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CSP: a viable alternative to coal base load power

30 Mar 2015

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It is no secret that South Africa is currently facing an electricity generation crisis. 2015 has been characterised by widespread load shedding, Eskom’s black hole in its balance sheet and sharply increasing electricity tariffs.

Essentially, this crisis has been caused by insufficient maintenance of Eskom’s aging coal-fired power plants, resulting in increased “technical errors” and “unplanned maintenance”.

In order to address this crisis, Eskom and the Department of Energy (DoE) have attempted to increase generation via four routes:

  1. Working through the maintenance backlog
  2. Completing the now infamous Medupi and Kusile coal fired power stations
  3. Launching the Coal Baseload IPP Procurement Programme
  4. Expanding the generally well-regarded renewable energy program (REIPPPP), which has already gone through four bidding rounds

Unfortunately these initiatives come with their own set of challenges.

Coal-fired Power Stations

The new Eskom built coal-fired plants (Medupi and Kusile) have been plagued by delay after delay and resultant cost overruns. Based on the most recent publically available information, the plants are expected to be fully operational in 2021. This is four years later than initially expected and resultant cost overruns have been eye-wateringly high. Eskom has not disclosed the exact extent of the overruns but estimates have been astonishing:

 

Source: Mail & Guardian, 6 Feb 2015

In 2012, NERSA calculated the cost of electricity generated from Medupi to be 97c per kWh. Since then, the laundry list of issues at Medupi have been well publicised but yet again, Eskom has remained tight-lipped on the updated estimated cost per kWh.

The DoE has turned to the private sector to increase SA’s coal generation capacity through the launching of the Coal Baseload IPP Procurement Programme. At a tariff cap of 82c per kWh (escalated at CPI), the economic cost to generate is expected to be lower than any other base load alternative.

Unfortunately these projects carry a large environmental cost which hasn’t been factored in. This includes the environmental damage caused by an increase in mining activity (new developments or existing mines), increased water usage in the arid areas where our coal resources are located (Waterberg region) and the large quantity of CO2 emissions from these plants. The so called “cleaner” coal technology doesn’t significantly reduce greenhouse gas emissions even though other forms of emissions have been reduced.

In case you need convincing as to how CO2 emissions (i.e. greenhouse gases) have contributed to global warming, see http://www.bloomberg.com/graphics/2015-whats-warming-the-world/

SA’s Renewable Energy Programme

The REIPPPP has successfully brought on stream a large number of independently run renewable energy power plants. Due to the competitive nature of the programme, the later rounds have yielded competitive tariffs when compared to new coal base load plants. On average, tariffs per kWh produced have dropped below new coal base load prices across the various technologies. For example, the cost per kWh of energy produced by a Round 4 Solar Photovoltaic (PV) would cost 76c per kWh.

To date, a total of 92 projects with combined capacity of 6.3GW have been procured under REIPPPP with more to come. To put this into perspective, Eskom has a total installed capacity of 44GW. This means that over the past three years, REIPPPP has increased the country’s generation capacity by 14%.

The bulk of the renewable energy projects are solar PV and wind power plants, which are not conducive for base load power. Solar PV generation peaks at around noon, while SA’s peak demand period is the late afternoon and early evening. Wind power plants generate in a more unpredictable pattern as they are dependent on when the wind blows. In order to transfer the energy generated from these plants to high demand periods, Eskom will need to increase its pump storage capacity. Electricity will then be stored during low demand but high generation periods (noon) and released during high demand periods (early evening). Unfortunately this all comes at a higher financial cost and increases the operational risks within SA’s electricity generation network.

Could Concentrated Solar Power (CSP) provide the answer?

What is CSP?

While CSP and Solar PV plants both derive energy from the sun, Solar PV does this via a chemical reaction which occurs in the PV panels, while CSP plants use the heat of the sun. While there are many variants of a CSP plant, all of them are based on the following basic steps:

  1. The sun’s heat is reflected off a mirrored surface onto a surface containing a fluid
  2. This heats up a fluid (or sometimes steam) to very high temperatures
  3. This heated fluid is used to create high temperature steam
  4. This steam is passed through a steam driven electric generator resulting in electricity generation

This may sound familiar as this is similar to how coal-fired power plants generate electricity. Coal-fired power plants burn coal to heat water in a boiler. This creates steam which drives an electric generator resulting in electricity generation. A CSP plant in fact shares a material amount of technology with a coal-fired power plant with little detriment to the environment!

A number of different types of CSP technology exists. These include parabolic trough, fresnel, molten salt tower and steam tower. For the purpose of this article, the focus will be on one of the newer and more efficient variants, namely molten salt tower CSP technology.

 

This “eye of Sauron-like” image may seem like a scene out of the latest sci-fi blockbuster but we believe it will be an important part of SA’s future energy mix.

