CSP: COSTS

Back to Concentrating Solar Power

The cost of generating electricity from traditional sources (eg coal or nuclear power) is often quoted as being between 2 and 3 pence (4 to 6 US cents) per kWh (see, for example, The Cost of Generating Electricity from the Royal Academy of Engineering). But figures like these are highly misleading:^note1

• Electricity from fossil fuels is artificially cheap:
  • Fossil fuels are still receiving large subsidies around the world. In 2004, the New Economics Foundation made a conservative estimate that worldwide subsidies for fossil fuels were about $235bn a year (see Fossil fuel subsidies 'must end'). There appears to have been little change since then.
  • To a large extent, companies that generate electricity by burning fossil fuels are still being allowed to use the atmosphere as a free dumping ground for CO₂. Given the urgent need to cut worldwide emissions of CO₂, this is not acceptable any more.
• The real price of nuclear electricity is disguised by many hidden subsidies (see Why we don't need nuclear power) and is certainly substantially higher than CSP. A report by the New Economics Foundation, published in 2005, said that a kilowatt-hour of electricity from a nuclear generator will cost as much as 8.3 pence (16.3 US cents) once realistic construction and running costs are factored in, compared with about 3 pence (5.9 US cents) claimed by the nuclear industry—and that's without including costs arising from the wider risks associated with nuclear power such as terrorism, the danger of nuclear proliferation, storage of dangerous nuclear waste for thousands of years, and the danger of potentially catastrophic nuclear accidents (see Why we don't need nuclear power).
• CSP can produce substantial benefits in addition to clean electricity (such as fresh water from the desalination of sea water and horticulture as an associated industry) and these benefits should be factored in to any cost-benefit analysis of CSP.

As the CSP industry expands, costs will fall because of economies of scale and refinements in the technologies (as has happened with wind power).

US venture capitalist Vinod Khosla has said that CSP is already cheaper than electricity from "clean" coal (with carbon capture and storage) and is likely, quite soon, to be cheaper than electricity from "dirty" coal. The TRANS-CSP report from the German Aerospace Centre calculates that CSP is likely to become one of the cheapest sources of electricity in Europe, including the cost of transmitting it.

Taking all these things into account:

• It is likely that electricity from CSP is already cheaper than electricity from fossil fuels and nuclear power, when the environmental and hidden costs of those technologies are fully internalised.
• It is likely that the costs of those technologies will continue to increase, while the cost of CSP will continue falling.

Since we do not yet have a level playing field for renewable sources of power compared with electricity from fossil fuels and nuclear fission, there will probably be a need in the short-to-medium term, for price support for CSP via direct subsidies or market mechanisms such as 'feed-in tariffs'.

The following chart (from the MED-CSP report in 2005) shows how the cost of CSP electricity is likely to tumble compared with the cost of electricity from fossil fuels, assuming a 1% annual rise in the costs of fossil fuels (a predicted rate of increase that is much smaller than the rate at which those costs have actually been rising).

(click the image to enlarge it)

Dr Franz Trieb, Project Manager for the TRANS-CSP and MED-CSP reports, said (in August 2006) that "The cost of collecting solar thermal energy equivalent to one barrel of oil is about US$50 right now (already less than the current world price of oil) and is likely to come down to around US$20 in future."

^note1 Apart from the misleadingly low figures for the cost of electricity from coal and nuclear power, The Cost of Generating Electricity from the RAE gives misleadingly high figures for the cost of wind power. This is because it assumes that there are additional costs arising from the provision of backup power to compensate for the intermittency of wind power. Not only does this overlook the fact that all sources of power are intermittent (including coal and nuclear power) but it overlooks the several mechanisms that are available to match variable supplies with variable demands. Since these mechanisms are required for all sources of electricity, it is unreasonable to load them all on to the cost of wind power.

Cost per kilowatt hour

Currently, opinions seem to vary about the cost of electricity from CSP:

• On the high side:
  • A report in the New Scientist (2007-05-05) says the current price is about 15 cents per kilowatt hour but suggests that it is likely to fall in the coming years.
  • A report from BBC News (2007-05-02) says "Is it true that this power is three times more expensive than power from conventional sources? Yes, but prices will fall, as they have with wind power, as the technologies develop." However, power from fossil-fuelled conventional sources is, at the present time, artificially cheap because it is using the atmosphere as a free dumping ground for CO₂. And the real cost of nuclear power is disguised by overt and hidden subsidies (see "Mirage and oasis", PDF, 1.2 MB, New Economics Foundation).
  • A report in Guardian Unlimited (2007-04-03) suggests that CSP electricity costs twice as much as electricity from fossil fuels. The same remarks apply as for the BBC report.
• On the low side:
  • The US Department of Energy (in Big solutions for big problems (2007?)) says:

    ... existing CSP plants produce power now for as low as 12¢ per kilowatt hour (12¢/kWh) (including both capital and operating costs), with costs dropping to as low as 5¢/kWh within 10 years as technology refinements and economies of scale are implemented. Independent assessments by the World Bank, ADLittle, the Electric Power Research Institute, and others have confirmed these cost projections.

