Utility Scale Solar Energy: Options and Competitiveness Kevin B. Smith – Chief Operating Officer, SolarReserve LLC Purdue University October 2, 2008
Dec 20, 2015
Utility Scale Solar Energy:Options and Competitiveness
Kevin B. Smith – Chief Operating Officer, SolarReserve LLC
Purdue UniversityOctober 2, 2008
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My Background Education:
Purdue University – BS Mechanical Engineering 1979 University of Chicago – MBA (Finance) 1985
Employment Highlights SolarReserve LLC (Santa Monica, CA): Large scale solar project
development Invenergy LLC (Chicago): Wind energy, natural gas turbine power projects -
development, construction, operation Rolls-Royce Power Ventures (London): natural gas & oil fired cogeneration
projects – international development, construction, operation Indeck Energy Services (Chicago): Natural gas fired cogeneration projects -
development, construction, operation Midwesco Energy Systems (Chicago): Biomass (wood), waste-to-energy,
natural gas - design and construction Sargent & Lundy Engineers (Chicago): Design of nuclear, fossil fueled power
projects
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SolarReserve Overview
A privately held LLC formed in December 2007: $140 million private equity funding (second
round) closed on Sept. 15, 2008. SR holds worldwide license for UTC technology
SolarReserve, LLC is a developer of Concentrated Solar Power (CSP) utilizing breakthrough Molten Salt Power Tower technology developed by United Technologies Corporation (UTC) – Rocketdyne Division.
What We Do
Who We Are
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Market Leading Technology
SolarReserve is the first solar energy company that can deliver utility scale (100 Megawatts to 300 MW*) renewable energy with:
Energy Storage – ability to efficiently store energy, the storage system is integral to the overall design
World Class Technology Provider – technology provided and performance guaranteed by United Technologies Corporation
Base load or Dispatchable Configuration – provides power to meet the demand profile required by the utility
Proven technology – performance fully validated with Department of Energy demonstration project – Solar Two (1995 – 1999)
Financeable System – proven technology and UTC performance guarantees provide basis for conventional project finance
Cost Competitive – competitive with other solar technologies but with the added benefit of energy storage and dispatchability
* equivalent to 100,000 homes
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Solar Power Tower with Energy Storage
Cold Salt Thermal Storage Tank
Hot Salt Thermal Storage Tank
SteamGenerator
Central Receiver
Conventional Steam Turbine Generator (With Reheat)
Condenser
~
Heliostat Field
Electricity(MW)
Process Flow Description1. Sunlight is concentrated and directed from a large field of heliostats to a receiver on a tall tower.2. Molten salt from the cold salt tank is pumped through the receiver where it is heated to 1050 oF (566 oC).3. The heated salt from the receiver is stored in the hot salt tank.4. Molten salt is pumped from the hot salt tank through a steam generator that creates steam, which drives a steam turbine, generating electricity.5. Cold salt at 525oF (288 oC) flows back to the cold salt tank.
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3
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‘Solar Two’ Molten Salt Demonstration Plant
•Daggett, California•1926 heliostats•42 MWt receiver•10 MW turbine•3 hrs molten salt storage•300 ft tall tower
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Technology Validated at Solar Two
Plant Performance Dispatchability Demonstrated electric power up to 24 hrs/day Power Output (10 MW nominal) Exceeded performance targets and test objectives
Receiver Performance Exceeded prediction (receiver efficiency 88%) Achieved design temperatures, flow rates &
pressures
Thermal Storage Performance Demonstrated low daily heat loss (97% efficiency) Pumps - Demonstrated full-flow at design
pressures
Collector System Performance Demonstrated sun tracking throughout the year
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Worldwide Opportunity for Solar Energy
In the US alone, the existing Renewable Portfolio Standards (RPS) in just 29 states requires over 45,000 MW of new renewable energy projects by 2020
US market expected to require well over 100,000 MW of renewable energy by 2020 ($300 billion investment) – at least one third of this could be met with CSP projects
With escalating power demands throughout the world (including China and India), estimates are that the worldwide solar energy market could approach 400,000 MW or more - potential capital costs of well over $1.2 trillion
In addition to the US, worldwide opportunities exist in Southern Europe, Middle East, Africa, India, China, and South America
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Markets Continue to Change Positively
Growing state regulatory requirements mandating Renewable Portfolio Standards (RPS) - 29 states to date
Federal RPS likely in next administration
Carbon legislation enacted internationally via Kyoto and likely in the US in the near-term Renewable Energy Credits (RECs) Carbon trading and/or caps
Substantial economic incentives including tax credits, grants, accelerated depreciation, property/sales tax incentives, and subsidized financing
Fossil fuels under increasing price, geopolitical, environmental, and security constraints
Customers increasingly willing to pay premium for secure and home-grown “green” power
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Renewable Energy Options Wind Energy
Large scale applications Proven, competitive technology Out of phase with demand requirements
Solar Energy Large scale applications Technology advancements with some technology
risk Pricing higher than wind and conventional thermal
generation
Geothermal Smaller scale (<40MW), limited applications
Hydro Large scale hydro has limited applications (ocean
technologies next?)
