CSP Facing “Adverse Market Conditions”

Less than a day before their planned debut on the NASDAQ stock exchange, BrightSource cancelled its IPO last Wednesday siting “adverse market conditions” [1].  While the market conditions BrightSource is referring to are factors like the recent downturn in stock indices and institutional investors’ lack of appetite for solar companies, “adverse market conditions” could aptly describe the challenges facing the concentrated solar power (CSP) industry as a whole.

In BrightSource’s concentrated solar thermal power plants, an array of mirrors focuses sunlight onto a boiler that sits atop a tower, generating high-pressure steam.  This steam can be used to turn a turbine to generate electricity, or can be used directly for enhanced oil recovery or other industrial applications [2].  Other solar thermal power companies and other solar thermal power technologies exist, and they share this same basic principle: create heat by focusing the sun’s light and then use that heat to boil steam (or other liquid) which turns a turbine and produces electricity – usually at a utility scale.

CSP’s chief competitors are conventional power plants – particularly natural gas combined cycle plants – and photovoltaics (PV).  Up until the middle of 2008, CSP looked well positioned against both of these rivals.  Natural gas prices were highly volatile and just plain high, plus natural gas did not benefit from renewable energy subsidies.  PV prices were also high – too high for utility scale power, many thought [3].   CSP also offered the ability to store heat, and thus power – a significant advantage over PV.

Starting in the second half of 2008, however, the tide began to turn against CSP.  Here is how natural gas prices and solar PV module prices have changed over the last 10 years or so according to the EIA [4]:

Notice the precipitous drop of both PV module price and natural gas price starting in the middle of 2008 (dotted black line).  These drops have already made some solar developers switch planned projects from CSP to PV [5].

Will CSP be able to withstand these “adverse market conditions” or is it destined to remain a niche power source?

References:

[1] BrightSource Press Release, April 11, 2012, http://www.brightsourceenergy.com/images/uploads/press_releases/BrightSource_S1_Announcement_Final.pdf

[2] BrightSource Website: http://www.brightsourceenergy.com/technology/how_lpt_works

[3] http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/04/13/BU481O2F04.DTL&type=tech

[4] U.S. Energy Information Administration: http://www.eia.gov/renewable/annual/solar_photo/ http://205.254.135.7/naturalgas/weekly/

[5] http://www.greentechmedia.com/articles/read/dark-day-for-solar-thermal-solar-trust-switches-500-mw-power-plant-to-pv/

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