  • The TRANS-CSP report from the German Aerospace Centre (DLR), published in 2006, gives the cost of electricity from CSP plants in Spain as 15 cents / kWh, falling to about 7 cents / kWh by 2020 (Figure 2-24, p. 63). At that time, it is anticipated that electricity imported from CSP plants in North Africa will be about 5.5 cents / kWh, mainly because North Africa has more sunshine.
  • A report from Newswire Today (2007-11-05) says:

    These facilities [hybridised CSP plants] are to be developed at a levelized cost of about 6 cents per kilowatt-hour (kWh), which is about the same as that of coal plants, when taken into consideration that coal plants have to pay for their heavy emissions, construed as their additional levelized costs.

  • A report from CNET News.com (2007-09-09) says:

    Ausra executives said that the [Ausra Fresnel mirror] system can now deliver electricity at 10 cents per kilowatt hour, more than the 9 cents per kilowatt hour that natural gas power plants cost.

  Once Ausra's manufacturing operations are working on a large scale, its production costs and cost of capital will go down below the price of coal-fired plants which are 6 cents per kilowatt hour, he said.

  • In a report from Business Week (2006-02-14), the CEO of Solel is quoted as saying "Our [CSP] technology is already competitive with electricity produced at natural-gas power plants in California". At that time, the price of producing a kilowatt hour of electricity in California using Solel's parabolic trough CSP technology was quoted as approximately 10 cents, close to the cost of electricity from a newly-constructed gas plant.
  • Speaking about CSP at Solar Power 2006, legendary venture capitalist Vinod Khosla said "... we are poised for breakaway growth—for explosive growth—not because we are cleaner [than coal-fired electricity] but because we are cheaper. We happen to be cleaner incidentally." From remarks he has made elsewhere it seems that the comparison he had in mind was with so-called 'clean coal' that includes carbon capture and storage. There is also an interesting interview with him on ABC TV (Australia). There are further details on another page.
  • In February 2006, Professor David Mills of Solar Heat and Power (he is now at Ausra) said: "Our costs look to be about 10 times cheaper than photovoltaics and we believe now we are rapidly approaching cost-competitiveness with fossil fuels—advanced fossil fuel systems such as natural gas combined cycle and advanced coal technology. And we hope to be in that place probably about 2009 or 2010." This quote is from a short WWF film called "Renewable energy in Spain". The technology he was referring to is a version of the Fresnel mirror system.
  • John S. O’Donnell, President of Tsugino Co., speaking before the Public Utilities Commission of the State of Colorado on the 29th of September, 2006, said "Concentrating Solar Power can be provided as firm dispatchable power using thermal storage at a cost per kWh under $0.10 for deployments over 50MW in plant size, and under $0.09 for deployments over 200MW in size. I have just returned from meetings in Australia with Solar Heat and Power which confirm these costs."
  • The Solar Power Group says that, with the relative simplicity and cheapness of their Fresnel mirror CSP system: "... for big power plants (e.g. 200 MW) placed in remote locations with high solar irradiation, the cost of electricity will be highly competitive with that of conventional fossil fuel power plants". In a paper entitled The Solarmundo line focussing Fresnel collector. Optical and thermal performance and cost calculations, the cost of electricity from the Fresnel mirror system is calculated as 0.0750 €/kWh, a little lower than the cost which they calculate for electricity from a parabolic trough system: 0.0845 €/kWh.
  • In a press release issued on 2007-06-01, SCHOTT AG say "Parabolic trough power plants have the lowest electricity production costs of all types of solar technologies. That combined with the extremely high efficiency gained through technological advancements from companies like SCHOTT, will soon give parabolic trough power plants the potential to generate electricity in regions inside the Earth’s Sunbelt at costs comparable to those of power plants that run on fossil energy sources."
  • In a press release dated 2007-11-27, Google Inc. announced a new strategic initiative to develop electricity from renewable energy sources that will be cheaper than electricity produced from coal. The initiative, known as RE<C, will focus initially on advanced solar thermal power (ie CSP), wind power technologies, enhanced geothermal systems and other potential breakthrough technologies.  RE<C will begin with a significant effort on solar thermal technology (CSP), and will also investigate enhanced geothermal systems and other areas. Larry Page, Google Co-founder and President of Products said: "Solar thermal technology ... provides a very plausible path to providing renewable energy cheaper than coal."

The TRANS-CSP report calculates that CSP electricity is likely to become one of the cheapest sources of electricity in Europe, including the cost of transmission.

Cost per watt of installed capacity

An alternative measure of costs is the cost per watt of installed capacity. That kind of measure can be derived from figures in news reports referenced in the table below. It seems likely that some of the figures given in these reports are not very accurate. Also, in these early stages, costs are probably higher than they will be in a few years time when economies of scale and refinements in the technologies have made things cheaper.

