CONCENTRATED SOLAR POWER Market Survey and Trends New CSP Market Segments Assessment Local Manufacturing Potential

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1 CONCENTRATED SOLAR POWER 2016 Market Survey and Trends New CSP Market Segments Assessment Local Manufacturing Potential

2 Market Survey and Trends 2017-Mar-07 2

3 LIFE NEEDS ENERGY Sun Gravity Nuclear Geothermal Biomass Sun Sun energy creates: wind, waves, biomass, oil, coal, hydro. Oil, Gas, Coal Wind hydro Reliable, Clean, Safe, Secure, Affordable Waves

4 CSP TECHNOLOGIES AVAILABLE Conceptually similar, concentrate solar DNI and generate electricity via thermodynamic cycle Parabolic Dish-Stirling is ill-suited for TES, omitted from study 2017-Mar-07 4

5 HYBRIDIZING CSP -100% RENEWABLE CSP+PV CSP+WIND CSP CSP ELECTRIC HYBRIDIZATION TES Steam Turbine PV TES Steam Turbine Wind Turbine ELECTRICAL GENERATION CSP+BIOMASS ELECTRICAL GENERATION CSP+GEOTHERMAL THERMAL HYBRIDIZATION Biomass Boiler Steam Turbine CSP GEOTHERMAL Steam Turbine CSP ELECTRICAL GENERATION ELECTRICAL GENERATION 2017-Mar-07 5

6 HYBRIDIZING CSP-FOSSIL FUELS Solar-aided power gen. (SAPG) Integrated Solar CC (ISCC) LOW SOLAR SHARE Coal / Fuel / Boiler Steam Turbine CSP HRSG Steam Turbine Gas Turbine CSP ELECTRICAL GENERATION ELECTRICAL GENERATION Decoupled Solar CC (DSCC) DSCC with PV CSP CSP HIGH SOLAR SHARE Gas Turbine TES Steam Turbine Gas Turbine TES Steam Turbine PV ELECTRICAL GENERATION ELECTRICAL GENERATION 2017-Mar-07 jservert@sta-solar.com 6

7 Trend in Technology choice INSTALLED CAPACITY Technology choice, actual LF 6% DS 0% PT 79% CT 12% HY 3% PT HY CT DS LF 2017-Mar-07 7

8 STATUS IN MENA COUNTRIES MENA CSP CTF Investment Plan has been a driving force in the region All MENA countries under study have signed the Paris Agreements, most have submitted INDCs Country Implementation Period GHG Target Type Greenhouse gas emission Cost of implementation Algeria Baseline scenario target 7-22% by 2030 Egypt Not applicable USD 73 million Jordan Baseline scenario target 1,5% by 2030 compared to BAU Morocco -- Baseline scenario target 32% by 2030 compared to BAU Tunisia Intensity Target 7t CO2 per capita in 2010, target in 2030: 3,4t CO2per capita. (48% reduction) USD 45 billion Libya Not submitted Saudi Arabia million tons of CO2eq avoided annually by 2030 Kuwait Actions only Oman Fixed Level Target GHG emissions growth by 2% 2017-Mar-07 jservert@sta-solar.com UAE Not applicable 8

9 STATUS OF CSP MARKETS Technology Focus 2017-Mar-07 29

10 CSP TECHNOLOGY COMPARISON Technology PT LF DS CT Typical size (MW) Concentration Factor Capacity Factor (%) Operation Temperature (ºC) Solar Electric perf. (%) Installed worldwide (MW) 4, Use of land (MWh/(ha year)) 600 1, , Maturity Commercial Commercial Demo Commercial Reflector Parabolic mirror Flat/curved mirror Paraboloid mirror Curved mirror Receiver Absorber tube w/ vacuum cover Absorber tube w/ concentrator Stirling engine / gas turbine External / Cavity HTF Thermal oil Saturated steam Air TES Molten salts, indirect Steam accumulator N/A Molten salt / Water-steam Molten salts, direct / steam accumulator TES capacity 4 12 hours < 1 hour N/A 6 14 / < 1 hours 2017-Mar-07 jservert@sta-solar.com 30 Hybridization capable Yes, existing Yes Unlikely Yes

