CSP Solar Tower Report 2014: Cost, Performance and Thermal Storage

CSP Solar Tower Report 2014: Cost, Performance and Thermal Storage Strategically plan your commercial trajectory and optimize profitability in the increasingly internationalized solar tower market Report Highlights Include: Comprehensive Cost Data Up-to-date, industry validated cost data across the lifespan of a plant from CAPEX to OPEX in 8 global CSP markets. PPA Tariff Calculations PPA Tariff calculations by market, benchmarking emerging CSP markets against the traditional key markets and identifying viable cost reduction strategies. Trends and Development In-depth analysis of the latest technological advancements set to optimize the performance and reduce the costs of solar tower plants. For more information visit: http://csptoday.com/research/tower-index.php

Industry overview Industry Overview Solar tower technology currently accounts for 4% of the global installed CSP share, totaling at 98 MW across 7 markets. Crucially, however, the global project pipeline indicates that solar tower technology is set to play an increasingly prominent role within the CSP landscape both in terms of MW capacity share accounting for 23% of the MW capacity under construction and 38% of the MW capacity under development - and market activity - the collective reach of solar tower plants in operation, under construction and under development will permeate 14 markets. This promising growth trajectory coupled with claims that solar tower could represent CSP s most viable route towards grid-parity has meant that the eyes of the industry are increasingly focusing in on this technology. Yet, for the CSP industry, the success of the internationalization of solar tower technology alongside the growth of the technology in established markets will be highly contingent upon a greater degree of transparency surrounding market specific cost data from CAPEX to OPEX, and performance characteristics and capabilities. For CSP industry stakeholders, a greater degree of cost and performance transparency is critical to assessing market activity, strategizing commercial trajectories and optimizing profitability from the most promising of CSP technologies. Through industry-validated cost information, localized techno-economic analysis and inter-market benchmarking, this report brings unprecedented clarity on solar tower technology across eight global markets, enabling you to separate the fact from the hype. Leading companies who have purchased previous editions CSP Today Solar Tower Report 2

Key reasons Key reasons to purchase this research Critical Market Specific Cost Data: Receive the most up-to-date, industry validated cost data breakdowns from CAPEX to OPEX in defined optimal solar tower plants across 8 markets (Chile, India, Morocco, Saudi Arabia, South Africa, UAE and US). Realistic Power Purchase Agreement (PPA*) Calculations: Determine the PPA of solar tower technology by market, benchmark emerging CSP markets against the traditional key markets and identify the sensitivity features which will impact upon the PPA and to what extent. Energy Yield and Performance Output Data & Analysis: Identify and benchmark the market specific energy yield and performance characteristics, including solar field thermal output, online parasitics, net energy, total operating hours, solar-to-electricity efficiency and water consumption. The Evolution of Thermal Storage (TES): Use the global project pipelines to understand how and to what extent TES is being increasingly incorporated into solar tower plants, and gain insight into the latest R&D initatives in TES tipped to reduce cost and optimize performance. Market Share of Solar Tower Technology: Strategize your investment in and gauge your profit from solar tower by understanding the long-term market share, growth and viability of this technology, including market-by-market pipelines and key comparisons with other CSP technologies. Who needs this report Whether you are a developer investing directly in CSP plants or a Component Supplier or Service Provider who needs to assess whether to invest in new manufacturing facilities, equipment or to hire more personnel, the CSP Today Solar Tower 2014 report will provide you with the data, insights and analysis you need to fine-tune your business plans and stay ahead of your competitors. Suppliers, service providers and component providers Discover how much resource you should be committing to Solar tower technology and where you should be focussing your market activity. Understand the growth trajectory of solar tower technology and how you can be best placed to compete for component supplied and services provided. Developers This report will help you determine the ROI you expect from a solar tower plant across the markets set to dominate the CSP landscape in the near-to-mid future. CSP Today Solar Tower Report 3

