China has announced plans to start – and complete – 11 CSP projects with thermal energy storage by 2024. The selected projects, with backing by some of China’s biggest energy giants, must now race to meet this very tight two-year deadline. (How Concentrated Solar Power – CSP works)
Out of China’s initial pilot program, from a planned 1.3 GW of CSP pilot projects by 2020, only 500 MW met the deadline on time. The pilot projects that did meet the deadline are still operating and enjoying their 20 year power purchase agreements with a tariff of about 17 cents/kWh USD as first of a kind in the country.
As you see in this summary (above) of the successful pilot projects, tower technology has emerged as the clear winner. Most of the pilot projects that made it through that very competitive initial program were tower. This suggests that China’s CSP future supply chain will comprise all the components for tower CSP.
Of the proposed tower projects, 6 of 9 came to fruition within the short 2 year timeframe required. Surprisingly, of the much more established and bankable trough technology, only 2 of the 7 proposed projects made the deadline, along with a less surprising quarter of the 4 proposed Fresnel projects.
According to CSP Focus founder and CEO, Sunny Sun, it was inability to find financing on time or at a good rate that derailed more than half those pilot projects. (This followed a similar trajectory in the US, where about half of the projects didn’t meet financing milestones in time to get built, per contracts with utilities.)
Huge state-owned firms to build China’s new CSP
In this next commercial round, each project will be developed by a consortium involving at least one large state-owned energy company, making it more likely that all the projects will have the financial wherewithal to be completed.
“These big firms are financially strong and they can get the financing from the bank, very easily, with very, very low interest rates,” Sun told SolarPACES in a call.
“Half of the pilot projects just stop moving because they cannot get the financing from the bank. Those halted projects were developed by and granted to private companies who were not able to provide enough equity or get low cost financing from banks by themselves alone, even though they know the technology very well.”
Cosin Solar (previously Supcon), and Shouhang are among the few private developers who were able to complete pilot projects on time. Shouhang and Supcon had also developed tower projects with no state-owned help, initially building smaller pre-pilot tests. Both Shouhang and Supcon are research-based university spinoffs. Two of China’s pilots involved winners of the SolarPACES Annual Technology Innovation Awards; Royal Tech’s silicone-based heat transfer fluid and the Hami tower project’s Stellio heliostat.
“Firms like Supcon, Shouhang and Royal Tech CSP, they took the initiative and they are so brave to embrace CSP technology,” Sun remarked. “But in the end, I think, those state-owned energy companies like China’s Three Gorges Renewables or China Green Development Group will be the frontrunners. They have very rich experience in hydro, nuclear or coal power plants and now they are doing the CSP. And with these projects ahead, they will get the experience and references needed to explore more project opportunities worldwide .”
The very large state-owned firms involved in several of the tariff-based pilots and now the first commercial round include nuclear, hydropower, coal, oil and natural-gas fired power plant developers that have experience with the turbines and boilers in the power blocks that CSP technology has in common with these older energy forms.
The first round included a set tariff – that declined for projects that met the two-year deadline late, causing late projects to have bank trouble and drop out. The first round focused just on CSP (all with thermal energy storage) to de-risk the technical challenges of this technology. Only two of the five projects that got built in the US included thermal energy storage and one was felled by technical failure.
But for this next round announced this month, CSP with storage will be developed as part of gigawatt-scale mixed-renewable energy projects along with PV and wind by very large state-owned energy firms. The government simply announces the needed gigawatts of capacity in each region and developers bid to meet however many gigawatts are needed.
For which state-owned firms won the bids to build the next round of CSP, see Part II: World’s Largest Energy Firm to Build Three CSP Projects