In this variant, molten salt in the central receiver is heated up to over 500⁰C during the daylight hours. This is done by angling mirrors to reflect the sun’s heat onto the receiver located on top of the 200m central tower. This is taller than two Big Bens stacked on top of each other! These hot salts are then stored in a hot salt tank.

When the operator wants to generate electricity, the hot salts are run through a steam generation system. The steam is passed through the steam turbine generator to generate electricity, with the used steam being passed through a condenser. The resultant water is used again in the steam generation system. The “cold” salts (at 260⁰C) are transferred to the cold tank to be used in the receiver again. The plant is largely a closed system with little wastage:

Source: Engineering.com

One of the advantages that molten salt CSP has over other renewable energy technologies is the inherent storage capacity. This enables these plants to dispatch power during peak demand periods even when the sun is not shining. In this way, it is very similar to the horrendously expensive diesel powered turbines Eskom currently uses as peaking power plants. The diesel powered turbines allow the peaking plant to start up and generate electricity relatively quickly to meet demand.

Storage enables these plants to be run 24/7 if the storage and salt system is appropriately sized. The salt is heated during the day for storage and generation and stored hot molten salt is released throughout the night to continue generating electricity. This configuration is being used in the Gemasolar plant in Spain which has been operating since 2011.

 

What do the anti-CSP crowd say?

Let us take our rose coloured glasses off for a minute and acknowledge that the molten salt tower technology has some real (and perceived) drawbacks. Let’s have a look at each of them and unpack what the issue really is.

Limited track record

Due to the technology being relatively new when compared to more established renewable energy and traditional energy technologies, a very limited track record of established CSP plants exists. Molten salt tower technology is even newer with only one plant greater than 100MW being commissioned (SolarReserve’s Crescent Dunes project). Gemasolar, a 20MW molten salt CSP tower plant located in Spain, has been operational since 2011.

Crescent Dunes has suffered a number of setbacks, with SolarReserve noting that these setbacks are not as a result of the technology but rather as a result of risks inherent in any green field construction project. Crescent Dunes is fully constructed and is currently being commissioned.

With this limited track record, it is clear that a cautious approach should be taken when deciding to include this technology into the energy mix. However, one should take note that a material part of a molten salt CSP tower plant has been tried and tested in the coal power plant application. Furthermore, the “new” portion of the technology (namely the molten salt system) uses technology proven in the general industrial, space exploration and aerospace industries.

Cost to generate electricity

Cost per kWh produced is a function of the capital costs, operational costs and input costs. Given that sunshine is a free input and operational costs are relatively small, the costs per kWh for a molten salt CSP tower plant is a function of capital costs.

All major pieces of equipment are not produced locally and have to be imported. As such, a large driver of the capital costs and ultimately the cost per kWh, is the value of the rand at the time of buying the equipment. Despite the current relatively weak rand, the tariff cap for CSP in the upcoming bidding round of REIPPPP is R1.38/kWh.

This tariff represents the amount paid per kWh produced during normal operating periods. The tariff is 2.77x greater during peak demand periods and zero during low demand periods. This tariff structure incentivises plants to operate like base load plants during the day, as peaking power plants during peak times and not generate during low demand periods such as late night and early hours of the morning.

Simplistically, a graphical depiction of the energy production for a 100MW CSP plant may look like this:

 

The fossil fuel equivalent of this energy generation profile would be the combination of coal base load and the more expensive diesel-generator peaking power plant:

 

Comparing the current cost per kWh generated of the two solutions, CSP works out to approximately R2.45 per kWh and the coal/diesel combination works out to approximately R1.87 per kWh.

When comparing only the current financial cost per kWh, the fossil fuel solution does seem to be the better choice. However the 58c per kWh saving does come with their own set of risks:

  • Increased pollution caused by emissions from fossil fuel power plants
  • The coal and diesel prices is subject to market forces while the sun is always free, meaning that today the coal market price may be at a historically low $54 per ton but next year it may be closer to the 2008 peak of $167 per ton.

You may be asking yourself, is there scope to reduce the cost of producing electricity via CSP? The answer is: Absolutely! CSP technology is relatively new and as more projects are built plants will become more efficient and more players will enter the CSP space, resulting in cost reductions

Wrapping it all up

With South Africa facing a serious electricity generation crisis, the instinctive reaction may be to stick to the tried and tested route of coal fired power stations to increase generation. Unfortunately this solution has significant environmental impacts. Futhermore, construction takes time. Even if all goes well, the construction duration on these plants is approximately five years. Construction can be significantly longer as evidenced by Medupi and Kusile.

Solar CSP on the other hand provides a far less detrimental environmental impact and is a quicker solution with an approximately two year construction period. Furthermore, CSP is a unique prospect as it provides base load and peaking power characteristics.

Instead of a country mired in an electricity crisis, we see South Africa’s potential as a country with one of the world’s best solar resources, a need and desire to increase electricity generation capacity, an effective engineering and manufacturing sector and a world class successful renewable energy programme. All the key ingredients to make South Africa a CSP hub of excellence!