11 CSP, PV OR HYBRID? On production cost alone, PV is, today, significantly cheaper than CSP; it is also more modular and easy to design, construct, maintain and operate System costs not reflected in LCOE When dispatchability is required, TES is cheaper to install and to run, which gives CSP a competitive edge. If combined with cost reduction, utility scale makes more sense with CSP Hybridizing CSP with fuels can ease the path, reducing emissions while providing track record to CSP, and time to amortize plants in operation 2017-Mar-07 jservert@sta-solar.com 31

12 LCOE Range for Different Technologies Note: Values in USD/MWh (2016). WACC = 8%, 25 year technical life for solar (PV-CSP) 2017-Mar-07 jservert@sta-solar.com 32

13 A NOTE ON SYSTEM COSTS Price of electricity value for the customers: as much as they need, where and when it is needed LCOE production cost, regardless where or when From LCOE to price integration costs: transmission lines (where) and backup (when) Low capacity factor increases the unit cost of lines Also ancillary services not provided by PV, wind High RE mix integration costs can trump LCOE CSP integration costs are as low as conventional, especially if hybridized 2017-Mar-07 33

14 A NOTE ON SYSTEM COSTS (2) MENA countries have a firm generation portfolio, penetration of PV/wind is possible but it has a limit A country/system level analysis is required to ensure grid stability Robust scenarios should be developed for medium/long term demand (economic & population growth) and generation (emission targets, system costs, impact of RE in wholesale market) 2017-Mar-07 jservert@sta-solar.com 34

15 CSP INSTALLED CAPACITY FORECAST Methodology and Scenarios 2017-Mar-07 35

16 Installed Capacity, GW UNCERTAINTY IN PROJECTIONS Half a decade ago, expectations for CSP deployment were much higher than the current situation: most longterm forecasts and country plans have not been fulfilled Scenarios must be cross-checked with cost projections Mar-07 jservert@sta-solar.com BAU-reference STE-GO2016 GP-IEA ID-optim ID-reference RD-reference RD-pessim Scenarios: BAU: business as usual ID: increased deployment RD: reduced deployment STE-GO: Solar Thermal Electricity Global Outlook 2016 GP-IEA: Greenpeace-IEA

BUSINESS AS USUAL SCENARIO Scenario considering plants identified in the pipeline worldwide, up to 2025 Operating Under Construction Under Development Under Planning Announced Constant growth after

17 BUSINESS AS USUAL SCENARIO Scenario considering plants identified in the pipeline worldwide, up to 2025 Operating Under Construction Under Development Under Planning Announced Constant growth after 2025 ± 20% region for optimisticpessimistic expectations Scenarios: BAU: business as usual STE-GO: Solar Thermal Electricity Global Outlook 2016 GP-IEA: Greenpeace-IEA 2017-Mar-07 37

18 Installed Capacity, GW SCENARIO IN MENA Under BAU assumptions, deployment is moderate If exporting energy to Europe is realized (DESERTEC or similar) it can be a total game-changer Algeria Egypt Jordan Kuwait Libya Morocco Saudi Arabia Tunisia UAE EXPORT MENA countries MENA pessimistic MENA optimistic 2017-Mar-07 jservert@sta-solar.com 38

19 COSTS AND COST TRENDS History and Forecast 2017-Mar-07 41

20 IMPACT ON LCOE Tower Parabolic Trough 15% 13% 55% 59% 30% 28% Investment cost O&M cost Investment cost O&M cost Financial cost Financial cost 2017-Mar-07 42

21 ELEMENTS IMPACTING COST Installed cost Hard costs: hardware (machinery, structures, etc.) Soft costs: services (engineering, design, installation, etc.) and project development (studies, permitting, etc.) O&M cost Fixed costs: permanent staff, insurance, land rental Variable costs: auxiliary staff, spare parts, consumables Capacity factor Risk concentrated on investment (as opposed to conventional, risk concentrated on operation) 2017-Mar-07 43