contents Contents About CSP Today.................................... 3 Welcome...................................... 4 Thought Leadership................................... 5 List of Figures 8 List of Tables..................................... 11 Abbreviations.................................... 13 Definitions 14 Methodology 15 Executive Summary.................................. 17 1. Solar Tower& Thermal Energy Storage Overview 20 1.1. Solar tower technology............................. 20 1.2. Thermal energy storage............................. 21 1.3. Market Status................................ 22 1.3.1. Solar tower power plants under operation................... 25 1.3.2. Solar tower power plants under construction................. 25 1.3.3. Solar tower power plants under development 25 1.3.4. Solar tower power plants planned or announced................ 26 1.4. Thermal energy storage: market status....................... 27 1.4.1. TES market share of plants in operation..................... 28 1.4.2. TES market share of plants under construction................. 28 1.4.3. TES market share of plants under development................ 30 1.4.4. Breakdown by country of plants with TES................... 30 1.5. Industry drivers and barriers........................... 30 1.6. Technical pros and cons............................. 31 1.6.1. Technological improvements........................ 32 1.6.2. Increased supplier base.......................... 32 1.6.3. New applications 33 1.6.4. Reduced manufacturing costs....................... 33 1.6.5. New technological solutions........................ 34 2. Solar tower technology.............................. 35 2.1. Key parameters................................ 35 2.1.1. Solar resource.............................. 35 2.1.2. Water use 36 2.1.3. Land use................................ 36 2.1.4. Capacity factor 37 2.1.5. Plant efficiency............................. 37 2.2. Key components 37 2.2.1. Heliostat................................ 38 2.2.2. Receiver tower 40 2.2.3. Heat transfer fluid............................ 42 2.3. System Design................................ 43 2.3.1. Solar Tower with molten salt as HTF 44 2.3.2. Solar Tower with Direct Steam Generation (DSG) 45 2.3.1. Solar Tower-Hybrid Combined Cycle..................... 45 3. Thermal Energy Storage.............................. 46 3.1. Two-Tank Direct System............................. 46 3.2. Two-Tank Indirect System............................ 48 3.3. Single-Tank Thermocline 48 3.4. Thermal Energy Storage media.......................... 50 3.4.1. Molten salt............................... 50 CSP Today Solar Tower Report 4

contents 3.4.2. Concrete................................ 50 3.4.3. Phase-change materials.......................... 50 3.5. Value of CSP with Thermal Storage........................ 51 3.5.1. Energy and ancillary services........................ 51 3.5.2. Capacity................................ 51 3.5.3. Integration and curtailment costs...................... 51 3.6. TES in solar tower power plants.......................... 52 4. Cost and Performance Modeling........................... 54 4.1. Methodology................................. 55 4.1.1. STEP 1: Plant configuration......................... 57 4.1.2. STEP 2: CAPEX and OPEX......................... 60 4.1.3. STEP 3: Energy yield simulation....................... 62 4.1.4. STEP 4: Financial model.......................... 63 4.1.5. STEP 5: Techno-economic optimal plant configuration.............. 65 4.2. Cost and performance by market......................... 66 4.2.1. Chile................................. 66 4.2.2. India................................. 74 4.2.3. Morocco................................ 80 4.2.4. Saudi Arabia 85 4.2.5. South Africa 93 4.2.6. Spain................................ 100 4.2.7. UAE................................. 106 4.2.8. USA................................. 113 4.3. Market comparison 119 5. Trends and Developments............................. 124 5.1. Heliostat Design............................... 124 5.1.1. Manufacturing 126 5.1.2. Installation.............................. 126 5.1.3. Maintenance............................. 126 5.2. Receivers and Towers............................. 127 5.3. Power Block 129 5.4. Storage.................................. 130 5.4.1. Graphite............................... 133 5.4.2. Phase Change Materials (PCM) 133 5.4.3. Solid TES materials........................... 134 5.4.4. Nanofluids and nanoparticles....................... 135 5.4.5. Molten Salt.............................. 135 5.4.6. Saturated Steam............................ 135 5.4.7. Thermochemical storage 136 5.4.8. Ammonia and hydrogen......................... 137 5.4.9. Compressed Air Energy Storage (CAES)................... 137 5.4.10. HOTTS................................ 137 5.4.11. Predictions for TES in CSP 138 5.5. Plant Layout................................ 138 5.6. Cooling.................................. 139 6. Conclusion................................... 140 7. References................................... 142 APPENDIX A List of Solar Tower Power Plants...................... 144 APPENDIX B Chiles reference Plant CAPEX Breakdown ( )................. 148 APPENDIX C Chiles reference Plant OPEX Breakdown ( )................. 152 APPENDIX D India s reference Plant CAPEX Breakdown ( )................. 153 APPENDIX E India s reference Plant OPEX Breakdown ( ) 156 APPENDIX F Morocco s reference Plant CAPEX Breakdown ( ) 157 APPENDIX G Morocco s reference Plant OPEX Breakdown ( )................ 160 APPENDIX H Saudi Arabia s reference Plant CAPEX Breakdown ( ).............. 161 APPENDIX I Saudi Arabia s reference Plant OPEX Breakdown ( )............... 164 APPENDIX J South Africa s reference Plant CAPEX Breakdown ( ).............. 165 APPENDIX K South Africa s reference Plant OPEX Breakdown ( )............... 169 APPENDIX L Spain s reference Plant CAPEX Breakdown ( )................. 170 APPENDIX M Spain s reference Plant OPEX Breakdown ( )................. 174 APPENDIX N UAE s reference Plant CAPEX Breakdown ( )................. 175 APPENDIX O UAE s reference Plant OPEX Breakdown ( ).................. 178 APPENDIX P USA s reference Plant CAPEX Breakdown ( )................. 179 APPENDIX Q USA s reference Plant OPEX Breakdown ( ).................. 183 CSP Today Solar Tower Report 5

