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Jun 18, 2010

Eskom hopes to complete concentrating solar power project by 2014

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Construction|Engineering|Africa|CoAL|Design|Eskom|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Sustainable|The International Bank|Water|Africa|South Africa|USD|CSTP Plant|Medupi Power Station|MW CSTP Plant|Applicable Technology|Bank|Building|Chosen Site|Cleaner Technologies|Energy|Maintenance|Power Generation|Power-generation|Solutions|Technology|Technology Assessment|Technology Strategy|Well-informed Buyer|Environmental|Barry MacColl|Power|Water|Operations|Heat Transfer
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As power utility Eskom continues working to ensure the lights are kept on and new coal-fired power stations are built, the company also continues to progress with work on its first concentrating solar thermal power (CSTP) plant, and has identified a site near Upington, completed an environmental-impact assessment and received the record of decision for it.

The ambition is to have the CSTP plant completed by the end of 2014.

The World Bank is currently appointing an independent technical review panel to conduct a technology assessment, which will start in July and is expected to be completed by November, to determine the most applicable technology for South Africa.

The scope of the technology assessment would need to be appropriate for the chosen site.

Eskom technology strategy and planning manager Barry MacColl tells Engineering News that, based on the utility’s own research and the results of the technology assessment, the company hopes to go to the market with a tender outlining the performance specifications by March 2011.

Going to the market with performance specifications – for example, detailing the required capacity, availability and storage capabilities – will allow for any and all vendors to offer in their bids configurations that they think could best meet the requirements.

The technology assessment means that Eskom is not yet committed to a detailed design, and is willing to change the scope of the project slightly. If, for example, it is recommended that the plant be 80 MW instead of 100 MW, with less storage, for example, these recommendations could be taken on board.

However, MacColl reiterates that the intention is to build a large plant that is regarded as a viable alternative to existing power generation options.

Eskom does not want a small pilot or test CSTP plant – it is determined to show that the technology is a viable replacement and alternative for coal.

“We don’t want to be a small player in this,” says MacColl. “We are intent on diversifying our generation mix, moving into the renewable space as an alternative to fossil fuels. We need to build a CSTP plant that demonstrates large power capacity, high availability and dispatchability, which implies storage capa- bility. Anything less will not indicate we are on a path to meet our renewable goals.”

Eskom has been researching CSTP since 2002, and says that the work done to date has placed the utility in a position to go to the market as a well-informed buyer or developer of the technology. The project has been endorsed by the Eskom board and puts the organisation in a position to respond to the anticipated Integrated Resource Plan 2 targets.

The Eskom Board has given the project the green light, provided funding solutions can be found.

Funding Requirements
When Eskom was granted a loan by the World Bank, the bank voted to support the building of the coal-fired Medupi power station, on condition that Eskom clearly showed transformation towards cleaner technologies. The loan was approved with the proviso that Eskom carry out wind and CSTP projects.

The portion of the World Bank loan allocated for the CSTP project, through the Clean Technology Fund, is $250-million. The International Bank for Reconstruction and Development, which also falls under the World Bank, has loaned the utility $150- million for the CSTP.

However, the World Bank loan does not cover the costs of these projects in full. Eskom’s 100-MW CSTP plant with storage is estimated to cost in the region of R6-billion (about $782-million), and thus the utility is in discussions with other potential funders to make up the shortfall of about $382-million.

These discussions are at an advanced stage and several lending institutions have expressed strong interest.

An Eskom treasury official explains that the utility is in discussions with other European development banks, as funding for clean technology projects is relatively readily available from them, and at more favourable terms than from commercial banks.

The official remains confident that these banks would not invest in anything that is not ‘doable’, and is certain that Eskom will get the necessary funding, and deliver the CSTP project.

Eskom would not produce power from the CSTP plant under the renewable-energy feed-in tariff, as it would not apply in this case. However, Eskom would need to include, and put forward to the regulator, the higher cost of power generation from the CSTP plant, when it makes its multiyear price determinations to establish electricity tariffs.

A major hurdle for the technology is that cost comparisons show that CST is about 168% more expensive than ‘new’ coal on a rand-per-megawatt-installed basis; however, MacColl emphasises that this is the capital cost of the project and not a long-term levelised cost comparison, and he believes that the cost of energy from fossil fuels will continue to rise (along with primary energy costs and carbon taxes), while the cost of solar technologies will continue to decline in real terms as the technology matures and more players enter the market.

“We are in the early days of CSTP. Solar energy is clean, abundant and at the beginning of a technology development curve which will make it cheaper to exploit in the next decades,” he says.

He also believes that, during the life span of this project, which is estimated at about 20 years, the lines will cross where solar becomes more cost efficient than coal and the electricity supply industry in South Africa will be transformed as a result.

Demonstrating the Technology
If built to the expected specifications, the Eskom CSTP station would be the biggest CSTP plant in the world.

Studies to date have outlined the potential for a 100-MW concentrating central receiver power plant, using molten salt heat transfer liquid, as well as storage tanks to allow for output when solar irradiation is inadequate.

A 14-hour storage capacity would give the plant a 68% availability factor, which is essential for Eskom’s operating requirements. By comparison, coal-fired power stations have an availability factor of between 85% and 90%.

By building the first plant of this type and size in the country, Eskom says it could kick-start the solar power generation industry in Africa, as the solar community could use the experience gained to deal with some of the key issues facing concentrating solar technology.

These include: • understanding the true cost of construction and the real prices of production, rather than referring to estimates;

  • realising the risks and opportunities for the large-scale deployment of the technology as a viable clean and renewable power generation option;
  • identifying the opportunities for local manufacture and job creation, which could potentially give South Africa a competitive export advantage;
  • encouraging regional cooperation in order to share resources and develop solutions to promote the growth of other emerging solar technologies;
  • providing certainty on the reliability of the technology solution;
  • understanding the operations and maintenance costs and procedures;
  • putting in place agreements with local government municipalities with regard to land and water supply, as well as power transmission requirements; and
  • understanding the ability of the plant to meet predicted load factor levels and prove storage ability.

MacColl acknowledges that there are elements of risk, but says that these need to be tackled on a sensible basis.

“Risk is a relative term and will mean different things, whether you are a small independent power producer or a large utility. We acknowledge that any venture into a new technology is a risk management exercise and it is precisely for this reason that we are determined to get our demonstration unit on the ground and operating. Only then can we stop theorising about the risks involved and actually quantify them based on real experience in a South African context,” he says.

He adds that, when one invests such signifi- cant quantities of money, one needs to ensure that due diligence is followed to protect lenders and other stakeholders, not least the people of South Africa.

“However, courage is also required if we are to transform our predominantly coal- based power sector into something more sustainable. Eskom wants this project to be the first of many in a South African solar industry that will be regarded by future generations as a wonderful thing. We are willing and able to make the first move in large- scale concentrating solar thermal power generation,” MacColl concludes.

Edited by: Martin Zhuwakinyu
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