22 COST MODELLING Bottom-up model considering: Learning by doing Learning by researching i C year = C 0i Economy of scale Pi year i P 0 i C size of the power plant log 2 PR i KS bi = C 0i i P size i P 0 Validation of parameters (PR i, b i, N) is carried out with historical data of whole plant costs N 2017-Mar-07 jservert@sta-solar.com 47

23 COST MODELLING Validation results show good correlation (r>90%) average is well represented High dispersion (RMSD 40%), large plant-to-plant variation Average relative error 8%) 2017-Mar-07 48

24 COST MODELLING Each component cost C i correlates with one metric P i Nominal power sets the cost for: Power block BoP EPC cost Owner s cost Recomercialization 2017-Mar-07 jservert@sta-solar.com 49

25 COST MODELLING Each component cost C i correlates with one metric P i Storage capacity sets the cost for: Storage system Values were corrected for the different operation temperature in CT and PT 2017-Mar-07 jservert@sta-solar.com 50

26 COST MODELLING Each component cost C i correlates with one metric P i Peak power sets the cost for: Erection and civil HTF fluid/system Mirror Structure/tracker Receiver 2017-Mar-07 jservert@sta-solar.com 51

27 COSTS AND COST TRENDS Results 2017-Mar-07 52

28 Structure & Receiver_Tower EPC cost_tower Storage system Owner's Mirror Erection and civil BoP Power block Structure & Storage system HTF system Receiver_PT EPC cost_pt Mirror Owner's cost_pt HFT fluid Erection and civil BoP Power block COST REDUCTION POTENTIAL TO 2025 Both Hard and Soft costs have a significant potential impact Tower 25% 20% 15% 10% 5% 0% Parabolic 14% 12% 10% 8% 6% 4% 2% 0% Uncertainty in projections is significant; values are provided to illustrate expected trends only, discretion is advised 2017-Mar-07 jservert@sta-solar.com 53

29 USD/MWh USD/MWh USD/MWh LCOE FORECASTED EVOLUTION Tower Parabolic PT - FORECASTED LCOE EVOLUTION Upper uncertainty limit LCOE PT Spain (Moron) LCOE PT USA (Dagget) LCOE PT Tunisia (Akarit) LCOE PT KSA (Duba 1) LCOE PT Algeria (Hassi R'mel) LCOE PT Egypt (Kuraymat) LCOE PT Morocco (Ouarzazate) LCOE PT Libya (Tazirbu) LCOE PT Jordan (WECSP) Lower uncertainty limit Uncertainty in projections is significant; values are provided to illustrate expected trends only, discretion is advised 2017-Mar-07 jservert@sta-solar.com 55

30 R&D PROGRAMS Challenges and Key players 2017-Mar-07 56

31 TECHNICAL CHALLENGES Cost reduction New HTF and cycles Structures and trackers Reflectors Receiver TES Soft cost reduction is not in typical R&D programs Other approaches New applications Dispatchability /firmness value Synergies Scale limits Use of water Hybridization 2017-Mar-07 57

32 Annual Investment (Million USD/year) EVOLUTION OF R&D INVESTMENT PUBLIC CHINA+INDIA MENA COUNTRIES AUSTRALIA USA EU R&D PROGRAMS EUROPEAN COUNTRIES AGGREGATED PUBLIC R&D INVESTMENT Aggregated Investment (Million USD) 2017-Mar-07 jservert@sta-solar.com 58

33 Annual Investment (Million USD/year) EVOLUTION OF R&D INVESTMENT PRIVATE & AGGREGATED TOTAL PUBLIC R&D TOTAL CORPORATE R&D AGGREGATED R&D INVESTMENT Aggregated Investment (Million USD) 2017-Mar-07 jservert@sta-solar.com 59

34 INNOVATION AND COST REDUCTION Some key aspects are not included in typical R&D Soft costs in development and EPC Risk reduction / cost of capital O&M costs New business models 2017-Mar-07 jservert@sta-solar.com 60

35 CONCLUSIONS and Recommendations 2017-Mar-07 61

36 CSP STATUS Half a decade ago, expectations for CSP deployment were higher than the current situation: most long-term forecasts and country plans have not been fulfilled. There is not only one reason for this: the quick cost reduction of PV made it a more attractive alternative (so some efforts were moved from CSP to PV); several other initiatives were halted, hoping that a PV-like cost reduction would bring CSP s LCOE closer to grid parity; when the cost reduction was not as quick as expected, the sector risked entering a vicious circle as a slower deployment further slowed cost reduction Mar-07 jservert@sta-solar.com 62