list of figures List of Figures Figure 1: Worldwide solar tower installed capacity...................... 22 Figure 2: Market share of CSP plants under operation worldwide in MW terms........... 23 Figure 3: Market share of CSP technologies under construction worldwide in MW terms 23 Figure 4: Market share of CSP technologies under development worldwide in MW terms....... 23 Figure 5: Solar tower power plants under operation in various countries of the world as % of installed capacity in MW................................ 25 Figure 6: Industry applications of operating solar tower power plants (number of plants)....... 25 Figure 7: Industry application share of operating solar tower power plants (MWs installed) 26 Figure 8: Solar tower power plants under construction as % of total MW under construction..... 26 Figure 9: Solar tower power plants under development as % of total MW under development..... 26 Figure 10: Solar tower power plants planned or announced as % of total MW in pipeline....... 27 Figure 11: Operating solar tower power plants with and without TES as % of total installed capacity... 28 Figure 12: Operating solar tower power plant share with and without TES 28 Figure 13: Share of solar tower power plants under construction with and without TES as % of total installed capacity.................................. 29 Figure 14: Share of solar tower power plants under construction with and without TES 29 Figure 15: Share of solar tower power plants under development with and without TES........ 29 Figure 16: Share of solar tower power plants under development with and without TES as % of total installed capacity.......................... 29 Figure 17: Share of solar tower power plants planned or announced with and without TES as % of installed capacity.................................. 30 Figure 18: Share of solar tower power plants planned or announced with and without TES....... 30 Figure 19: Future Applications of CSP 33 Figure 20: Annual DNI (kwh/m 2 /annum) around the world................... 36 Figure 21: Back face of Solar One heliostat 38 Figure 22: Surround-field configuration of Gemasolar heliostat array............... 39 Figure 23: North-field configuration of PS10 and PS20 heliostat arrays............... 39 Figure 24: Heliostat field biomimetic and radial-stagger layouts................. 40 Figure 25: Solar One central external-type receiver...................... 41 Figure 26: Cavity-type receiver with four apertures (Battleson, 1981) 41 Figure 27: Examples of direct steam (esolar, Brightsource on the left and center) and molten salt (Sandia National Laboratories on the right) receivers.................... 42 Figure 28: Volumetric and tubular receivers (Abengoa, 2012) 42 Figure 29: Steam turbine solar tower employing molten salt as HTF and storage medium....... 44 Figure 30: Steam turbine solar tower using steam as HTF.................... 44 Figure 31: Solar tower-hybrid combined cycle using air as HTM................. 45 Figure 32: Schematic of parabolic trough plant with a two-tank direct TES system.......... 47 Figure 33: Schematic of parabolic trough CSP plant with a two-tank indirect TES system........ 48 Figure 34: Thermocline test at Sandia National Laboratories 49 Figure 35: Methodology to determine the PPA of the optimal solar tower power plant configuration... 56 Figure 36: Example of the optimization process 66 CSP Today Solar Tower Report 6

