$4.8bn. Under a more favourable forecast scenario, revenue could even surpass US$8.6bn in 2020. “Solar PV is not only more attractively priced at the moment than CSP technology, but it also has an established track record that makes it more appealing to investors,” says Senior Analyst Peter Asmus. “Yet, CSP may overcome these disadvantages by reducing costs as a result of larger scale and new technology models. The most promising opportunity in the near term is to link CSP with thermal energy storage, thereby increasing the value of clean
electricity in a cost-effective way that solar PV cannot replicate.” CSP providers have already begun devising hybrid power plants combining CSP with fossil fuel generation – integrated solar combined cycle (ISCC). At the same time, utility-scale energy storage capabilities are enabling expanded electricity production by dispatching stored heat in the evening hours. Overall growth in the CSP market depends, however, on a range of factors including project bankability/ financing, policy issues, cost reductions in technology, cost competitiveness with solar PV, and expanded electricity transmission capacity.
UK Queen’s Speech: EMR proposals and GIB imminent
I
N HER speech setting out UK Government’s legislative priorities, the Queen talked up the importance of the forthcoming Electricity Market Reform, and confirmed that the Government will establish the Green Investment Bank, which will be headquartered in Edinburgh and seeded with an initial £3bn (US$4.84bn) of public money. The UK’s forthcoming Energy Bill aims to reform the electricity market to enable large-scale investment in low-carbon generation capacity in the UK, and deliver security of supply, in a cost-effective way. Making reference to it in the speech, the Queen said, “my Government will propose reform of the electricity market to deliver secure, clean and affordable electricity and ensure prices are fair”. Key elements of the reform package include: • A Carbon Price Floor (announced in Budget 2011) aiming to put a price on carbon, and provide a stronger incentive to invest in lowcarbon generation now;
• the introduction of new longterm contracts (Feed-in Tariff with Contracts for Difference) to provide stable financial incentives to invest in all forms of low-carbon electricity generation. A contract for difference approach has been chosen over a less cost-effective premium feed-in tariff; • an Emissions Performance Standard (EPS) set at 450g CO2/kWh to reinforce the requirement that no new coal-fired power stations are built without CCS, but also to ensure necessary short-term investment in gas can take place; and • a Capacity Mechanism, including demand response as well as generation. Commenting on the forthcoming Energy Bill, a Department of Energy and Climate Change (DECC) spokeswoman said: “This is crucial legislation...reform [ing] the electricity market...in a more cost-effective way, while reaping the economic benefits”. DECC added that the Bill is designed to provide investors with
long-term certainty and incentives to invest in low-carbon. By the end of the month DECC says it will publish a draft Energy Bill for pre-legislative scrutiny. It aims to have the bill passed into law by next year, and covering low-carbon projects as early as 2014. Gaynor Hartnell, Chief Executive of the Renewable Energy Association (REA), said: “We look forward to seeing the details of the Energy Bill. This is of immense importance to project developers in renewables, as the measures it puts in place will eventually replace the Renewables Obligation. Many of the projects in development now are working to a timescale that takes them into the new regime, and they need to know the detail as soon as possible. The new arrangements aim to deliver a stable price for renewable electricity generators, irrespective of what happens to electricity prices. If all works as intended, it should make project development less risky and means that the public pays no more than it needs to for green power.”
CSP market to double by 2020
T
HE MARKET for concentrating solar power (CSP) is set to more than double by 2020 despite the current lull, according to analyst Pike Research. The CSP sector has been marked by volatility since its revival in 2004, and the ups and downs are likely to continue through the remainder of the decade, as the price of ‘rival’ solar photovoltaic (PV) modules continues its dramatic decline. Pike Research nevertheless believes that the worldwide annual revenue for CSP systems will increase dramatically, from US$2.1 billion in 2012 to US$5.1bn in 2013, before dropping again in 2014 and beginning a gradual recovery. By 2020,
10
May/June 2012 | Renewable Energy Focus
the cleantech market intelligence firm forecasts, revenue will reach US$4.8bn. Under a more favourable forecast scenario, revenue could even surpass US$8.6bn in 2020. “Solar PV is not only more attractively priced at the moment than CSP technology, but it also has an established track record that makes it more appealing to investors,” says Senior Analyst Peter Asmus. “Yet, CSP may overcome these disadvantages by reducing costs as a result of larger scale and new technology models. The most promising opportunity in the near term is to link CSP with thermal energy storage, thereby increasing the value of clean
electricity in a cost-effective way that solar PV cannot replicate.” CSP providers have already begun devising hybrid power plants combining CSP with fossil fuel generation – integrated solar combined cycle (ISCC). At the same time, utility-scale energy storage capabilities are enabling expanded electricity production by dispatching stored heat in the evening hours. Overall growth in the CSP market depends, however, on a range of factors including project bankability/ financing, policy issues, cost reductions in technology, cost competitiveness with solar PV, and expanded electricity transmission capacity.