Another point to consider is that, a proper assessment of costs must include both the capital cost of the plant and the cost of the fuel over the lifetime of the plant. Plants that run largely on fossil fuels are cheap to build but expensive to run, and those running costs are likely to increase in the future. Plants that are powered mainly by the sun may, currently, be a bit more expensive to build but the fuel is free and it will last for ever!

US venture capitalist Vinod Khosla has said: "I think CSP, leveraging the large investment in traditional, steam-based power generation, and using passive mirrors to concentrate heat, can get to 35 percent efficiency today at $500 per kilowatt." (MIT Technology Review, March/April 2007).

Reports on the cost of CSP

Reports about the cost of CSP are listed here with summaries and download links:

• Economic, energy, and environmental benefits of concentrating solar power in California (PDF, 1.5 MB, prepared by Black & Veatch for the US National Renewable Energy Laboratory, April 2006). The report says that "The economic and employment benefits, together with delivered energy price stability and environmental advantages, suggest that the CSP solar alternative would be a beneficial addition to California’s energy supply. While early CSP plants are more costly than their traditional gas counterparts, subsequent plants are estimated to become nearly cost competitive on a levelized cost of energy basis."
• Assessment of concentrating solar power technology cost and performance forecasts (PDF, 701 KB, prepared by Sargent & Lundy LLC Consulting Group for the US National Renewable Energy Laboratory, 2005). This report, which is an update of the one below, estimates that the cost of electricity from parabolic troughs is likely to fall from about 10.9 ¢/kWh in 2006 to about 6.5 ¢/kWh in 2020, while the corresponding costs for electricity from power towers is likely to be 15.0 ¢/kWh and 5.7 ¢/kWh, respectively.
• Executive summary: assessment of parabolic trough and power tower solar technology cost and performance forecasts (PDF, 589 KB, prepared by Sargent & Lundy LLC Consulting Group for the US National Renewable Energy Laboratory, 2003. See also: the full report (PDF, 2.5 MB)). The report estimates that the cost of electricity from these two technologies in 2004 as being in the range of 10 to 14 ¢/kWh and then likely to fall to something between 3.5 and 6.2 ¢/kWh by 2020.

Other NREL reports about the costs and benefits of CSP may be found at www.nrel.gov/csp/publications.html. See also the reports page.

The cost of building a large-scale HVDC transmission grid

Many people imagine that it would be quite unacceptably expensive to build the kind of large-scale HVDC transmission grid that would be needed to transport CSP electricity from North Africa and the Middle East to Europe (see the page about Getting the energy to where it is needed). This is quite wrong and these are the main reasons:

• Quite apart from the import of CSP electricity, there are other powerful reasons for building a large-scale HVDC transmission grid throughout Europe and beyond.
• Building a large-scale HVDC transmission grid need not be as complicated or difficult as it may at first sight appear. The Supergrid proposed by Airtricity (see electricity transmission grids) would be created entirely from HVDC cables laid under the sea. This not only simplifies construction but it avoids objections on the grounds of visual pollution.
• The HVDC transmission grid would work in conjunction with the existing HVAC transmission lines—it would not be a replacement for them. In other words, most of the transmission grid is already in place and the proposed Supergrid would simply be an addition to that infrastructure.

Some comparative costs

Here are some figures for the cost of building the kind of HVDC transmission grid proposed in the TRANS-CSP report:

• In the report, it is envisaged that a total of 20 transmission lines would be needed between MENA and Europe, each one of 5 GW capacity—100 GW in all . The estimated total cost of this grid is €45bn. This cost would be shared amongst several different countries and would be spread over several years.
• Two 5 GW transmission lines (a 10 GW link) between North Africa and the UK would cost about €5bn.

For comparison, here are figures for the costs of some other things that governments spend money on:

• €132.5bn (£90bn) is Gordon Brown's estimate of the cost of cleaning up the UK's nuclear legacy (The Observer, 2006-06-04)
• €7.5bn (£5.1bn) is the estimated cost of adding a new lane to the M1 motorway in the UK (The Observer, 2007-05-06).
• €166bn (US$235bn) was the annual subsidy worldwide to fossil fuel industries in 2004 (New Economics Foundation, see Fossil fuel subsidies 'must end') and it appears that there has not been much change since then.
• €100.6bn (£76bn) is the estimated cost of renewing Britain's Trident nuclear missile system (see New Trident system may cost £76bn, figures show).
• €12.3bn (£9.3bn) is the estimated cost of the London Olympics, as of March 2007 (see Lottery cash for Olympics not repaid until 2031).
• €6bn (£4.8bn) is the estimated cost of a new nuclear power station in 2008 (see Nuclear reactors will cost twice estimate, says E.ON chief).
• The Metronet fiasco has cost UK taxpayers €2.68bn (£2bn) (see £2bn of public money goes down the Tube as Gordon Brown counts cost of failed deal).

Back to Concentrating Solar Power