list of figures Figure 37: Chile s plant optimization............................ 68 Figure 38: Chiles optimal plant PPA............................ 71 Figure 39: Chile s CAPEX and OPEX sensitivity........................ 72 Figure 40: Chile s CAPEX structure sensitivity........................ 72 Figure 41: Chile s EPC cost sensitivity........................... 73 Figure 42: Chile s component cost sensitivity........................ 73 Figure 43: India s plant optimization............................ 76 Figure 44: India s optimal plant PPA............................ 78 Figure 45: India s CAPEX and OPEX sensitivity........................ 78 Figure 46: India s CAPEX structure sensitivity........................ 79 Figure 47: India s EPC cost sensitivity........................... 79 Figure 48: India s component cost sensitivity........................ 80 Figure 49: Morocco s plant optimization 82 Figure 50: Morocco s optimal plant PPA.......................... 84 Figure 51: Morocco s CAPEX and OPEX sensitivity....................... 85 Figure 52: Morocco s CAPEX structure sensitivity....................... 86 Figure 53: Morocco s EPC cost sensitivity.......................... 86 Figure 54: Morocco s component cost sensitivity....................... 86 Figure 55: Saudi Arabia s plant optimization......................... 89 Figure 56: Saudi Arabia s optimal plant PPA......................... 91 Figure 57: Saudi Arabia s CAPEX and OPEX sensitivity..................... 91 Figure 58: Saudi Arabia s CAPEX structure sensitivity..................... 92 Figure 59: Saudi Arabia s EPC cost sensitivity........................ 92 Figure 60: Saudi Arabia s component cost sensitivity..................... 93 Figure 61: South Africa s plant optimization......................... 95 Figure 62: South Africa s optimal plant PPA......................... 98 Figure 63: South Africa s CAPEX and OPEX sensitivity 98 Figure 64: South Africa s CAPEX structure sensitivity...................... 99 Figure 65: South Africa s EPC cost sensitivity......................... 99 Figure 66: South Africa s component cost sensitivity...................... 99 Figure 67: Spain s plant optimization........................... 102 Figure 68: Spain s optimal plant PPA........................... 104 Figure 69: Spain s CAPEX and OPEX sensitivity....................... 104 Figure 70: Spain s CAPEX structure sensitivity 105 Figure 71: Spain s EPC cost sensitivity 105 Figure 72: Spain s component cost sensitivity 106 Figure 73: UAE s plant optimization........................... 108 Figure 74: UAE s optimal plant PPA 110 Figure 75: UAE s CAPEX and OPEX sensitivity........................ 111 Figure 76: UAE s CAPEX structure sensitivity........................ 111 Figure 77: UAE s EPC cost sensitivity........................... 112 Figure 78: UAE s component cost sensitivity........................ 112 CSP Today Solar Tower Report 7

list of figures Figure 79: USA s plant optimization........................... 114 Figure 80: USA s optimal plant PPA 117 Figure 81: USA s CAPEX and OPEX sensitivity........................ 117 Figure 82: USA s CAPEX structure sensitivity........................ 118 Figure 83: USA s EPC cost sensitivity........................... 118 Figure 84: USA s component cost sensitivity........................ 118 Figure 85: PPA market comparison 122 Figure 86: PPA escalation impact............................ 122 Figure 87: Maturity of renewable energy technologies.................... 124 Figure 88: The concept of low-cost heliostat design..................... 125 Figure 89: Production losses due to U-tube........................ 127 Figure 90: Receiver for Supercritical Carbon Dioxide Cycles.................. 128 Figure 91: Carnot Efficiency of Various Power Cycle..................... 130 Figure 92: Possible CSP Thermal Energy Storage Technologies................. 131 Figure 93: Curtailment of PV due to Lack of Grid Flexibility.................. 132 Figure 94: 15% PV Contribution and 10% Dispatchable CSP.................. 132 Figure 95: Alright Energy plant featuring packed-rocks TES.................. 134 Figure 96: Thermochemical Energy Storage for CSP Application................ 136 CSP Today Solar Tower Report 8

list of tables List of Tables Table 1: CSP Plant Capacity In Operation, Under Construction and Under Development According to Technology Employed as of Q2-2012 23 Table 2: Solar Tower Industry Present and Future Capacity (MW)................ 24 Table 3: Overview of solar tower power plants with and without TES. 28 Table 4: List of plants in different countries with TES..................... 30 Table 5: List of capacity of TES used in solar tower power plants based on market and project status... 31 Table 6: Solar Tower Pros and Cons........................... 34 Table 7: Solar Tower Performance Indicators........................ 35 Table 8: Renewable and Conventional Power Metrics Overview (CSP Today PT Cost and Performance Report)................................... 37 Table 9: Overview of Solar Tower Technology and Providers.................. 43 Table 10: Value of CSP with TES............................. 51 Table 11: DNI for all the markets............................. 58 Table 12. Reference Plants Technical Parameters....................... 58 Table 13: Local labor cost in EUR............................. 59 Table 14: Local manufacturing cost in EUR......................... 59 Table 15: Financing conditions in each market....................... 60 Table 16: CAPEX Breakdown Structure.......................... 61 Table 17: OPEX Breakdown Structure........................... 62 Table 18: Plant characteristics common in all the markets analyzed............... 67 Table 19: Chile s country overview............................ 68 Table 20: Chiles optimal plant configuration........................ 68 Table 21: Chiles optimal plant energy yield......................... 69 Table 22: Chiles optimal plant annual performance..................... 70 Table 23: Chiles optimal plant CAPEX........................... 70 Table 24. Chiles optimal plant OPEX 71 Table 25: Chile s loan conditions sensitivity (PPA tariff reduction)................ 74 Table 26: India s country overview............................ 74 Table 27: India s optimal plant configuration........................ 75 Table 28: India s optimal plant energy yield......................... 76 Table 29: India s optimal plant annual performance..................... 76 Table 30: India s optimal plant CAPEX........................... 77 Table 31: India s optimal plant OPEX 77 Table 32: India s loan conditions sensitivity (PPA tariff reduction)................ 80 Table 33: Morocco s country overview........................... 80 Table 34: Morocco s optimal plant configuration....................... 81 Table 35: Morocco s optimal plant energy yield....................... 82 Table 36: Morocco s optimal plant annual performance.................... 83 Table 37: Morocco s optimal plant CAPEX......................... 83 CSP Today Solar Tower Report 9

