Concentrated Solar Heat could decarbonize industrial heat requirements
Citing a study by the International Renewable Energy Agency (IRENA), World Bank energy consultant Elena Cuadros told SolarPACES that direct solar thermal heat holds the promise to replace fossil fuels supplying half the world’s industrial requirement for medium temperature heat. Even industries like mining and steel that require higher temperatures – also use some medium heat processes between 300ºC and 400ºC, which can be met with Concentrated Solar Heat (CSH).
“CSH has been commercially proven for providing heat up to 400ºC for the pharmaceutical and textile sector, brick, paper, food processing and hospital uses. These industries are usually locally owned small and medium businesses and important sub-sectors” Cuadros said.
Together with Fraunhofer’s Pedro Horta, Cuadros presented very detailed, specific calculations showing where CSH could be substituted at a lower cost than fossil fuels within five MENA region nations, by comparing CSH costs to the fossil fuel costs currently used locally for heat in these industries.
Their presentation was at the Concentrating Solar Heat (CSH) Workshop in Jordan, held jointly by the World Bank under its MENA Concentrating Solar Power Knowledge and Innovation Program (MENA CSP KIP) and Jordan’s Ministry of Environment.
They found that CSH could have a 5-year payback now in MENA region locations with a good solar resource – where direct normal irradiance (DNI) is at least 2,250 kWh/m2. “For these industries in the MENA region CSH is very promising.
Cuadros teamed up with Senior Energy Specialist Jonathan Sinton, in the World Bank’s International Bank for Reconstruction and Development (IBRD), to decarbonize industrial heat in the MENA region.
But even though the costs, the lifetime returns, and the speedy pay-back proved so competitive, during the three year MENA Region study they found that small and medium businesses were loathe to actually purchase and own novel technology.
Sinton explained: “Although there are commercial systems available they aren’t widely available, they’re not the conventional technology, so they’re seen as somewhat risky. They’re not really seen as plug and play, so decision makers require quicker payback than something that is perceived as safe like a gas or oil fired boiler.”
This led them to consider an alternative based on similar challenges solved by solar PV: to eliminate ownership and just sell the heat, like in a solar Power Purchase Agreement (PPA), where buyers pay only for electricity generated.
Inventing the Heat Purchase Agreement (HPA)
The PPA leveled the playing field between fossil fuels and solar electricity for homeowners and small businesses by minimizing change, because pay-as-you-go electricity continued the familiar model of just buying the power, not the power plant.
“So after almost three years trying to develop CSH in the region, what Jonathan and I have been considering is to basically help create the Heat Purchase Agreement,” said Cuadros. “Then with maybe an escrow where a third party takes all these risks.”
With HPAs, utility-scale solar heat producers could set up large CSH utilities, and sell heat to multiple smaller firms clustered in industrial parks.
“One could envision a dedicated concentrated solar heat fund, with an agreement with the on-lending banks that there will be an independent technical advisory that acts as a gatekeeper to ensure that any projects that apply for funding are in accord with the defined purpose of the fund,” Sinton explained.
“There could also be some technical assistance as well to all of the players along the chain, to the banks that are lending to this new type of project, to the project hosts and developers as well, to reduce risk to the borrower, the commercial bank and also to the World Bank as well, because we have a fiduciary responsibility to recover the funds.”