37 CSP S FUTURE The future development of CSP is linked to its ability to provide value to the electric system in comparison with other alternatives. CSP s strengths, beyond possible cost break throughs, are: cheap storage, demand management capabilities, ancillary services, etc Mar-07 jservert@sta-solar.com 63

38 CSP S FUTURE There is potential for cost reduction in both hard and soft costs, but some chapters (civil works, power block, BoP, EPC cost and Owner s cost) have barely improved despite its significant impact Soft costs are not a typical target in R&D programs Other approaches beyond cost reduction (synergies, alternative applications) can improve CSP s competitiveness Monetizing CSP energy s desirable properties would help it compete in equal terms with PV, wind 2017-Mar-07 jservert@sta-solar.com 64

39 CSP S FUTURE Hybridization can be a key to the future of CSP: Hybridizing CSP with fuels can ease the path, reducing emissions while providing track record to CSP, and time to amortize plants in operation CSP integration costs are as low as conventional, especially if hybridized Risk is concentrated on investment in CSP, and on operation in conventional; hybrids can have a better balance between both, diluting them 2017-Mar-07 jservert@sta-solar.com 65

40 CSP IN MENA COUNTRIES The experience in MENA countries has followed the same technology implementation pattern: first CSP power plants used PT technology in the Solar Field (ISCCs, Shams), but are already considering the development of solar tower projects. MENA Countries can profit from the availability of CTF funds to minimize financing costs, reducing the final energy prices. Risk allocation will be crucial as well as reducing the uncertainty in countries accessing concessional financing Mar-07 66

41 CSP IN MENA COUNTRIES CSP can be the backbone of a highly renewable energy system in the MENA countries, providing advantages when compared with intermittent renewable energies with chemical back-up or conventional back-up capacity MENA Countries may gain relevance in CSP industry through the development of concepts as DESERTEC, contributing to support the future development of CSP High electricity interconnection and the option of a transnational market opens possibilities for developers and off takers, adding flexibility and increasing competition 2017-Mar-07 jservert@sta-solar.com 67

42 CSP IN MENA COUNTRIES MENA countries can benefit from the lessons learned during the development of CSP technology and become relevant players of the industry. CSP deployment on the selected MENA countries can become a reality if several key conditions are fulfilled: uncertainty (perceived risks in the region ) is reduced, realistic targets are set up to supply local market, and an appropriate frame is defined to provide energy to Europe 2017-Mar-07 jservert@sta-solar.com 68

43 New CSP Market Segments Assessment 2017-Mar-07 69

44 CONTENTS Technology Process Integration CSP CSP vs Business as Usual (BAU). Today Future Trends CSP Deployment Investment required and cost savings Emission Savings (COP21)

45 PROCESS INTEGRATION CSP Thermal Energy Storage (TES) Solar Field (SF) HOT COLD Heat Transfer Fluid (HTF) System Power Block (PB) Depending on the application, TES or hybrid configurations may be needed, due to economic and security of supply reasons.

PROCESS INTEGRATION CSP Thermal Energy Storage (TES) Solar Field (SF) HOT COLD Oil Production Oil Refineries Chemicals Manufacturing Water Heating Agriculture

46 PROCESS INTEGRATION CSP Thermal Energy Storage (TES) Solar Field (SF) HOT COLD Oil Production Oil Refineries Chemicals Manufacturing Water Heating Agriculture Mining Heat Transfer Fluid (HTF) System Depending on the application, TES or hybrid configurations may be needed, due to economic and security of supply reasons.

47 PROCESS INTEGRATION CSP - REQUIREMENTS Minimum thermal power: 10 MWth Land availability Technical feasibility Stable energy demand Project lifetime: years High investment Consumer commitment

48 NATURAL GAS AND OIL HISTORY PRICES: 2.5 Dimensionless evolution of fuel costs (Ref 2015 prices) Natural Gas Oil Data obtained as a mean value of Fuel Prices included in BP Statistical Review of World Energy June Available on-line at:

49 OIL CONSUMPTION IN OIL PRODUCTION 1 Oil Barrel 4 Oil Barrel - Source: US International Revenue Service & California Energy Commission.