list of tables Table 38: Morocco s optimal plant OPEX.......................... 84 Table 40: Morocco s loan conditions sensitivity (PPA tariff reduction)............... 87 Table 41: Saudi Arabia s country overview......................... 87 Table 42: Saudi Arabia s optimal plant configuration 88 Table 43: Saudi Arabia s optimal plant energy yield...................... 89 Table 44: Saudi Arabia s optimal plant annual performance.................. 89 Table 45: Saudi Arabia s optimal plant CAPEX........................ 90 Table 46. Saudi Arabia s optimal plant OPEX 90 Table 47: Saudi Arabia s loan conditions sensitivity (PPA tariff reduction)............. 93 Table 48: South Africa s country overview 94 Table 49: South Africa s optimal plant configuration 94 Table 50: South Africa s optimal plant energy yield...................... 96 Table 51: South Africa s optimal plant annual performance................... 96 Table 52: South Africa s optimal plant CAPEX........................ 97 Table 53. South Africa s optimal plant OPEX........................ 97 Table 54: South Africa s loan conditions sensitivity (PPA tariff reduction)............. 100 Table 55: Spain s country overview........................... 100 Table 56: Spain s optimal plant configuration....................... 100 Table 57: Spain s optimal plant energy yield........................ 102 Table 58: Spain s optimal plant annual performance 102 Table 59: Spain s optimal plant CAPEX.......................... 103 Table 60. Spain s optimal plant OPEX.......................... 104 Table 61: Spain s loan conditions sensitivity (PPA tariff reduction) 106 Table 62: UAE s country overview............................ 106 Table 63: UAE s optimal plant configuration........................ 107 Table 64: UAE s optimal plant energy yield........................ 108 Table 65: UAE s optimal plant annual performance..................... 109 Table 66: UAE s optimal plant CAPEX 109 Table 67. UAE s optimal plant OPEX........................... 110 Table 68: UAE s loan conditions sensitivity (PPA tariff reduction)................ 112 Table 69: USA s country overview............................ 113 Table 70: USA s optimal plant configuration........................ 113 Table 71: USA s optimal plant energy yield........................ 115 Table 72: USA s optimal plant annual performance..................... 115 Table 73: USA s optimal plant CAPEX 116 Table 74. USA s optimal plant OPEX........................... 116 Table 75: USA s loan conditions sensitivity (PPA tariff reduction)................ 119 Table 76: Summary of performance results for all markets.................. 120 Table 77: Summary of economic results for all markets 121 Table 78: Molten Salt Multi-Component Systems...................... 135 CSP Today Solar Tower Report 10

methodology Methodology CSP Today s Solar Tower Report 2014: Cost, Performance and Thermal Storage responds to the most critical needs of the CSP industry, representing 5 months of research (primary and secondary) and culminating in over 200 pages of high-quality data and analysis, 96 figures and 78 tables. Industry Research: Identifying gaps in knowledge, defining focus and refining content At the crux of CSP Today s research process are the 25+ in-depth industry interviews conducted with a cross-section of industry executives to identify: Key industry trends Challenges and opportunities currently facing the industry Significant information gaps The precise data and analysis required by companies to optimize success in CSP technology In March 2013 the CSP Today Markets and Technology Survey was completed by 306 industry stakeholders. The information needs outlined by the survey respondents were collated with the in-depth interview findings, ensuring that the focus and scope of the Solar Tower Report 2014 reflects and answers to the most critical business needs of the CSP industry at this juncture. figures on the changing market size and share of solar tower technology, the internationalization of solar tower as played out in the global project pipelines, and the growing reach of thermal storage. Cost Validation Exercise: The cost data presented within this report originate from an in-house database containing the most up-to-date and accurate figures on over 120 CAPEX and OPEX price points as shared and verified by industry stakeholders (including developers, suppliers, service providers, financiers, EPCs and industry experts) between April and June 2013. Localized Cost Data: In order to account for the market specific costs associated with building and operating a CSP solar tower plant, localized cost data were sourced for the 8 markets analyzed in the report, including local wage rates from plant manager to mirror cleaner, the cost of steel per ton, and the Expected Equity IRR. Report Production Methodological Approaches The methodological approaches adopted over the course of this report have been framed by the pursuit to meet the information needs outlined in the original 25+ in-depth industry interviews and 300+ survey responses. Quantitative Analysis: Market and Project Data: Over 7800 pieces of the latest, industry verified markets and project data extracted from the CSP Today Global Tracker to provide the most comprehensive and digestible facts and CSP Today Solar Tower Report 11

