Will Solar Power Tower Ever be Successful

A Solar Power tower is a tower used to receive concentrated solar power. It is usually surrounded by heliostats or flat movable mirrors that capture the sun’s rays and reflect it to the Solar Tower in the middle. Below you can watch a video of the tallest Solar tower being constructed in an Israeli Desert. This tower is encircled by 50,000 heliostats and should reach a height of 250 meters once completed.

Source: Telegraph

However, whether these power towers will ever become successful? We at Greenworldinvestor had sounded the end of the solar thermal technology years ago, saying that the technology was no longer competitive with silicon solar PV technology. Today the prices of mainstream silicon has fallen and is already competitive to the prices of traditional sources of power. Many of these towers are being replaced with solar PV technology.

The Ivanpah Solar Power plant which was constructed in California by Brightsource Energy costed $2.2 billion is already running into trouble. The power tower has failed to generate the required power as per the contract with Californian utilities. These power towers are still a niche technology and on top of it is the falling solar PV costs, which makes this technology look even worse.

Here are some of the Disadvantages of Solar Thermal Energy

 1) High Costs – Solar Thermal Energy costs at least Euro 3.5/watt and has not declined too much in the last 3-4 years. However these costs are too high  when compared to solar PV technology which has witnessed rapid falls in prices lately and should continue to do so in future.

2) Future Technology has a high probability of making CSP Obsolete – Solar energy has become a hotbed of innovation with daily news of some new breakthrough in materials and process in PV Technology. This has made PV solar the popular choice amongst masses.

3) Water Issue – Solar Thermal Plants use lots of water which is major problem in desert areas. Using non-water cooling raises the cost of CSP projects too much. While using sea water has been proposed it remains to be seen if it possible to implement this solution.

4) Ecological and Cultural Issues – The usage of massive arrays of mirrors is noted to heavily impact the desert  wildlife harming the endangered species. The mirrors create an effect of water bodies, which naturally attract birds and animals who eventually die because of high temperatures in the vicinity.

5) Limited Locations and Size Limitations – Solar Thermal  Energy can only be built in places which have the high amount of solar radiation. They can be built in deserts mostly and require a large land area. This means its not possible to build them in populated areas. Solar Thermal Energy also can only be built in large sizes which are at least 50 MW in size to be economical. This contrasts to Solar PV which is sold in sizes as low as 5 Watts.

6) Long Gestation Time Leading to Cost Overruns – The gestation time for permitting, financing, drilling etc. can easily take 5-7 years to develop a concentrated solar thermal power plant. Compare this to 6 months for a small wind farm or 3 months for a Solar PV plant.

7)  Financing – is the biggest problem in developing projects particularly for small solar thermal developers in this industry.

The Solar Power towers are still in a conceptual stage and we shall wait for the technology to find its foot hold in niche areas of power generation.

Where will Solar Industry Go From Here…

Solar energy has been witnessing an overwhelming response from all around the world. The technology has not only been successful on grounds of its green credentials, but also a sharp decline in its prices. The solar panel prices have plunged almost 40% in the past few quarters. Much of it could be attributed to a slower demand from China. The country has also been facing grid issues leading to chaos in the transmission of this generated solar power. The Chinese government is now lowering subsidies.

File photo of workers cleaning photovoltaic panels inside a solar power plant in Gujarat

The first half of the year witnessed China installing a gargantuan 20 GW of solar power. This rush was solely due to the fact that only solar projects that were operational by June 30, 2016, would be eligible for a ‘feed-in tariff’ by the Chinese government. While the installations beyond June 30th would get a lower tariff rate (lower than 15 US cents/ kwh). The Chinese NEA has also reduced its solar installation target to 110 GW from 150 GW as planned earlier. This has affected the demand and supply economics of the global solar industry.

First Solar (NASDAQ:FSLR) recently announced phasing out an entire series of its S5 modules to conserve costs and also to launch a much more competitive S6 series which would be better designed to handle peer competition. While its Chinese counterparts like Trina Solar, Canadian Solar and Jinko Solar have been increasing capacity and feeding the over supply, I think First Solar made a strategic and important decision, which should help the company stride through this downturn.

