IEA Says U.S. Could Become Desert Solar Leader—With Right Incentives

The United States could position itself as the global leader in producing utility-scale solar power from its vast deserts, with immediate and appropriate government support, a new report from the International Energy Agency says.

The study by the Paris–based energy policy adviser for developed nations says with R&D backing, adoption of feed-in tariffs and binding renewable energy portfolio standards, the U.S. and other sunny nations could accelerate the cost reductions needed for widespread deployment of concentrating solar power (CSP) plants. 

"This decade is crucial for effective policies," said Nubuo Tanaka, executive director of IEA.

With incentives in place, investment costs for solar farms could drop by 30 to 40 percent by 2020, the energy agency, known for its conservative predictions, said. 

As the Senate considers new climate law, at least one thing is certain in the U.S.: There is no lack of available land. The deserts of the Southwest could theoretically power the entire nation.

Currently, solar provides less than one percent of America's electricity supply, with about half of that coming from CSP installations. The 30-year-old CSP technology is proven. It has been generating electricity in California since the 1980s. Unlike photovoltaics, which turn the sun's rays directly into electricity in panels, CSP uses arrays of often hundreds of mirrors to magnify sunlight. The massive mirrors concentrate the sun's energy hundreds of times to generate steam in a boiler that spins a turbine.

The IEA also expects the industry to solve the problem of nightfall. The 50-page report says CSP plants will be able produce electricity around the clock in the "not-too-distant future" — even when clouds close in or the sun sets — thanks to emerging thermal storage technologies that will allow "solar plants to compete with fossil-fuel plants."

Storage technologies will amass power accumulated during daylight hours so it can be released at night or dispatched to the national electrical grid at peak periods.

"The firm capacity and flexibility of CSP plants will help grid operators integrate larger amounts of variable renewable electricity such as solar PV and wind power," Tanaka said.

As with wind farms on remote Midwestern praires, however, huge investments in long-distance electricity transmission would eventually be needed to carry the clean electricity from far-off deserts to city centers.

But ultimately, it is installation costs that will determine whether CSP technology takes off, or not.

IEA says if building costs falls as predicted, CSP would achieve grid parity by 2020 in peak and intermediate loads. For baseload power, CSP would be as cheap as coal between 2025 and 2030.

But that assumes a lot — an increase in competition, a growth in plant size, the mass production of equipment, an improvement in technology improves and a policy to put a global price on carbon.

Most importantly, though, the financial community would have to gain confidence in CSP.

Even with strong government programs, "financing of CSP plants may become difficult if investors in technology companies do not supply some equity capitalists," the report said.

Spain Leads, For Now

While other governments and the private sector have been slow to support CSP in recent years, Spain has moved ahead on its own.

"Spain has taken a leading role globally in promoting solar power and other forms of renewable energy," Tanaka said, at the launch of the report in Valencia this week.

In 2005, the Spanish government passed a feed-in tariff aimed at CSP development. Because of the subsidy, the nation now has over 20 projects under construction with 1,000 megawatts of capacity that could go online by the end of this year. The country's eight operational facilities were all completed in the last two years.

It was the U.S., though, that first eyed CSP with great interest in the 1980s. And a revival is now underway.