July 2015

The value of combining CSP with wind power

CSP today – Business Intelligence
April 2015

Amid growing awareness of the value of combining different renewable energy sources, to what extent does it make sense to marry up CSP with wind?

By Jason Deign

An increasing appreciation of the potential for combining CSP with PV is leading to the question: what about wind? Wind power and CSP rarely get considered together. But a close scrutiny of the cost of storing wind power reveals there could be a case for hybrid plants.

“It’s not quite as complementary [as PV],” said Kevin Smith, chief executive officer at SolarReserve, and there are “higher intermittency issues,” but wind power has the advantage of being even cheaper than PV. “It really is about cents per kilowatt an hour.”

As with PV, the main reason for adding CSP to a wind farm is to take advantage of the potential for low-cost energy storage using molten salts. Wind power is, if anything, even more intermittent than PV. Grid operators currently deal with this intermittency in a variety of ways.

At low levels of penetration, it is usually enough to rely on day-ahead forecasting to assess output and ramp other forms of generation up or down as needed to compensate for the variable power coming off wind farms.

And over large enough regions, ups and downs in production in one place tend to be balanced out by ups and downs elsewhere. As wind power penetration grows, however, there is an increasing need to curtail excess production so as not to overload the grid.

In places with favourable geography, an alternative to curtailment is to use pumped hydro storage to store excess output for use later on. This has been highly successful in markets such as Spain, where wind power accounted for a fifth of all energy generation in 2014.

But pumped hydro is unlikely to be an option in many desert environments where CSP, conversely, might be well suited. Furthermore, the other option for storage, batteries, is still far from being cost effective.

As an example, Southern California Edison’s Tehachapi Energy Storage Project, where batteries store wind energy, delivers 32 megawatt-hours of storage and cost a reported USD$49.9 million, which translates to more than $1,500 per kilowatt-hour.

Present-day costs

The SolarReserve Crescent Dunes project, in comparison, has 35 times as much storage, includes energy generation and cost less than $150 million (for the molten salt circuit), making it about a tenth of the price of Tehachapi on a like-for-like basis. And that is on present-day costs.

In the near future, however, CSP plants could become much cheaper. SolarReserve estimates that compared to Crescent Dunes it can reduce the cost of its upcoming Redstone project in South Africa by 20% through heliostat design advances alone.

Many CSP observers agree that it makes sense to see CSP as complementing rather than competing with other renewable generation sources, including wind.

In a LinkedIn debate sparked by a CSP Today story on competition between CSP and wind, for example, a number of experts came forward to defend putting the two together and in particular making better use of the heat output from solar thermal plants.

“Wind and CSP are two different forms of energy which can be used for different applications,” said Michael Goth, general manager at STEAG Energy Services in Germany.

“Developers need to determine the best mix to maximise these resources and perhaps storage is the meeting ground for the chosen systems,” chimed Nigel Spink, a former senior project manager with ABB.

“The output, whether it is electrical energy, heating, cooling on a local or district level, or desalination, may depend upon the location.”

Hybrid projects

Despite this apparent level of appreciation for the synergies between CSP and wind, developers have yet to propose any hybrid projects of note. But it is worth highlighting that some major CSP players also have significant experience in wind power, particularly in Spain.

Acciona, for example, is known for its expertise in wind as well as PV, hydro and biomass project development. FCC Energy, meanwhile, has a portfolio of 14 wind farms with an installed capacity of almost 421MW on top of its two 50MW CSP projects.

Grupo TSK and Ibereólica are among other Spanish firms that have significant track records in both CSP and wind project development.

What these companies perhaps lack is SolarReserve’s track record in molten salt power tower designs, which are arguably the best in terms of storage capability.

But the Spanish companies are catching up fast: at Ouarzazate in Morocco, for example, Acciona and TSK are working with Sener and Aries on a project for ACWA Power that will include a power tower with molten salt storage.

Given the diversity of project experience in these companies, it is perhaps just a matter of time before one of them proposes a development combining CSP with wind.