In India, a solar panel now costs close to 36-37 cents per unit from 43-44 cents per unit a quarter earlier. While a dip in panel rates could help developers and solar power utilities bid at lower rates, many large companies like First Solar have ruled out signing contracts in India on grounds of economic viability of such projects. The solar power tariff have now reached a historic low of INR 4 per unit. India has also reduced the reference rate for grid solar power to just USD 6 cents/kWh.

China has a goal to increase renewable energy’s share to 15% of the overall energy mix. India too has an ambitious target to install 100 GW of solar power by 2022. India’s solar energy capacity has grown by more than 130% since the last one year. Now the Donald Trump led USA is also an additional point to factor in the global clean energy scenario. Trump has called climate change a hoax and favors the thermal industry to the clean stocks. The solar industry is set for another major consolidation under these conditions and it remains to be seen who would survive this slowdown.

First Solar not launching Series 5

Solar panel prices have crashed by around 30% globally in 2016 which has made every major producer rethink their strategy with respect to expansion and growth. Many of the solar stocks have seen their prices fall by 40-80% in 2016, as a massively oversupplied market has resulted in prices going below costs for most companies. First Solar which is a thin film solar panel leader has made impressive gains in efficiency over the last few years. Its solar panels have reached an efficiency of 16.5%, making it equal to the multicrystalline solar panel efficiency. This has made First Solar remove its biggest disadvantage with respect to mainstream silicon solar panel companies such as Trina Solar and Jinko Solar. First Solar also claims to have a far better advantage in terms of energy generation in high temperate climates such as India and the Middle East. However, the recent crash in solar panel prices has made go back to the drawing board.

Thin Film Solar

The company which was about to unleash its next generation Series 5 module with a very large form factor is being forced to rethink its plans. It is now thinking whether it would make sense to just move from Series 4 to Series 6.

Also read First Solar and Sunpower could be the biggest beneficiaries if Mrs. Clinton wins

This will be done to reduce costs making it products more competition in this fiercely competitive market. Chinese solar companies have repeatedly surprised the market with their rapid cost and price reductions. This has made solar energy extremely competitive with other forms of energy and has wiped out competing solar technologies such as solar thermal and most thin film technologies. First Solar with its rapid technology improvements had thought that it has finally made it, but the sharp crash in solar panel prices has made it defer most of its solar system projects. The company has also stopped competing for a lot of solar panel supply contracts because it cannot make adequate margins. The company reported decent 20% plus margin this quarter, however the stock fell by more than 15% as the company reduced its full year guidance by more than $1 billion.

First Solar has managed to survive in this industry for more than 15 years, even as other leaders such as Suntech, Q-Cells and Yingli Green Energy have become bankrupt. It has done so by nimbly moving into high margin segments. Unlike the Chinese, it does not have unlimited amounts of debt financing that it can use to keep on running its factories at a loss. DOE programs have helped the company in the past but it won’t help it now. While First Solar continues to be run well with a great R&D team, it does face headwinds in the next year or so as a massive price war takes out a lot of companies.

The international agency IEA which is considered as the “authority” on energy globally has proved itself foolish by being extremely conservative on solar growth, despite being proved wrong repeatedly. Even in the past, analysts and market watchers have castigated IEA for being way below the mark in predicting solar growth figures. Even this time IEA has been conservative on predicting solar growth despite being proved wrong.

Also read Indian wind developers get the short end of the stick form defaulting Indian utilities

It recently raised its forecast of renewable energy capacity from 29% of capacity growth in the next 5 years to 42% of the capacity. This happened after RE capacity increases have become almost 60% of the total capacity growth in developed markets. Even large developing countries such as India and China have been installing huge capacities in solar and wind energy recently. The global blowback against coal continues to grow as the pernicious effects on pollution and climate change makes it a pariah in developed markets. Even developing markets are trying to reduce thermal power capacity as much as they can.

However, IEA most probably because it is held hostage by the fossil fuels lobby continues to downplay the importance of solar and wind energy growth. Though IEA says that they are becoming important it does not give very accurate figures for the growth of these two main RE sources.

Even for 2015,  IEA has given a very low figures for solar capacicty additions while other reputable agencies such as IHS are almost 20-30% higher. Don’t know why these people at IEA smoke or research. Even a high school student should be able to do better research than these guys.