methodology Cost and Performance Modeling: Understanding the working principles of solar tower technology in terms of cost structure, component breakdown and overall plant performance is critical to identifying the areas that offer the greatest room for the cost and performance improvements needed to secure the industry s long-term success. The National Renewable Energy Laboratory s proprietary System Advisor Model (SAM) in combination with a complex technoeconomic optimization tool developed in-house have been used to conduct a cost and performance study to determine the current PPA Tariff LCOE of solar tower plants in today s market conjuncture, and the opportunities that exist for further reducing the LCOE and securing lowest PPA. Qualitative Analysis: Industry interviews and case studies: Interviews with the leading thermal storage and heat transfer companies providing unique insights into the potential and commercial status of the latest research endeavors tipped to reduce the cost and optimize performance of solar tower technology. Secondary Sources: Additional analysis includes secondary research conducted by our expert analysts. A comprehensive review of industry and academic journals, conference presentations, online publications, news articles, government policy documents, company press releases, and proprietary literature and materials providing a strong foundation from which to contextualize the report findings and highlight points of corroboration and departure. Where applicable, all secondary research resources are appropriately cited within the report. Expert Analysis: This report has been researched and written by a team of highly-qualified and impartial industry experts ensuring that only the highest quality, most relevant and digestible analysis is published. CSP Today Solar Tower Report 12

The below extract is taken from Chapter 4 of the Solar Tower Report. Focusing on the South African market, this section provides results and analysis based upon over 500 simulations performed to determine and define the optimal techno-economic configuration of a solar tower plant based in South Africa. Zooming in on energy yield results and economic results, data results on optimal plant annual performance are detailed. Not covered in this section but provided in the full report is additional information on South Africa s CAPEX and OPEX cost breakdown, optimal plant PPA, as well as information on the impact of CAPEX and OPEX on South Africa s PPA, EPC cost sensitivity, component sensitivity and loan conditions analysis. 4.2.5. South Africa An exceptional solar resource and the current government support for and interest in renewable energy technologies in South Africa make it one of the best places worldwide for developing CSP projects. Northern Cape Province experiences irradiation levels exceeding 2,900 kwh/m 2 /year, which are among the highest levels of DNI worldwide. 4.2.5.1. Optimal plant configuration Table 49 shows the characteristics of the optimal plant configuration found for South Africa as a result of the techno-economic optimization process performed for the reference plant. Table 48: South Africa s country overview Solar Resource Population Source: CSP Today 2013 2800 kwh/m 2 year 50.5 million GDP per capita USD 10,973 Installed power capacity Annual electricity consumption 44.1 GW 240.5 TWh Expected annual electricity demand 375 TWh by 2020 Targets 1200MW GW of CSP by 2020 As can be seen in Figure 61, a range of 3500-4000 heliostats was identified as the optimal configuration for the reference plant, with 55MW gross and 3 hours of storage. Due to the excellent solar resource found in South Africa, smaller fields are required compared with other CSP locations. 4.2.5.2. Energy yield results The performance results for the optimal plant configuration found for South Africa (55 MW gross with 4 hours of TES, dry cooling and 3789 heliostats) are shown in Table 49 and Table 50. 4.2.5.3. Economic results Table 51 shows the CAPEX estimation for the optimal plant where a total investment of 232 million EUR was estimated, which represents 4.21 EUR/Wgross (3.47 EUR/Wgross for the EPC cost). Solar field and TES system represent the main expense, accounting for 21 and 4.1% of the total CAPEX respectively. OPEX estimation is shown in Table 52, where a total of 3.06 million EUR was calculated (EUR cent 1.6/kWh generated). The complete cost breakdowns can be found in APPENDIX J and APPENDIX K. As a result of the techno-economic optimization, a PPA tariff of EUR cent 17.47/kWh indexed with inflation (6% annual escalation) was found for a nominal equity IRR target of 16.5% and EUR cent 25.58/kWh in case of no escalation. Figure 62 illustrates a detailed component-wise PPA breakdown where it can be seen that financing cost (includes both financing cost during construction and loan interest payment during operation) even above EPC cost. This is due to the quite demanding financing conditions found in South Africa so far. The net present value (NPV) of each of the expenses incurred during the project s lifetime was calculated in order to derive the PPA breakdown. By doing so, the impact of the different expenses in the PPA was calculated. CSP Today Solar Tower Report 13