“One may expect that local communities in desert countries will actively drive small wind and solar energy applications,” confirmed Paul van Son, country chairman for RWE in the Middle East, North Africa and Turkey.

 

Alternative renewables funding to be considered as sector matures

Engineering News
14 July 2015

TERENCE CREAMER
 

 Alternative funding models could be expected to begin coming to the fore in South Africa’s renewable-energy sector as the market becomes more competitive and domestic development finance institutions (DFIs) begin scaling back their direct involvement in projects.

Speaking to Spanish investors during a recent mission to South Africa, Industrial Development Corporation (IDC) industrial infrastructure head Lizeka Matshekga reported the State-owned financier is shifting gears in relation the Renewable Energy Independent Producer Power Procurement Programme (REIPPPP).

The IDC has hitherto played a major role in developing the industry, having supported 24 projects with financial commitments totalling R14-billion.

In total, 92 renewables projects, with a combined nameplate capacity of 6 243 MW, have been procured since the announcement of the first REIPPPP preferred bidders in late 2011 and the Department of Energy has indicated that the programme has resulted in investment commitments of R193-billion.

Matshekga indicates that the IDC began paring back its involvement during the fourth bid window of the REIPPPP and that it intends increasingly refocusing its resources towards the localisation of the components used in renewable-energy projects.

“We will still play a role, but not at the level of the past,” she explains, adding that the shift is reflected in the consolidation of the green industries under the more broadly focused industrial infrastructure business unit. The unit aims to support the infrastructure needs of the mining and metals, chemicals and pharmaceuticals and agroprocessing value chains both in South Africa and the rest of the continent.

This shift in strategy could have significant consequences, particularly in light of Energy Minister Tina Joemat-Pettersson’s decision that a further 6 300 MW of renewables capacity be procured beyond the projects procured under previous government determinations.

Standard Bank renewable energy, power and infrastructure head Rentia van Tonder says that at least another R160-billion will have to be invested by independent power producers to meet the additional 6 300 MW determination.

“I cannot see the commercial banks doing that on their own,” Van Tonder argues. “The introduction of Basel 3 acts as a constraint on the amount of long-term debt South African banks can take on their balance sheet and this effect will indirectly support the development of a secondary market.”

Van Tonder believes the DFIs still have a significant direct role to play, particularly in providing equity finance, but also in supporting black economic empowerment community development and funding for black industrialists in the sector. “To grow the renewable-energy sector and take it to the next level, I believe everybody will need to play their role.”

However, in light of the changing environment she says different models could be considered in future, including options that seek to tap the debt capital markets.

One possible alternative is the creation of so-called ‘yieldcos’, which would be publicly traded corporations that hold operating assets that generate long-term, low-risk cash flows, which are distributed to investors as dividends.

“The sector has grown to the point where we have to look at alternative funding models and, as a bank, we are looking at various structures,” Van Tonder explains.

 

Working Groups

Working Group

Chair

Description

Assets

Lukhanyo Kenneth Ndube
Assets@sawea.org.za

Previous Chair:
Mark Pickering

WG Report

Membership of the Asset Working Group is restricted to those members of SAWEA who are involved in the ownership and/or operation of wind farms that have achieved at least preferred bidder status. The working group strives to represent the majority of assets in order to speak convincingly on behalf of the industry. The Working Group was establishment in early 2015 and is in the process of expanding membership. Qualifying members of SAWEA are encouraged to join the Working Group. The goals of the Asset Working Group are: To promote best operating practice amongst members through shared learning, particularly in the areas of health, safety and environment; To identify issues of common interest to members and to develop an industry perspective where necessary; To represent the interests of members in fora and processes of relevance to the financing, construction and operation of wind farms in South Africa; and To facilitate the development of the professional skills required for a successful and sustainable wind industry.

