Cleantech Group picks winners and losers in concentrated solar thermal

Sub-sectors of the concentrated solar thermal (CST) market still offer ample opportunities for venture-stage capital investment, according to a report released today by the Cleantech Group.

In addition to high-profile emerging CST technologies, many of the high-growth areas lie outside traditional solar investing, including innovations to components such as steel, coating material and heat-transfer fluid, the report says.

The Cleantech Group’s Concentrated Solar Thermal report predicts trough-based CST systems will be most prevalent until 2012 or 2013 but then could be displaced by power towers, compact linear Fresnel reflectors (CLFR) and dish-engine developers if the technology advances more quickly. Still, the report says, additional investment opportunities exist in follow-on rounds for all the technologies.

"Troughs will dominate the first generation of CST. It's project financeable today because we know the costs, we know the technologies, and there are no technology risks. Developers have a roadmap to bring down the cost," said Brian Fan, senior director of research for the Cleantech Group.

"But if the power-tower concept is proven in the field in test operations, because of higher thermodynamic efficiency and higher scalability, I believe power tower will be the next generation of CST plants past 2012," he said.

The Cleantech Group has been tracking the sector since 1999 and provides cleantech market information, financial services and networking events around the world. The group also publishes this Web site.

Growth in the sector is projected despite the recent economic downturn, which could freeze funds for large-scale solar projects. That’s because CST has the potential to reach grid parity in the next five to ten years, Fan said.

Additionally, CST has one major advantage over other grid-scale renewable energy: the ability to store generated power, he said.

"The biggest promise for concentrated solar thermal is the ability to generate and store power in the form of heat," Fan said.

According to the report, molten salt for thermal storage costs $40 to $50 per kilowatt-hour with an energy return rate of more than 90 percent, while storage for wind or photovoltaic systems cost $1,000 to $3,000 per kWh of capacity. Andasol I and Solar Tres, the first commercial plants to use molten-salt extended storage, are expected to come online later this year in Spain.

Oil-based HTFs and steam have storage potential but offer more challenges than molten salt, the report concluded.

CST has drawn $745 million in venture capital investment and acquisitions through early October 2008—five times the investment for all of 2007, according to the report. That funding has drawn many new components suppliers to the market, Fan said.  

Among those identified in the report:

• Stirling Energy Systems has licensed a kinematic engine from Swedish firm Kockums AB and contracted with Detroit’s Linamar for an engine by 2011 or 2012.
• Sopogy plans to use Alanod’s polished aluminum reflectors as a collector material. That market has been dominated by Flabeg’s parabolic mirrors, but other approaches are being pursued by SkyFuel and possibly 3M.
• Heat-transfer fluids are also evolving. Traditional oil-based HTFs from Dow Chemical and Solutia are giving way to engineered fluids that can improve heat retention, cycling capacity, viscosity, temperature ranges and cost. Ausra and Solar Power Group have opted for steam, while Sener is looking to molten salt for its Solar Tres plant in Spain.

Growth in the CST sector will likely be inhibited by the constrained supply chain and bureaucratic hurdles for permitting the projects, the analysts wrote.

Trough developers have announced projects worth $23.5 billion. The report says that pipeline is reliant on technological improvements, such as work being done with direct-drive steam utilization by Solar Millennium and Solel. Micro-trough systems are being designed for smaller scale industrial and distributed uses by companies including Sopogy. The industrial applications of CST are likely to create a $50 billion global market as technologies evolve and sales channels are developed, analysts wrote.

The report says the growth of CFLR depends upon companies such as Ausra, Solar Power Group and Novatec Biosol providing tangible evidence to back up their assertions that the technology can generate energy generation for between 8 cents and 10 cents a kilowatt-hour by 2011. Ausra recently opened its first CFLR plant in North America (see Ausra opens U.S. solar-thermal plant).

And the report notes that tower developers such as Abengoa Solar, Sener, BrightSource Energy, eSolar and SolarReserve are taking vastly different approaches to heliostat sizes and heat-transfer fluids. Analysts say it’s too early to tell which approach will succeed but predict the advantages of cost and operation will allow tower technology to compete very strongly with CST troughs.

Dish-engine CST systems will likely overcome reliability concerns and offer opportunities for small- and mid-scale generation, the report says. The average efficiency of 24 percent to 27 percent has prompted interest in companies including Stirling Energy Systems and Infinia.

The Cleantech Group’s report on concentrated solar thermal can be downloaded for free by members of its Cleantech Network here.

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