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SOLAR POWER SUMMARIZED BY ENERGETICA INDIA Solar Thermal Energy’s Outlook & Regions Energetica India summarizes the 4th report on Solar Thermal Energy (STE) from European Solar Thermal Electricity Association (ESTELA) and looks at STE overview in some of the countries across the world. As of 2015, the installed capacity of Solar Thermal Energy (STE) increased to almost 5 GW with the connection of a number of large-scale solar thermal power plants to the grid, in Spain and the US in particular. Around 61% of the operational STE plants are located in Spain, whereas 18% are located in the US. Over the past three years, market interest has shifted away from the traditional markets of Spain and the US to emerging markets like South Africa, Morocco and Chile, due to their high solar resources and political commitment to solar energy. The levelised electricity cost of STE plants depends on both the available solar resource and development costs of investment, financing and operation. Plants under the same price and financing conditions, in the southwestern US or Upper Egypt will have levelised electricity cost 20%-30% lower than in southern Spain or the North African coast. This is because the amount of energy from direct sunlight is up to 30% higher (2,600-2,800 kWh/ m2/yr compared to 2,000–2,100 kWh/ m2/yr). The solar resource is even lower in France, Italy and Portugal. The best solar resource in the world is in the deserts of South Africa and Chile, where direct sunlight provides almost 3,000 kWh/m2/yr. The economic feasibility of a project is determined by both the available solar resource at the site and then by power sale conditions. If the local power purchase price does not cover the production cost, then incentives or soft loans can cover the cost gap between the power cost and the available tariff. Environmental market mechanisms like renewable energy certificates could be an additional source of income, in particular in developing countries. All the STE plants in the US were prefinanced by developers and/or suppliers/ builders and received non-recourse project financing only after successful start-up. In contrast, all STE projects in Spain received non-recourse project financing for construction. Extensive due diligence preceded financial closure and only prime EPC contractors were acceptable to the banks, which required long-term performance guarantees accompanied by high failure penalties. In markets like South Africa and India, a reverse bidding system has been used to ensure a competitive tariff for the PPA. STE with storage is increasingly becoming a pre-requisite in government tenders around the world ‘Bankability’ of the plant revenue stream has been the key to project finance in Algeria, Spain and the US. Different approaches have been long-term power purchase agreements and FITs, but it has taken considerable effort during years of project development to remove the barriers and obstacles to bankability. In Spain, one major barrier for industry development was the right of the government to change tariffs every year, which gave no long-term business plan income security. International Policy Frameworks There is one major and still active international policy instrument relevant to STE at the moment – the Mediterranean Solar Plan. The Mediterranean Solar Plan was announced in mid-2008 under the Union for the Mediterranean with an initial forecast of 10 GW of STE by 2020, reflecting the potential in the region for the technology to provide both local and export power. The MSP is a result of collaboration on promoting renewable energy between the EU and its Southern and Southeast Mediterranean neighbours, involving support to the production of solar energy in North Africa and energy efficiency to support significant energy savings in the Mediterranean region. Although the 10 GW goal may seem unrealistic, progress has been made, such as in Morocco with three big solar thermal power plants under construction along with ambitious prospects for 2020 mainly for supplying its local demand. Plans for solar thermal power plant deployment for internal consumption have also been announced in other Mediterranean countries in Africa. However, the MSP’s success regarding exporting power depends on high- voltage connections between Tunisia and Italy and Turkey and Greece, as well as on the reinforcement of the interconnection of the Iberian Peninsula with France. This last point caused important hesitations for Spain, which are now removed after knowing the priority that has been given to the electrical interconnection in the Juncker’s Energy package. On the other hand, political instability in the region remains a major barrier to the implementation of the MSP. The European Union is supporting the MSP through a number of projects including the “Paving the Way for the Mediterranean” Solar Plan launched in October 2010. Moreover, other projects, such as the “Support for the Enhanced Integration and the Improved Security of the Euro-Mediterranean Energy Market” and the second phase of the project “Energy Efficiency in the Construction Sector”’, will help create the conditions for renewable energy development and increased energy efficiency in the Mediterranean region. Additionally, the EU Neighbourhood energetica INDIA · MAY | JUN16 35


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