Environmental (Birds & Bats & Strategic environ)

Ben Brimble
Environmental@sawea.org.za

Previous Chair:
Jadon Schmidt

WG Report

The goal of the Environmental Working Group is to:-

  • pro-actively engage with national/provincial authorities and stakeholders on environmental aspects of wind energy development and generation that require collaborative attention.
  • coordinate response and pro-active lobbying activity on environmental regulatory issues through collaboration with SAWEA’s Regulatory Working Group.
  • engage with respective authorities and stakeholders to promote sustainable and responsible wind energy development.
Health, Safety & Environment

Tom Thorogood hse@sawea.org.za

The SAWEA HSE working group would address HSE best practise arising from all activities of the wind industry in SA, covering development, construction and operations. Priorities for 2016: Common Issues to approach Department of Labour Draft KPIs Draft Terms of Reference.

Land use

Mantwa Mathebula
LandUse@sawea.org.za

Previous Chair:
Enelge Gildenhuys

WG Report

The SAWEA Land Use Planning Working Group focuses on engaging authorities on issues of land-use and spatial planning for wind energy, and to interface between national/provincial planning authorities and SAWEA, to collate/submit members’ comments on draft planning guidelines, acts and regulations. The WG aims to play a significant role in cooperating with planning authorities and other industry bodies with intent to facilitate and advance renewable energy development, particularly wind energy.

Manufacturers & Local Content (O&M)

Tbc
manufacturers@sawea.org.za

Define standards from Manufacturers view point for the Wind Energy Industry in SA/ Local Content

Policy & Markets

Policy@sawea.org.za

Previous Chair:
Brian Cunningham

WG Report

The Policy and Markets Working Group exists to support the development and sustainability of the wind energy industry in South Africa. Their objectives are a favourable legislative framework in which a wind energy industry is supported and promoted, and further the removal of barriers to entry confronted by all players within the wind energy industry. The Policy and Markets Working Group came about after a merge of the Policy and Legislation and the Markets and Procurement Working Groups, since the objectives of both groups were aligned. The wind energy market within South Africa is governed by the legislation put in place by the Department of Energy.

Skills development

Manfred Dutschke
Skills@sawea.org.za

Previous Chair:
Laura James

The Skills Development Working Group consists of representatives of learning institutions and IPPs.  It is seeking additional representation from OEMs.  The Skills Development Working Group’s purpose is to act as the nexus between skills demand and skills supply.

Technical

Duncan Ayling
Technical@sawea.org.za

Previous Chair:
Christopher Bellingham

WG Report

Since early 2010, the Technical Working Group has been working on several projects and been engaging in relationship building with key stakeholders, including: Strategic Grid Plan: Spatial Distribution of Wind Energy Resource in South Africa – the statistical compilation of views on where the wind development potential could be expected to be focussed. Provided as input to Eskom Planning’s SGP Grid Code: engagement on evolution of draft grid code for wind, setting up of Project Committee Framework for Transmission Hub Planning – an initiative to bring together NERSA, DoE, Eskom Planning, Grid Access Unit and Transmission with key industry bodies to address challenges in the IPP Procurement Process and Eskom application and costing process to facilitate proactive and pragmatic planning of shared integration infrastructure. GCCA 2012 – engagement with Eskom on the GCCA 2012 and production of a discussion document addressing questions. Developing stakeholder relationships, including: DoE, NERSA, SAAF, CAA, DEA, Eskom Planning, Distribution, Transmission, System Operator, Grid Access Unit, SABS, SAWEP, DTU/Risoe, CSIR, DEADP, various universities.

Wind for Communities

Marion Green-Thompson
Communities4wind@sawea.org.za

Previous Chair:
Holle Wlokes

WG Report

Members of the wind industry have at different forums indicated a need for guidelines in developing SED plans and engaging communities, as per REIPPPP requirement. The ED commitments under REIPPPP, in particular SED and EnD have positioned community development, previously not considered the core business of wind farm project developers, as a key strategic imperative for the wind industry.

There is a clear commitment from industry to do it right. The objectives of this working group are to: Develop and disseminate advice on good practice for community development and engagement; Promote collaboration and knowledge sharing amongst IPPs in maximising the social returns of the renewable energy program  at local and district level;  Facilitate improved communication between industry and government to improve quality and relevance of economic development reporting;  Support positive relationship building with beneficiary communities; Communicates the developmental impact of the SED and EnD programmes implemented by the wind industry.