Annual installed PV figures

2013 2014 2015
IEA 37.6GW 38.7GW 49GW
BNEF 39GW 48GW 57GW
IHS 38GW 45GW 59GW

Gamesa – Solar Power in India

We at Greenworldinvestor have talked about the benefits of going solar. The technology is slowly but steadily gaining mass attention all over the world. The prices of solar installation have also reduced drastically which has made many foray into solar. These days even companies having little or no experience in solar technology are trying to enter the solar market. India which is a developing economy with increasing demand for power has set up an ambition solar installation target of 100 GW by 2022. This has made many large foreign companies expand into the Indian territory.

stock-footage-solar-panels-and-wind-turbines

Gamesa which is a major wind turbine manufacturer had made an entry into the Indian Solar energy market aggressively in the last year. This Spanish company also recently won two large-scale solar plants development projects in India having a combined capacity of 130 MW. The 90 MW plant would be located in Karnataka, while the 40 MW plant will be built in Andhra Pradesh. Gamesa will do the EPC work in addition to maintenance of the plant. The company will also supply 96 E1.37 MW photovoltaic inverters to the newly commissioned solar plants. The company has been selected by Atria Power a renewable energy solutions company located in Karnataka. Atria Power has already developed hydel power and wind power plants and is engaged in the development of Solar thermal power generation since 2011.

This will be the largest solar order for Gamesa in India. The new projects will start commissioning in March 2017. Gamesa’s strategy in India is not looking at the solar development space, but also ramping capacity through EPC. The company had jotted “2015-2017 business plan” of developing businesses that complement the wind industry, such as solar power. With wind energy development getting stagnant in the country, it makes sense for these companies to expand in the solar territory which is expanding exponentially in the country. These wind developers have a good experience in project financing for large capacity power plants. Besides keeping up their growth rates, it will also help them utilize their skills at renewable energy development and land acquisition.

“This contract marks a fresh milestone in our strategy in the solar power segment in India. Here at Gamesa we continue to strive to offer our customers unrivalled solutions, by leveraging our know-how developing and managing renewable energy projects and our competitive local supply chain”, explained Ramesh Kymal, Gamesa’s CEO in India.

Source: Gamesa

Many Indian states have become slightly crazy with their solar power commitments going overboard without having the capacity or real need to do so. The Indian central government target of building 100 GW of solar power up from just 8 GW now has pushed many state governments to go a bit bonkers. Jharkhand which is a piss poor state in the middle of India with a large mineral base, but with little industry and agriculture is one of them. The state government had come out with a 1200 MW solar tender which was one of the largest at that time. It made little sense considering the fact that the state’s overall capacity is just 3000 MW and it has tons and tons of cheap coal lying beneath its soil. A smaller tender to meet  its Renewable Energy Obligation of 200 MW would have been enough, but the state for whatever crazy reason went in for a 1200 MW solar tender.

Also read Can Jharkhand move from 16 MW to 18 GW – A step forward!

 

It is also to be remembered that the state’s power policy is a mess with its main distribution utilities owning solar water pumphundreds of millions in debt and being ranked as the worst utilities in entire India for their dismal financial condition. The state loses around $150 million every year due to electricity theft and inefficiency besides pricing power below the cost of production. It is a classically mismanaged state which has failed to develop despite having rich resources. The state failed to develop a large hydro and a thermal power plant despite almost 20 years of trying, due to issues in land acquisition and plain sloth and corruption. Now it looks like it will miss the solar boat as well.

The state had one a power auction of solar power capacity and had got bids in the range of between 7 cents to 11 cents a unit. However, despite most companies winning the bids fair and square, the state has refused to sign a PPA with them. This is same as the situation with Telangana state which had dome something similar. The state wants the winner to lower their prices as new bids in other states are being priced between 6 to 7 cents. However, Jharkhand got higher prices as the developers like Hero and Renew do not have faith in the state government or discom them paying them on time if at all. So they priced the power higher factoring in the higher risk.

Also read why India’s tribal state of Jharkhand receives high solar tariff bids.

Also it makes little sense of the state to buy 1200 MW of solar power when it does not need to do so as per its green commitments. It can buy much cheaper power form other sources or generate from its billions of tons of coal reserves. A check of awarded projects shows 1200 MW of solar capacity of ReNew Power, Adani Power and ACME Solar and about 600 MW of wind capacity is stuck for the lack of PPAs in Jharkhand.