A Word with Jonathan Sinton, Senior Energy Specialist at the World Bank
Senior Energy Specialist at The World Bank
CSP technology has two main advantages which are especially relevant for the region: it uses the heat and light from sun, both which are in abundant supply in the region, and has the capacity to store heat for generating electricity when demand is highest, which for the Middle East and North Africa tends to be in the evening when the sun is down and photovoltaic technology stops producing electricity. With the flexibility that heat storage provides to meet peak demand whenever it occurs, CSP is as dependable as the fossil fuel generated plants it can replace. For countries in the region that currently import fossil fuels to meet their energy demands, a key advantage of using the heat and light from the sun is that both are free and in unlimited supply. This increases energy security and frees energy importing countries from the volatility of international energy prices. For oil exporting countries, it allows for their precious natural resources to be a source of revenue rather than burned for domestic consumption. We firmly believe that the region is very well placed to take advantage of the unique qualities of CSP to meet the rising demand for electricity while moving toward an energy secure future based on clean, renewable energy. It is for that reason that the World Bank launched the CSP Knowledge and Information Program—to ensure countries have a clear understanding of the technology’s potential benefits, and how to go about realizing them.
What can countries in the MENA region gain by building CSP plants?
CSP plants can take advantage of a resource that all MENA countries have in abundance: sunshine. But not just any kind of sunshine, countries in this region enjoy high Direct normal irradiation, or in other words, direct light from the sun, not refracted or reflected. This type of sunshine can be harnessed very efficiently through CSP to create heat and electricity.
Figure 1. DNI Global Map. World Bank Group. http://globalsolaratlas.info
Figure 2. DNI Middle East and North Africa Map. World Bank Group. http://globalsolaratlas.info
Also, CSP is a good technology for the kind of dry locations that are common in the MENA region, because when coupled with dry cooling CSP consumes very little water. From a performance standpoint, CSP performs better in dry locations because sunshine can be fully utilized in the absence of vapor particles, which are common in regions around the equator.
Additionally, CSP can contribute to reduce dependence on fossil fuels for domestic consumption. This helps importing countries spend less on oil and gas. At the same time, CSP helps producing countries free up oil and gas production for exports or for higher value-added uses that can generate more revenues than burning them in fossil-fired plants. It’s worth bearing in mind that the sun is a free fuel.
MENA can benefit from international experience in intermittent renewable energy deployment that demonstrates the importance of increasing overall grid flexibility. The use of thermal energy storage (TES) in CSP plants provides one option for increased grid flexibility in two primary ways. First, TES allows shifting of the solar resource to periods of reduced solar output with relatively high efficiency. Second is the inherent flexibility of CSP/TES plants, which offer higher ramp rates and ranges than large thermal plants currently used to meet a large fraction of electric demand.
CSP could potentially replace a fraction of the conventional generator fleet and provide a more flexible generation mix, enabling greater penetration of intermittent renewable energy sources like PV and wind. In MENA countries, rich in solar irradiation, CSP and PV may actually be complementary technologies, especially at higher penetrations, as it is already happening in the Noor Complex in Morocco.
We have talked about the positives, but what are the barriers standing in the way of CSP in the MENA region?
Essentially, there are three barriers: costs relative to other technologies, unfamiliarity with CSP, and obtaining financing.
You can liken the status of CSP to that of PV 5 to 10 years ago or Wind 10 to 15 years ago. There is a perception that is is an expensive, niche technology. But now PV and Wind are, in many circumstances, reliably generating electricity at lower costs than fossil-fired plants. CSP costs are higher from a dollar per kilowatt-hour perspective but is going through a similar cost reduction path right now. You can see this in the bid for the 200 MW CSP plant in Dubai and the CSP projects in Chile’s Atacama Desert. Within the next ten years we can expected to reliably see CSP in the single digits per kilowatt-hour.