50 LCOE (USD/MWh_th) THERMAL APPLICATIONS: CSP LCOE VS BAU LCOE ( ) FUEL-OIL CSP NATURAL GAS Uncertainty range MEAN LCOE CSP Lower uncertainty limit CSP LCOE Upper uncertainty limit CSP LCOE NATURAL GAS MAX NATURAL GAS MEAN NATURAL GAS MIN FUELOIL MAX FUELOIL MEAN FUELOIL MIN Fuel cost uncertainty ranges defined according to the Mean Cost Variance of the fuel during the period, defined as: Var തX = 1 n SX തX CSP cost uncertainty defined as Max CSP LCOE value +20% and Min CSP LCOE value 20% LCOE cost for auxiliary fuels only considers fuel costs (96% of total costs)

51 Difference between BAU and CSP LCOE in 2016 (USD/MWh-th) CONSUMPTION VS TEMPERATURE AND LCOE GAP (MENA COUNTRIES) Water Heating (Fuel); 43 Oil Extraction (EOR); Agriculture; 11 Mining; 6 Solar Ice; 4 Chemicals Manufacturing (Fuel); 2 Oil Refining; Natural Gas Transport Grid; 4 Water Heating (Natural Gas); 86 Solar Cooking ; 4 Desalination MED; 12 Water Tratment and Conditioning; 5 Drying; 12 Biogas Production; 6 Solar Heating and cooling; 10 Temperature (ºC) Chemicals Manufacturing (Natural Gas); 22

52 PREVIOUS EXPERIENCES Application Country Project Installed Capacity Agriculture Oil Extraction (EOR) Oil Extraction (EOR) Oil Extraction (EOR) Australia Port Augusta Greenhouse 39 MW_th USA Coalinga 29 MW_th Oman PDO Pilot 7 MW_th Oman Miraah 1 GW_th Mining Chile El Tesoro 10 MW_th - CSP Ready Technologies are the ones that present a possitive LCOE value compared to BAU with significant market potential - CSP Potential Technologies are the ones that present a possitive LCOE value compared to BAU or have a significant market potential.

53 CLASSIFICATION OF CSP THERMAL APPLICATIONS Classification of CSP thermal applications: CSP Ready - Oil Extraction - Mining - Agriculture (Greenhouses) - Fuel-oil substitution CSP Potential - Oil Refining - Water Heating (Large) - Chemicals Manufacturing (Saturated Steam) - CSP Ready Technologies present cost-competitive values (LCOE) compared to BAU and previous experiences - CSP Potential Technologies present cost-competitive values (LCOE) compared to BAU or significant market potential.

54 Thermal Power Installed (GW_th/year) Annual Investment (Billion USD/year) INVESTMENT AND POWER INSTALLED PER YEAR ( ) Solar Ice Mining (MW_th/year) Water Heating (MW_th/year) Oil Extraction (MW_th/year) Agriculture Chemicals Manufacturing (MW_th/year) Oil Refining (MW_th/year) ANNUAL INVESTMENT (Billion USD/year)

55 Annual Emission Savings (Mill Tonnes CO2/year) Aggregated Emission Savings (Mill Tonnes CO 2 ) EMISSION SAVINGS ( ) 4,000 20,000 3,500 17,500 3,000 15,000 2,500 12,500 2,000 10,000 1,500 7,500 1,000 5, , Oil Extraction (Annual) Water Heating (Annual) Chemicals Manufacturing (Annual) Agriculture (Annual) Oil Refining (Annual) Mining (Annual) Solar Ice (Annual) Aggregated Emission Savings (Total) Only period is reflected period present constant emmission savings as 2030, and decreasing during the last 13 years due to the end of the lifetime of the CSP plants.

谢谢 Any comments or ideas jservert@sta-solar.

56 谢谢 Any comments or ideas THANK YOU Merci Gracias 2017-Mar-07 13

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