Nuclear? Large scale, controversial, expensive
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Wind is “Out-of-Phase” with Demand
WIND INTERMITTENCY LIMITS LONG-TERM VALUE
Wind Generation July
MW
SCE Average Load July
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Market Precedent - Rapid Build of Wind Energy
Worldwide installed wind energy capacity almost 100,000 MW More than $300 billion invested in projects to date worldwide Almost 20,000 MW added worldwide in 2007 alone
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Solar Energy Overview – Large Scale Photovoltaic
Proven technology Smaller scale applications (rooftop) plus
distributed generation (10MW to 40MW) Larger scale implementation in process?
Concentrated Photovoltaic Intended for large scale implementation and
distributed generation Technology in development to bring costs
competitive
Concentrated Solar Power – large scale applications
Trough technology Steam Power Tower Molten Salt Power Towers 30 MW to 300MW applications
Stirling Engine Commercially not competitive – reliability
issues
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Global Solar Energy Market – 2008 Estimates
“From now until 2020, installed solar capacity will grow by roughly 30 to 35 percent per year, from 10 gigawatts today to about 200 to 400 gigawatts …..”
“Even if all the forecast growth occurs, solar energy will represent only 1.5 to 3 percent of output in 2020….”
The McKinsey Quarterly Report – August 1, 2008
(NOTE: 400 gigawatts equivalent to an investment of more than $1.2 trillion)
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US Market – Southwest will dominate• Strong support for Renewable Strong support for Renewable
Portfolios Standards (RPS)Portfolios Standards (RPS)
• More than 45,000 MW of More than 45,000 MW of renewable energy required to renewable energy required to be installed under current RPS be installed under current RPS requirements:requirements:
• CA - 33% by 2020CA - 33% by 2020• NV - 20% by 2015NV - 20% by 2015• NM - 20% by 2020NM - 20% by 2020• AZ - 15% by 2025AZ - 15% by 2025• CO – 20% by 2020CO – 20% by 2020• TX – 5,800 MW by 2015TX – 5,800 MW by 2015
• Wind can not address capacity Wind can not address capacity and time-of-day needsand time-of-day needs
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World Market – Unlimited Potential
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Power Pricing Issues: NON-Renewables Overall market pricing for non-renewable electricity has been escalating dramatically over the last 5 years – both capital costs and fuel costs with added risk of “carbon trading” costs.
Power purchasers evaluate pricing based on 20 to 30 year ‘all in’ costs including cost of funds, fuel escalation expectations, O&M, decommissioning, etc.
“Clean Coal” Technology - Capital costs estimated at in excess of $3.0 Million per MW plus fuel, O&M, carbon trading costs.
Resulting new project ‘year 1’ wholesale costs well in excess of 11 cents/kWh with fuel and carbon escalation risk.
Natural Gas (base load) – Capital costs at $1.0 million per MW plus fuel, O&M, carbon. At $10.00/MMBtu for natural gas fuel costs alone are 8 cents/kWh (escalating) Resulting new project ‘year 1’ wholesale costs at 10 to 14 cents/kWh – could double as fuel prices increase over time.
Nuclear Costs – Capital Costs Estimated at $5.0 million to $7.0 million per MW plus fuel, O&M, spent fuel issues.
Resulting new project ‘year 1’ wholesale costs at 15 to 20 cents/kWh minimum
Overall generation mix driven not just by costs but by environmental factors, state & federal regulatory issues, security of supply, consumer demand fro green energy, etc.
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Power Pricing Issues: Renewable Energy Wind Energy – most competitive form of renewable energy when ignoring time-of-day
issues. Wholesale Pricing currently in the 7 to 11 cents/kWh range including tax credits. Turbine costs rising, site availability and permitting issues in prime wind areas
growing increasingly difficult. 75% OFF PEAK - cannot take advantage of peak power pricing incentives.
Photovoltaic – currently priced in excess of 20 cents/kWh but becoming more competitive (includes tax credits) Dramatic spikes in output difficult for utilities to manage.