Table 49: South Africa s optimal plant configuration Item Value Unit METEOROLOGICAL CONDITIONS Accumulated annual DNI 2,760 kwh/m 2 /year Average ambient temperature 19.8 C Average wind speed 3.7 m/s SOLAR FIELD Number of heliostats 3789 - Mirror area 435,735 m 2 RECEIVER/TOWER Receiver height 14.61 m Receiver diameter 8.9 m Receiver thermal power 241.1 MW th Tower height 150 m TES Equivalent hours 3 hours Energy capacity 405.9 MWh th Molten salts mass 5854.7 tons Number of tanks 2 (1 cold + 1 hot) - Tank diameter 22.05 m Tank height 7.72 m Number of pumps 3 in each hot tank and 3 in each cold tank - HTF-molten salt HEXs thermal power 301.6 MWth POWER BLOCK Gross power 55 MWe Net power 50 MWe Turbine nominal efficiency 41.06% - Max turbine load 100% - Min turbine load 10% - Cooling system Dry - Auxiliary fuel boiler 1 5 MWth GENERAL Land requirement 243 Ha Construction period 28 months 1) Auxiliary fuel is only use for safety operation purposes and to speed up daily plant start-up. Therefore, auxiliary fuel is not used for electricity generation purposes Source: CSP Today 2013 CSP Today Solar Tower Report 14

Figure 61: South Africa s plant optimization 21.0 PPA (EUR cent/kwh) 20.5 20.0 19.5 19.0 18.5 18.0 17.5 17.0 2000 2500 3000 3500 4000 4500 5000 5500 6000 Number of heliostats Source: CSP Today 2013 4.2.5.4. Sensitivity analysis on cost data To gain a greater understanding of the impact of different cost items in the PPA tariff, a set of sensitivity analyses of the reference plant were performed by varying the main cost expenses of the project. The results derived from these analyses provide an insight into the potential PPA tariff reduction that could be achieved, identifying those items with the highest impact where the industry should focus its efforts. Optimal configuration Due to the complex methodology followed in this report, an optimal plant configuration was determined regressively for each case studied in the sensitivity analysis, guaranteeing that the plant configuration with the lowest PPA tariff is always selected, as would be the case in a real life project. First, the impact of CAPEX and OPEX was evaluated. As expected, CAPEX was identified as the expense with Table 50: South Africa s optimal plant energy yield Energy flow GWh/Year Incident solar energy 1,178.5 Solar field thermal output 500.4 Thermal energy to TES 109.4 Total thermal energy to power block (TES+ solar field) 497.6 Gross energy 199.6 Online parasitics 17.9 (10.5% of gross) Net energy 181.8 Offline parasitics 1 Offline parasitics 3.3 Source: CSP Today 2013 CSP Today Solar Tower Report 15

Table 51: South Africa s optimal plant annual performance Source: CSP Today 2013 Annual performance Total operating hours 3,971 Equivalent full-load hours 3,305 Capacity factor 37.2% Solar-to-electricity efficiency 15.42% highest weight in order to reduce the PPA tariff. It offers almost a linear relationship where 30% reduction in CAPEX is translated into 27.0% reduction in PPA tariff. Once CAPEX was identified as the cost item with the Table 52: South Africa s optimal plant CAPEX largest potential for PPA tariff reduction, a second level of analysis was performed in order to study the impact of the CAPEX structured. To do so, three different analyses were performed, each of them at a further level of detail, going from the main overall CAPEX expenses (EPC cost, developer cost and financing cost) to the component cost level (mirror, heliostat structure, molten salts fluid, etc.). With a 37% contribution in the PPA tariff, financing cost offers the greatest room for cost reduction, followed quite closely by EPC cost. Within the latter, solar field is the component with the highest impact, where a 30% cost reduction would be translated into a 8.2% PPA tariff reduction. Looking at the component level, heliostat structure and tracking system are the items with the largest impact EUR % EPC cost 191,271,814 82.4% Procurement and construction 159,979,861 68.9% Civil works 20,641,467 8.9% Solar field 48,667,834 21.0% Power block island 31,333,965 13.5% BOP 4,884,162 2.1% Solar Receiver & Steam Generator 28,947,233 12.5% TES 9,621,596 4.1% Electric installation 7,432,677 3.2% DCS 2,372,976 1.0% Miscellaneous 6,077,951 2.6% Engineering (including EPC margin) 31,291,954 13.5% Developer cost 14,024,195 6.0% Financing cost 26,800,219 11.5% TOTAL CAPEX 232,096,229 100.0% Source: CSP Today 2013 CSP Today Solar Tower Report 16

