ABENGOA SOLAR Solar Power for a Sustainable World

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1 SOLAR Why Does It Take So Long to Build a Concentrating Solar Power (CSP) Plant? Dr. Fred Morse Senior Advisor, US Operations Abengoa Solar

2 Why CSP and why now? Necessity the utilities other options (coal, nuclear or NG) have significant long term risks Uniqueness of thermal energy storage Public opinion favors solar Favorable but still unreliable policies, such as the RPS and the ITC (both of which are essential) 2

3 Power Plants are Big Power plants need to be large to realize economics of scale. The most economical CSP plants are about MW about ½ the size of a coal power plant These CSP plants are capable of meeting the energy needs of about 100,000 homes Big things take a lot of time to build. Big things cost a lot of money and the lenders ask a lot of questions and that takes time Let s run thru a real example the recently announced Solana 280 MW CSP plant in Arizona 3

4 Solana Generating Station The plant will cost over $1 billion The Solar Field will cover 3 square miles This will require as much steel as for a second Golden Gate bridge Plant footprint is large, but profile is low (3 story building) 4

5 150 MW SEGS Plant 5

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7 The buyer of the electricity A utility company is the buyer of the electricity from CSP plants Step 1 is to have a site for a proposed CSP plant Need to find and buy a good site good solar, flat, near transmission, water available and usable Need about 1 square mile for 100 MW So for MW need 2-3 square miles 7

8 Project Location Site Location: The Solana site is located west of Gila Bend, AZ, approximately 110 km (~68 miles) southwest of Phoenix. Insolation is 7.21 kwh/m 2 /day. 8

9 Solana Property Satellite View Satellite view of the Solana site illustrates the previously disturbed, agricultural use of the land. The property has been actively farmed for decades, and Solana s water requirements for plant cooling will require only 1/4 th of the current agricultural use. 9

10 Are you sure? Before you buy a site you need to make sure it can be used for CSP No environmental or cultural or other show-stoppers Takes about 3 months If all is OK, you buy the land. Now you are ready to propose a CSP plant to a buyer a utility company 10

11 Attributes of CSP in the eyes of utilities Utilities are familiar with steam generation Suitability for utility scale installations of 100MW or more Stable, known and decreasing costs and zero carbon emissions provide hedge against NG price volatility and carbon caps Other generation options have significant risks Ability to provide firm dispatchable output which is of great value to utilities 11

12 Summer Generation Profile Renewable Resource Fit (from Barbara Lockwood, APS) Solar w/storage Solar M W Wind? Biomass, Geothermal Hour of the Day 12

13 Flow Diagram HTF-Salt Heat Exchanger 13

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15 Flow Diagram HTF-Salt Heat Exchanger 15

16 Thermal Energy Storage Like using a thermos to store hot coffee for the evening. Need one tank to store the hot fluid and one to store the used fluid 16

17 Dispatch Profile Generation from solar plant with storage can be shifted to match the utility system load profile Summer Winter 1.8 Solar Plant With Storage vs. Utility System Load July Solar Plant With Storage vs. Utility System Load January Utility Load, Trough Plant Output Solar Resource (W/m2) Utility Load, Trough Plant Output Solar Resource (W/m2) Hour Ending Hour Ending 0 Relative Value of Generation Trough Plant w/6hrs TES Solar Radiation Relative Value of Generation Trough Plant w/6hrs TES Solar Radiation 17

18 Flow Diagram HTF-Salt Heat Exchanger 18

19 Water Usage Same as any conventional steam power plant Can be reduced by 90% with dry cooling but performance will suffer and price will increase by about 10% l 19

20 Make a deal with the utility company The utility will have to agree to buy all of the electricity this plant produces for 30 years. As this will cost a few billion dollars, the agreement to buy this energy takes about 6 months to negotiate This is in addition to the 6 months for the utility to request bids and select one to negotiate with Year 1 is now gone but you have a buyer and a site. What next? 20

21 Approvals The contract (price and terms) must be OK d by the Regulators 6 months The billion dollar deal must be OK d by the banks and investors 6 months Year 2 is now gone but you have the money needed to build the plant Next comes permitting, connecting, designing, procuring and building the plant This will take about 4 more years and a lot of money (a few million dollars) 21

22 Schedule at a Glance Development & Permitting 24 months Engineering & Procurement 48 months Construction & Start-Up OCOD months 22

23 Can I build it here and hook it to the grid? Approval to build (Permitting) comes next Approval to feed the power onto the grid (safely) comes during the same time. This takes about 2 years 23

24 Key Construction Permits 24

25 Transmission Corridor Study Area Right-of-Way (ROW) discussions are must be held with landowners along proposed transmission routes. 25

26 Transmission Design Considerations APS Double Circuit 230kV Transmission Structure with 69kV Underbuild Typical Lattice Double Circuit 230kV Transmission Structure with no Underbuild 26

27 Engineering and Procurement To build a new house you need drawings to guide the builder and to know what is to be purchased Same for our billion dollar power plant But will need thousands of drawings It will take about 4 years to complete this, and usually overlaps with Permitting if willing to take some risk (Sorry, can t build it here!) and with construction. So this time will not be added to the total 27

28 Construction A massive amount of stuff must be brought to the site, assembled and erected This will require about 2.5 to 3 years after Permitting is done. This is what we need to build 28

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31 So how many years? Agreement 1 year after site secured Approval and financing 2nd year OK to build and connect 4 th year Build the plant and start-up 6 th year (maybe 5th if willing to take some risks) Add another year (year 7 )to cover normal delays (a transformer blows during start-up) 31

32 Current Policies Relevant to CSP Federal 30% Investment Tax Credit needs to be extended until 2016 or redefined; if not CSP projects will be delayed Accelerated depreciation DOE R&D budget needs to be adequate to support the CSP industry in a period of rapid market growth States RPS and carbon legislation will create a large market for CSP Property and sales tax exemptions are essential Land access and transmission policies are needed 32

33 RPS and ITC must both be present Incentive + Compelling Event = Market Change ITC RPS Credible CSP CSP Providers Competitive LEC LEC Green Mandate Favorable Regulatory Frameworks, Cost Cost Recovery Mechanisms Affordable, Reliable, Clean Clean Electricity Utility + Utility Appetite for for New = New Clean Clean Electricity Market ITC + RPS = CSP 33

34 Why 1 year is useless 30% ITC must be available to get financing (to make the numbers work) 30% ITC must also be available when the comes on line (is working) Those two events are 4 5 years apart So 5 one year extensions are all useless because that fail to cover this essential period Developers need to build a series of plants to bring the cost into the competitive range, hence the need for (at least) an 8 year extension 34

35 So? CSP can scale up to make a major contribution to greenhouse gas reductions The ITC is needed to make the numbers work and to make the RPS work The ITC must be available for 8 more years to cover the long time needed to build a plant and to build enough plants to make them competitive Both the Senate and House passed an 8 year ITC extension but the disagreement is over if and how to off set that revenue loss. Please don t let that prevent America from developing its huge solar energy resources, prevent billions of investment money to pour into the SW and to create tens of thousands of new jobs. Ask your Senator to support the passage of this vital tax policy. 35

36 Contact Information Fred Morse Senior Advisor, US Operations, Abengoa Solar and Chairman, CSP Division, SEIA 236 Massachusetts Avenue, NW, Suite 605 Washington, DC Tel: