With the cost of solar photovoltaic projects declining steadily and cost reductions in concentrating solar power (CSP) projects falling at a slower pace, some are calling 2011 the year that PV killed CSP. In the last year and a half, roughly 3,000 MW of CSP projects in the U.S. have been converted to PV.

In the short term, PV seems to have won the day. But that may not always be the case. A new analysis from the National Renewable Energy Laboratory explores how the value of CSP increases with a higher penetration of solar on the grid, making the technology an important enabler of solar PV.

At a 10%-15% solar penetration, say NREL researchers, the value of CSP (with storage) increases by 1.6 – 4 cents due to better dispatchability, a reduction in curtailment (i.e. having to shut down a solar or wind plant because it’s easier ramp a fossil plant up and down), and increased capacity. The chart below shows how a combination of PV and CSP with storage can substantially reduce curtailment of solar plants, thus making bringing the cost of energy down:

Recognizing the need to increase the value of their product, CSP developers have been integrating more storage. Leading U.S. developer BrightSource announced in November that it would add molten salt storage to three of its power tower projects in the U.S., calling it “the largest storage deal in the world.” Along with molten salt storage technologies, AREVA solar is integrating CSP into gas and coal plants, thus increasing the efficiency of existing infrastructure.

Here’s how the NREL researchers described the value of ancillary services from CSP plants when coupled with storage:

From a policy standpoint, a simplistic approach to choosing a generation technology might be based simply on picking the option with the lowest overall levelized cost of electricity (LCOE). However, deployment based simply on lowest LCOE ignores the relative benefits of each technology to the grid, how their value to the grid changes as a function of penetration, and how they may actually work together to increase overall usefulness of the solar resource.

Given the dispatchability of CSP enabled by thermal energy storage, it is possible that PV and CSP are at least partially complementary. The dispatchability of CSP with TES can enable higher overall penetration of solar energy in two ways. The first is providing solar-generated electricity during periods of cloudy weather or at night. However a potentially important, and less well analyzed benefit of CSP is its ability to provide grid flexibility, enabling greater penetration of PV (and other variable generation sources such as wind) than if deployed without CSP.

In other words, the simplistic attention to lower-cost PV ignores the important benefits that a “firm” technology like CSP can bring to the grid, thus enabling more variable technologies.

As Keely Wachs of BrightSource points out: “not all CSP technologies are created equal. While some projects have moved from PV to CSP, other CSP technologies are doing very well. Power Tower technologies are thriving as evinced by BrightSource and SolarReserve projects being built, and that at more than 2400 MW, BrightSource has one of the largest solar pipelines in the US.”

There are about 1,200 MW of CSP projects underway in the U.S. today.

So don’t rule out CSP. While some investors have been delaying or abandoning CSP plants in favor of PV, that doesn’t tell the whole story.

This article was originally published by Climate Progress and was reprinted with permission.