India has awarded 500 MW of solar thermal plants during JNNSM Phase 1, as it gave both solar PV and solar thermal technology an equal boost. However solar thermal technology is losing out to solar PV even during 2011; and we had pointed it out that giving solar thermal technology too much money did not make sense. In fact we are also against giving subsidy for large ground mounted solar panel farms, as it only benefits large corporate houses. Instead India should give subsidies for rooftop solar installations, which is now seeing some traction. The failure of this policy is now being seen as most solar thermal plants are not being built because the developers are set to lose money.
Only Godavari Power has started the first 50 MW solar thermal plant after paying much higher amounts of money than anticipated and the project being far behind schedule. As solar thermal technology is not developed, major western component suppliers like Dow, Siemens etc. have managed to extract high payments from these developers. Also most of the plants which were won by big companies like Lanco and Reliance Power may never be built. Note Reliance power is notorious for not keeping to its commitments if economic conditions turn unfavorable . The company did not built its massive 4000 MW plant in AP after imported coal prices shot up making its cost higher than the selling price. Even as Tata Power sold electricity at a loss, Reliance Power stopped building the project.
I think the same thing will happen here as well, as the dollar has risen by 25% during this period and labor costs have escalated. This would mean that these solar thermal plants would not make money, if not lose money. The solar thermal plants had been bid for aggressively even at that time and we had raised doubts about how these developers would be able to recuperate those costs. I think most of the other solar thermal plans will not be built, as the developers might find it more profitable to fight the case in the Indian courts rather than constructing them.
Why is Solar Thermal technology losing to Solar PV technology
Solar thermal energy has been losing out in the last couple of years to solar photovoltaic energy which is seeing a huge increase in demand amidst very low prices. Some of the major solar thermal energy projects in the globe have been converted into solar PV installations due to its lower costs. Some of the major solar thermal energy companies like Solar Millennium have sold their solar thermal portfolios to other companies while Stirling Power Systems has gone bankrupt. Tessera has sold its solar thermal plants which had gotten DOE Loan Guarantees in California to Solar Developers who have made these solar thermal plants into solar panel ones. However there are some companies like eSolar and Brightsource Energy which are powering ahead with their technologies and projects with backing from big industrial MNC conglomerates like GE and Areva. Their Power Tower Technologies are supposedly more efficient than the mainstream parabolic toughs that are used.
Disadvantages of Solar Thermal Energy
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. Oerlikon has come out with a radial new a-Si Technology while CIGs player are touting increased efficiencies. Chinese Solar Companies have captured large chunks of the Solar Market through low cost leadership while number of Global Heavyweights like Posco, Samsung, Hyundai, Sharp, GE, TSMC promise to further decrease these costs.
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 as this would imply building Plants very near the Coastline.
4) Ecological and Cultural Issues – The Usage of Massive Arrays of Mirrors is noted to heavily impact the Desert Wildlife endangering the endangered species. California has already seen a massive fight on this issue with Project Developers curtailing the size of their Plants and spending money to move the wildlife.
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.
Godawari’s plant and the other six projects that prevailed in the 2010 auction won licenses by pledging to sell power at an average of 11,480 rupees ($197) a megawatt-hour. That’s 43 percent below the global average of $344, according to data compiled by Bloomberg. Supplier Dow Chemical Co. (DOW) almost doubled the price for its critical heat-transfer fluid to $5.67 a kilogram in the months following the bid, according to Agrawal. The project was further set back when a dust storm caused a building at the site to collapse, delaying construction by a month, while the rupee depreciated 23 percent against the dollar since the auction.Godawari Power & Ispat Ltd. (GODPI) started Asia’s biggest solar-thermal plant as India limps toward clean-energy targets with prices almost half the global average.The 50-megawatt plant in northwest Rajasthan state boasts 5,760 mirrors that concentrate the sun’s rays, generating steam to drive turbines, project Managing Director Siddharth Agrawal said in an interview. Output started a month behind scheduleey were also hurt by overpricing from U.S. and European suppliers with virtual monopolies over niche products such as heat-transfer fluid and absorber tubes, Singal said. Future projects could contain costs by turning to China, which is offering both items at half the price, he said.
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