Table 53: South Africa s optimal plant OPEX EUR % Labor cost 843,500 27.5% Utilities 219,425 7.2% Electricity 111,320 3.6% Backup fuel 28,263 0.9% Water 79,842 2.6% Service contracts 199,827 6.5% Materials & maintenance 642,434 21.0% Insurance 1,160,481 37.9% TOTAL OPEX 3,065,666 100.0% Source: CSP Today 2013 in the PPA tariff, and just a 30% reduction in these two by varying both the debt fraction and the loan interest components would lead to around 3% reduction in the maintaining a constant loan term of 14 years. Interest PPA tariff. during construction was not modified for this analysis, although it is expected that it would change in line with Since financing cost was identified as the largest the loan interests. Therefore, further PPA tariff reduction contributor to the PPA tariff even before EPC cost, a could be expected due to lower interest during sensitivity analysis on the project loan was performed construction. Figure 62: South Africa s optimal plant PPA 30 25 3% 10% 1% EUR cent/kwh 20 15 3% 10% 2% 13% 36% 12% n Developer cost n Equity returns n OPEX n Tax n EPC cost n Financing cost 10 35% 5 38% 37% 0 PPA indexed with inflation Source: CSP Today 2013 PPA w/o escalation CSP Today Solar Tower Report 17

About CSP Today About CSP Today CSP Today is the reference point for CSP professionals and a cornerstone for communications within the industry. We have been a leading provider in this global market for the past 6 years. We provide the industry with focused news, events, online up-to-the minute data, analysis, reports, updates and information for the Concentrated Solar Thermal Power industry. CSP Today s mission is to be the hub of the CSP community enabling dialogue throughout the industry ad driving CSP forwards and to provide its clients with the most accurate and timely project and plant intelligence, based on the highest quality research. CSP Today experts are on the phone everyday collecting and verifying global industry data and information direct from EPC s, developers, suppliers, utilities and government bodies for you to have at your fingertips. Order your report in less than 60 seconds Just fill in this form and access the information and analysis you need to develop your knowledge of solar tower technology across 8 key global markets Pages: 200+ Price: $3195 (standard price) Price: $2195 (launch price) Launch price expires 4thOctober 2013 after which, $3195 Four ways to order: http://csptoday.com/research/tower-index. php Scan and email this form back to: bea@csptoday.com Or fax: +44 (0)870 238 7255 First name Last name: Company Telephone: Email: Address: Max Crompton, Account Manager, Business Development, +44 (0) 20 73757156 Payment details: City Name (as it appears on card): Zip/Postcode Card Number: Report Name Type of card: Expiry date: Security Code: Quantity Order your copy today at: http://csptoday.com/research/tower-index.php CSP Today Solar Tower Report 18

Thought leadership Thought Leadership CSP Today s Business Intelligence Portfolio: CSP Today Global Tracker Access current CSP market, policy, and project and supplier data at your fingertips. CSP plants at every single stage across the globe Announced, planning, development, construction, commissioned and in operation In-depth CSP plant data Access all the plants details including technology choice, technical specification, stakeholders, suppliers, incentives and finance Country by country policy - Understand each CSP market with data on market size, policies & incentives, energy market structure and up to date information on EPCs and developers operating in the market Global CSP supplier list The most comprehensive component supplier list serving every part of a CSP plant from heliostats to pumps and valves CSP Today Quarterly Update The CSP Today Quarterly Update serves as a companion to the Global Tracker, highlighting major trends in the industry and collating information making it easily available for you to read at a glance. Previous editions have looked at: The movement of Spanish companies abroad and the value of emerging markets The potential of hybrid CSP systems and forms of off-grid applications such as enhanced oil recovery, direct steam generation and desalination Revenue opportunities for CSP CSP Markets Report 2014 This 200+ page report draws on the experience of local experts from major markets and focuses on the in-depth analysis of major CSP markets including detailed explanations of: CSP project pipelines Local CSP Ecosystems Government policies and frameworks Supportive local infrastructure for CSP Major financing groups, developers, suppliers and consultants active in each market Markets forecast and scorecard http://csptoday.com/research/tower-index.php CSP Today Solar Tower Report 19