End to solar thermal? Not so fast!

September and October have been great months for utility-scale solar thermal projects in California, as the state (with cooperation from the Feds) approved six projects with 2.8 gigawatts of capacity in the Mojave desert. Five of these are proven trough systems, while the sixth plans to use a Sterling engine.

However, Michael Kanellos and Brett Prior of GTM speculate it’s the beginning of the end for solar thermal. Their argument is sound in principle, but I wonder if their timing is premature.

Most of the advantages of the solar trough systems are also its disadvantages: it's low tech, decades-old proven technology that works well at scale. For years, the world’s largest solar facility — and California’s entire utility scale solar capacity — consisted of the nine SEGS sites totaling 354 MW in Eastern Mojave. The GTM argument is that the main solar thermal systems — both trough and tower — are about to lose to PV on cost per watt and LCOE, and that the price of PV technology will continue to improve more rapidly than that for thermal.

I think the latter is certainly true — PV costs have been coming down for decades, while many of the thermal parts are mature and proven. Also, the moving parts on heating water and running turbines guarantee significant operating costs that are not seen by PV, which are essentially semiconductors covered by glass windows that need to be washed.

Has it crossed over yet? I think the crossover is coming, but the fact that all six utility scale systems are thermal rather than PV suggests it’s still a ways off — or at least that PV manufacturers can’t ramp up production capacity quickly enough to generate gigawatt-capacity plants.

While the costs are attractive, PV clearly has more risk in the short term than the proven thermal technology. That (as they argue) other utility scale systems plan to use PV suggests the crossover is coming, but I don’t think we’re there yet.

The other thing about the argument is that it says little about the economic viability of thermal systems either operating or under construction. If utilities have signed a PPA with the RPS gun to their head, they still need the contracted capacity at the agreed-upon price.

In fact, if both Jerry Brown gets (re) elected (even odds) and Prop. 23 fails (it’s outspent 3:1), then utilities are going to need whatever capacity they can get to meet the RPS standard of 33% by 2020. Keeping the 33% requirement will give an extra 2-5 years of life to the solar thermal market (beyond whatever its natural lifespan is) as buyers wait for PV manufacturers to ramp up capacity to meet a global — not just California — demand for renewable energy.

Renewable energy is a capital-intensive commodity business. At some point solar thermal companies will have a hard time competing for the bulk of the market, but for now they can — in best Monty Python fashion — note that “I’m not dead [yet].”