ARENA’s investment focus is on supporting solar thermal activities:
- from research and development through to demonstration of small-scale to mid-scale facilities, including balance of plant such as storage and turbines, particularly with high potential to drive down the cost of solar thermal deployment
- involving pilot or demonstration projects for industrial process applications.
This assessment is based on ARENA’s in-house analysis and knowledge of its funded projects. ARENA intends to review the solar thermal investment focus area in more detail in future.
Likely scale and potential for growth by 2030-40
Concentrating solar thermal (CST) with storage has the potential to deliver dispatchable energy that could offer advantages for grid constrained areas and at times of peak electricity prices. However CST projects are not currently commercially competitive with other renewable energy technologies.
In the medium term (by 2025) it is expected CST will become a more viable option for power generation, as it has proven storage systems and is able to offer dispatchable energy on demand.
CST also has applications beyond energy generation:
- Solar thermal is a potential source of heat for industrial uses, competing with other fuels such as gas, coal and electricity. The potential in this area is discussed in the ‘renewables for industrial processes’ investment focus area.
- There is a potential market for small-scale rooftop CST for both power generation and solar heating/cooling, which reduces fossil fuel demand. This is primarily able to be utilised on larger roofs such as shopping centres, hospitals, industrial warehouses and commercial premises.
- CST can be used to produce solar fuels. Many different technologies can be used to convert concentrated solar energy into syngas (a mixture of hydrogen and carbon monoxide), and then Fischer-Tropsch or other commercial processes can be used to convert the syngas into established and novel transport fuels such as methane.
With the current excess of capacity in the National Electricity Market (NEM), the economics of supply and demand show there is limited potential for large-scale (>50MW) CST projects to be developed in the short term. The most likely development path for CST under a flat demand scenario remains with smaller-scale off-grid and fringe-of-grid power plants from 5-50MW, as well as industrial process heat applications.
ARENA expects a similar development path under a ‘high renewables take-up’ scenario, as it would be some time before the value from dispatchability overcame the higher LCOE compared to wind and solar PV.
Globally, CST is a proven technology that is commercially viable without funding support only in niche markets. Most globally-deployed CST has funding support through capital grants, tax incentives or government-funded feed in tariffs. The Australian market is currently not a financially viable option for large-scale CST plants without similar funding support.
There are diverse technical approaches to CST (such as mirror configurations, thermal fluids and storage mechanisms) that offer the potential for further technology innovation and cost reduction.
ARENA has a significant opportunity to drive the development of CST in Australia by providing funding support for research and development as well as for individual high-merit projects. ARENA investment can help to reduce both system and component costs (thus lowering LCOE) and also provide demonstration value for small-scale pilot or supported commercial projects, thus lowering perceived technology risk.
Research and development also has the potential to improve competitiveness for high temperature applications of solar thermal in industrial processes. While technical approaches are available, work would be needed to reduce the cost.
Gap in ARENA portfolio
ARENA estimates that its current research and development portfolio will be sufficient to reduce the cost and improve the performance of big tower systems. This is the major focus of existing funding through the Australian Solar Thermal Research Initiative (ASTRI).
In addition, ARENA’s 2015 competitive research and development round sought proposals involving the industrial application of renewables. This area will be revisited in light of any successful project applications.
To date, ARENA has not considered the potential for solar fuels, or ARENA influence in the development of this technology, but will do so in future in light of relevant projects that are successful in the 2015 competitive research and development round.
There may also be potential benefit from industry-led pilot or demonstration projects that solve specific technical limitations of CST systems or to drive down the costs of smaller-scale systems in the Australian context.
Pilot-scale or pre-commercial projects that are either grid-connected or directly supporting process heat applications are an opportunity to provide demonstration value within an Australian context. However these projects would need to have a strong knowledge sharing component or the potential for a significant advance in technology readiness or commercial readiness to justify ARENA funding.