The second barrier is unfamiliarity with the system-wide benefits of CSP technology. CSP can be paired with thermal storage, giving the operator the chance to produce electricity when demand requires it. This makes CSP fundamentally different to PV and Wind, which must dispatch electricity whenever it is produced, regardless of the level of demand. Although you can technically store electricity, it is still significantly more expensive than storing heat.
Essentially, a CSP plant is precisely the same as a fossil fuel plant except that the source of heat for generating the steam is not a boiler that is burning coal or a turbine that is burning gas but a solar array that is heating up a working fluid. Then this fluid goes through a heat exchanger to generate steam. With CSP you can hold onto that working fluid, keep it hot for hours and then use it to generate electricity when you need it. That is particularly important in many MENA countries where there are evening peaks. Where, as the sun goes down electricity demand goes up. That’s exactly when PV stops producing.
Figure 3. A Concentrated Solar Power Plant with Storage producing energy during the night
Storage also gives CSP the ability to produce electricity at times of higher demand, when the kilowatt-hour of electricity is more expensive. You might have a very cheap kilowatt-hour produced by Wind or PV at a time when the value to the consumer is low and then you don’t have any production in the evening, when demand tends to be highest.
With CSP, you can store energy produced at times of low demand (and low cost) so you then dispatch it when the value is higher. You need to look at the value side of the equation, not only cost.
The next barrier is financing. Say that you decide that CSP provides value for your country. But start-up costs are relatively high, so how do you obtain the funds you need to get the plant built? These are long term investments that typically require the involvement of many co-financiers. In these cases, concessional financing can help.
How can concessional financing provided by International Financial Institutions (IFIs) help?
Concessional financing is essentially a long-term loan at very low interest rates. This helps lower the overall cost of financing a project and to attract other sources of finance. The World Bank was the conduit for the Clean Technology Fund (CTF) investment program for CSP in the MENA region. So far, Morocco CSP projects have been the main recipient of CTF funds, with the Noor Ouarzazate Solar Complex being a note-worthy example.
And what other means does the World Bank have of helping MENA countries overcome barriers to CSP?
In addition to concessional financing, there are risk mitigation products, and grant facilities that provide funds for prefeasibility and feasibility studies that are required to build confidence in the technical aspects of the project. And in all these areas the World Bank and the other IFIs in the region can be of assistance. I would also like to point out that it would be a rare thing indeed if a single IFI was involved in a CSP transaction. It’s more common to have at least two or three IFIs involved.
On the knowledge side, the World Bank has started the MENA CSP Knowledge and Innovation Program, a 3-year program which aims to assist countries in the region to build up their CSP technical capacity and to understand the implications of CSP in terms of power system planning. As part of the project, specialist consultants will train up engineers and officials and decision makers on the salient points of CSP.
How does accelerating the deployment of CSP in the MENA region help fulfil the World Bank’s overarching mission of “ending extreme poverty by 2030 and promoting shared prosperity by fostering the income growth of the bottom 40% for every country”?
The World Bank’s efforts are not just aimed at CSP but at improving the power system as a whole. That includes the hardware, market conditions, and regulatory framework necessary to build an energy system that supports economic development that serves everybody.
In this regard, by serving the evening peaks at relatively low costs CSP could help countries avoid untoward electricity price rises. This is a benefit that would be most important to lower income citizens of these countries. In more extreme circumstances, CSP can help prevent situations where insufficient capacity or grid stability can threaten blackouts, unscheduled outages as they are sometimes called, which also tend to impact the poor disproportionately.
You can’t say that this particular CSP plant or this investment in grid strengthening is going to put money in the pockets of these particular individuals. It’s part of the overall package of supporting an energy pillar to the stable economic development of countries in the region.
Is there anything else you would like to add?
My colleagues and I at the WB are looking forward to working over the coming years with decision makers, utilities and experts, and with all interested parties in the region to see how CSP can be part of the healthy development of their power systems.
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