Concentrated Solar Power (CSP or Solar Thermal) ‘All in pricing’ in the 13 to 17 cent/kWh range including tax credits. No fuel escalation, no carbon trading risk. Cap costs $3.0 to $4.5 million per MW. Power delivered primarily during peak, storage enhances value.
Biomass and geothermal pricing is reasonably competitive but not utility scale Estimated in the 11 to 13 cents/kWh range including tax credits.
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Power Pricing – Utility Views
• Southern California Edison “Multipliers” in pricing reflect true marginal costs• Incentives provided to generators that can supply for peak production• Current “Market Referent Price” of 11 cents/kWh off peak X 3 = 33 cents/kWh Peak
Thermal Storage Creates Value
time January February March April May June July August September October November December0:00 0.61 0.61 0.61 0.61 0.61 0.75 0.75 0.75 0.75 0.61 0.61 0.61 1:00 0.61 0.61 0.61 0.61 0.61 0.75 0.75 0.75 0.75 0.61 0.61 0.61 2:00 0.61 0.61 0.61 0.61 0.61 0.75 0.75 0.75 0.75 0.61 0.61 0.61 3:00 0.61 0.61 0.61 0.61 0.61 0.75 0.75 0.75 0.75 0.61 0.61 0.61 4:00 0.61 0.61 0.61 0.61 0.61 0.75 0.75 0.75 0.75 0.61 0.61 0.61 5:00 0.61 0.61 0.61 0.61 0.61 0.75 0.75 0.75 0.75 0.61 0.61 0.61 6:00 0.83 0.83 0.83 0.83 0.83 0.75 0.75 0.75 0.75 0.83 0.83 0.83 7:00 0.83 0.83 0.83 0.83 0.83 0.75 0.75 0.75 0.75 0.83 0.83 0.83 8:00 1.00 1.00 1.00 1.00 1.00 1.35 1.35 1.35 1.35 1.00 1.00 1.00 9:00 1.00 1.00 1.00 1.00 1.00 1.35 1.35 1.35 1.35 1.00 1.00 1.00
10:00 1.00 1.00 1.00 1.00 1.00 1.35 1.35 1.35 1.35 1.00 1.00 1.00 11:00 1.00 1.00 1.00 1.00 1.00 1.35 1.35 1.35 1.35 1.00 1.00 1.00 12:00 1.00 1.00 1.00 1.00 1.00 3.13 3.13 3.13 3.13 1.00 1.00 1.00 13:00 1.00 1.00 1.00 1.00 1.00 3.13 3.13 3.13 3.13 1.00 1.00 1.00 14:00 1.00 1.00 1.00 1.00 1.00 3.13 3.13 3.13 3.13 1.00 1.00 1.00 15:00 1.00 1.00 1.00 1.00 1.00 3.13 3.13 3.13 3.13 1.00 1.00 1.00 16:00 1.00 1.00 1.00 1.00 1.00 3.13 3.13 3.13 3.13 1.00 1.00 1.00 17:00 1.00 1.00 1.00 1.00 1.00 3.13 3.13 3.13 3.13 1.00 1.00 1.00 18:00 1.00 1.00 1.00 1.00 1.00 1.35 1.35 1.35 1.35 1.00 1.00 1.00 19:00 1.00 1.00 1.00 1.00 1.00 1.35 1.35 1.35 1.35 1.00 1.00 1.00 20:00 1.00 1.00 1.00 1.00 1.00 1.35 1.35 1.35 1.35 1.00 1.00 1.00 21:00 0.83 0.83 0.83 0.83 0.83 1.35 1.35 1.35 1.35 0.83 0.83 0.83 22:00 0.83 0.83 0.83 0.83 0.83 1.35 1.35 1.35 1.35 0.83 0.83 0.83 23:00 0.83 0.83 0.83 0.83 0.83 0.75 0.75 0.75 0.75 0.83 0.83 0.83
WinterSummerWinter
2008E 11.55
2009E 12.09
2010E 12.66
2011E 13.26
2012E 13.88
2013E 14.53
2014E 15.21
2015E 15.93
U.S. Department of Energy: National Electricity Price Forecast
• Applying the same conservative 4.7% inflationary rate, average US electricity prices will reach 16 c/kWh by 2015• Rates in some states will be higher, with CT electricity prices forecast to reach 27 c/kWh in 2015 by the same logic
*Estimates
c/kWh
Solar is already cost competitive in some states today and will be in many more in coming years as energy prices increase nationwide
Solar is already cost competitive in some states today and will be in many more in coming years as energy prices increase nationwide
Year*
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Power Pricing Issues: International Tariffs Europe has implemented “feed-in tariffs” to promote renewable energy
European tariffs in high solar areas: Spain – 26 to 28 €/kWh (38 to 41 US cents/kWh) Italy – 34€/kWh (49 US cents/kWh) Greece – 23 €/kWh (33 US cents/kWh) Additional tariffs being implemented in Cyprus and Portugal
Other international markets following suit with feed in tariffs, including:
India China Brazil, Chile
US tariffs to follow? California tariff under discussion. Federal Renewable Portfolio Standards likely under next administration.
