You wear different sunblock depending on the intensity of the climate, so why shouldn't the sort of solar technology vary depending on the part of the country where you live. That is exactly what is happening, of course, which is why you will start hearing more about the adoption of concentrating photovoltaic technology in the weeks and months to come.
This was the theme of a conference call that I attended last week, hosted by the Solar Energy Industries Association. More on that in a moment, but first I want to point to an entirely separate report recently released by GTM Research.
That report notes that concentrating photovoltaic (CPV) technology remains a small fraction of the installed solar technology capacity today: only 28 megawatts of the estimated 33,000 megawatts that are installed worldwide. But the pipeline of CPV projects has begun to grow, because of the potential for lower cost per kilowatt-hour of electricity generated. We're not talking about wild growth, but CPV capacity should reach 1,000 megawatts by 2015, if anticipated cost reduction and technology performance targets are met.
There are three companies emerging at the front of the CPV crowd, according to GTM Research: Amonix, Concentrix Solar and SolFocus. According to the research firm, those companies account for almost 96 percent of the projects that are in operation or under development with signed power purchase agreements.
During a recent press conference to discuss the potential for technology diversification in the utility-scale solar market, Rhone Resch, president and CEO of the Solar Energy Industries Association, said more companies in the business of solar are moving to diversify their investments in solar photovoltaic versus concentrating solar technologies.
Resch and other participants on the call saw the technologies as complementary, not competitive. For example, concentrating solar only makes sense where there is lots of land exposed to bright sunlight for most of the day, said Tom Georgis, senior vice president of development for SolarReserve. But it has the potential to be less intermittent than other photovoltaic technologies, when couple with the right energy storage technology. SolarReserve has been able to expand beyond its original focus in the southwest by adding solar photovoltaic technologies to its development portfolio, Georgis said. It has roughly 3,000 megawatts of concentrating solar projects under development. And in mid-May, SolarReserve snagged a conditional loan guarantee of $737 million from the Department of Energy for a project in Tonopah, Nevada, that would be the largest molten salt power tower project in the world.
The big downside of concentrating projects has been the capital required upfront. "Uncertainty is problematic for the industry as a whole," said Pat Dinkel, vice president of resource planning for Arizona Public Service. Over the past few years, the financial markets have been unable to bear those investments. It could easily cost $1.5 billion to $2 billion to finance a concentrating project, estimates Dinkel. That compares with the $50 million to $100 million you are talking about for many smaller-scale photovoltaic projects.
It is also why you will see more solar developers working on utility-scale projects begin to hedge their bets, potentially combining different solar technologies within the same location or choosing different technologies depending on the geography. "The most important part of this proposition is making sure we are aligned with state regulators," Dinkel said.