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Solar Energy Future- Summary
Increasing demand for renewable energy as a result of environmental awareness, security of energy supply, escalating fuel costs.
Worldwide demand for solar energy expected to grow to 400,000 MWs by 2020 – requires investment of more than $1.2 trillion.
Concentrated Solar Power with storage technology can replicate supply performance of conventional thermal power projects. On demand supply Peak supply and load following
Pricing for solar energy in the 13 to 17 cents/kWh is within ‘striking distance’ of conventional thermal power facilities which are in the 10 to 14 cents/kWh range.
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Contact Information
SolarReserve LLC2425 Olympic Blvd., Suite 500ESanta Monica, California USA 90404Phone: 1.310.315.2200www.solar-reserve.com
Kevin B. [email protected]
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Additional Slides
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Solar Trough with Storage
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Solar Energy Overview – Large Scale
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Competitive Analysis
Direct Steam
(Troughs; Towers; CLFR)Solar One & PS-10
Issues •High Pressure Piping
– Thick Wall Tubing– Expensive– Safety
• Two-Phase Flow– Erratic Heat Transfer– High Stress– Water Droplet Damage– Turbine Failures
• May Require Natural Gas• No Inherent Storage• Low Quality Steam
No Energy Storage/Requires Nat. Gas/Reliability Issues
Oil
(Troughs)SEGS Plants
Issues•Miles of active piping
– One Mile per MW– Vacuum Tubes– Toxic Fluid– Material Availability
• Requires Natural Gas– Loses Energy at Night
• Requires Significant Water– Low Temperature Ops– Dry Cooling Difficult
• No Inherent Storage• Low Quality Steam
Molten Salt
(Towers)Advancements to Solar Two
AdvantagesPrimary Heat Transport• Feet – Not Miles• Inherent Storage• Dispatchable/On Demand• No Natural Gas Required• No Energy Loss at Night• High Quality Steam• Standard Steam Turbine
Issues• 50MW Minimum• Higher tower (630 ft.)
Project Development Phase Timing
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Phase 2 – Site Feasibility and Early Development
PreliminaryEnvironmental
studies
Power buyerdiscussions
Solar datacollection and
analysis
Interconnectionstudies
Economicanalysis
Secure landoptions
Phase 3 – Project Advanced Development
Site specific project design and capital cost pricing
Complete Environmental
permitting
Secure landrights
Secure local planning approval
Interconnectionagreement
Contract for Equipment
Supply & BOP
Typical Timing18 to 36 months
2 - 4 months
3 - 6 months
9 - 24 months
2 – 4 months
Fe
asi
bili
tyId
en
tific
ati
on
De
velo
pm
en
tPhase 1 - Potential site identification
Review ofenvironmental
issues
Grid connectionanalysis
Power market review
Opinion of local
government
Local PlanningReview
Initiate contact withlandowners
Solar resourceanalysis (regional)
Secure PPA or
Power Hedge
Proceed to financial close and start of construction
PreliminaryProject DesignSpecifications
Definitive Economic Analysis
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9 meter wide road
9 meter wide road
9 meter wide road
26 meter wide road
8500 Heliostats
Tower offset = 232.9 metersField diameter = 2620 meters
Inner field radius = 93.5 meters
Heliostat Layout and Footprint
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Pow
er (
MW
)
600
450
300
150
4 8 12 16 20 24 Full Power Operation (hours)
600 MW4 hrs/day
150 MW16 hrs/day
100 MW24 hrs/day
LargerTurbine
SmallerTurbine
Time ofDay
Pricing
IncreasedCapacity
Factor
300 MW8 hrs/day
200 MW12 hrs/day
Flexible Reference Solar Plant Design
500 GWh per year ~ 2 mi500 GWh per year ~ 2 mi22
200 GWh per year ~ 1 mi200 GWh per year ~ 1 mi22
Market Flexibility:System Sized to Client Needs