Concentrating Photovoltaics: It’s Make It or Break It Time

The concentrated photovoltaics (CPV) industry tenaciously pushed through these last four years, and now has 33 megawatts (MW) in the ground, with 60 more expected by mid-year 2012 and about 700 MW more in the pipeline.

Not bad for a relatively new technology, but securing the pipeline and any future projects could make for a tough solar race, as bankability issues loom and cheap PV forces companies to be even more competitive.

“A major challenge for CPV is that their main competitor, traditional PV, has lowered its system price by 30 percent in the last year” said Brett Prior, a senior analyst at GTM Research.  “The CPV companies know they need to offer the lowest cost per kilowatt-hour solution or they’re not going to win [future] projects.”

Starting Up

Early on, because of the price advantages it had over flat-plate or traditional solar PV, CPV found an edge, and a slew of projects happened in climates with high DNI (direct normal irradiance), particularly in the western U.S., Spain, Mexico and Australia. The technology also had efficiency upwards of 40 percent, was faster to install, and didn’t need nearly as much water as concentrating solar power (CSP).

The industry went from less than 1 MW in 2009 to 5 MW in 2010. And last year, though far under industry predictions, CPV saw another 500 percent increase. Altogether, there are now 689 MW in the pipeline, according to GTM Research, mostly with projects from today’s big industry players, including Soitec Solar, Amonix, and SolFocus.

About 289 MW of those pipeline projects are in development with power purchase agreements (PPAs) already in place.  Another 207 MW are under development awaiting contracts or Feed-in-Tariff confirmation.

Staying Competitive To Move Forward

To keep things in perspective, though, the CPV market still represents a very tiny fraction of the entire solar market, and in fact accounts for less than 0.1 percent of installed solar worldwide. PV still dominates with over 33,000 MW, while CSP represents more than 1,000 MW of installed solar power capacity.

Still, solar analysts predict that 300 MW of CPV will be installed by the end of 2013 and 1 gigawatt will be on the ground by 2015. That’s if companies can continue to gain customer confidence and offer better pricing to maintain a lower levelized cost of energy (LCOE).

The rapidly falling PV prices have also impacted the CPV industry.

“It has certainly required us to [rethink] our prices,” said Nancy Hartsoch, vice president of marketing and business development at SolFocus. “We have to able to price at a much lower dollar-per-watt price than we ever expected a year ago.”

However, she points out, CPV is poised to bring down its cost faster than any other solar technologies between now and 2020.  According to GTM Research, high-concentrating CPV will have a LCOE of $0.07 kWh by 2020, whereas multicrystalline PV will be about $0.09 kWh.

Carla Pihowich, vice president of marketing and regulatory at Amonix, who said the company has been working with CPV for 16 years and is in its 8th generation of the technology, pointed to that same statistic, but acknowledged today’s predicament.

“We are very aware of the rapid decline [of PV prices], and have our finger on the pulse of where pricing is going,” Pihowich said.  “But on the positive side, we believe that we are very well-poised going forward; we have a detailed road map to reduce costs—from a design standpoint, from a supply chain standpoint, and from a manufacturing scale standpoint.”

There was some pricing hype last year, when four projects in California switched from CSP to PV because it was cheaper. But that isn’t necessarily the fate of CPV projects, GTM Research’s Prior said. First, overall it was only a small percentage of the MW in the CSP pipeline that switched to PV, and, second, the price difference was more dramatic between CSP and PV, so it just made more sense. “Switching CPV projects isn’t as worthwhile in some ways,” he said.

Either way, for the CPV industry to take off, companies need to find ways now to get more MW to market to help improve the technology’s reliability and bankability.  Many may not be making a profit, but at least they are getting the equipment out there, and they are getting to scale.

Creative Energy

There are certainty investors for CPV, but a lot of what’s in the ground today and planned for installation in 2012 was funded by independent power producers—who could front the cash.  Additionally, the U.S. Department of Energy loan guarantee program helped fund many of the projects.  

For now, all eyes are on Amonix’s 30-MW Alamosa project, which is under development in Colorado by Cogentrix. It will be the largest CPV project in the world when it is completed sometime in 2012, and one of the first utility-scale CPV projects in the U.S. It managed to secure a $90 million loan guarantee from the DOE, and the first 10 MW should be completed by early 2012. 

Currently the biggest CPV project in the U.S., the 5-MW Amonix project is now online in Hatch, N.M, with electricity being sold to El Paso Electric under a PPA, which is helping meet the state’s Renewable Energy Portfolio Standard. Industrial Revenue Bonds funded that project.  (Amonix is responsible for about 19 MW of the total installed capacity today.)

Though it didn’t receive a DOE loan guarantee, San Diego’s 150 MW Imperial Solar Energy Center West project funded through Tenaska Solar Ventures, which is proposing to use Soitec Solar’s technology, is still in development, according to Soitec. That brings Soitec to 305 MW for the area, which includes the 155 MW spread out over five contracts with San Diego Gas & Electric (SDG&E).

With all of these PPAs now approved by the California Public Utilities Commission, Soitec announced in December a $150 million investment into the city by purchasing a manufacturing facility in Rancho Bernardo, Calif. that will support these pipeline projects. It will produce 200 MW of solar modules per year, and is expected to go online late 2012.

SolFocus, which has partnered with Sol Orchard, now has a total of 34 MW in operation or under construction, with projects in Colorado, Arizona, California, Hawaii, Italy, Portugal, Greece, Saudi Arabia, South Africa and Malaysia. Its most recent announcement was a completed 53 kW project in Texas that is owned by El Paso Electric.

According to GTM, CPV solar has 170 projects under development, with most of those in the U.S. “[The industry] finally now has real projects with PPAs,” Prior said. “But there’s the lynchpin: the hold up is finance.”

A big part of the problem is bankability.

Beating Bankability

According to a GTM Research report in 2011, the CPV industry ranks the lowest in bankability, compared with PV and CSP.  Older companies with more MW in the ground, like Amonix, may be perceived differently, but overall, the consensus is that bankability is an issue for the industry as a whole.   

Now, with so many projects under construction in 2012 and in the pipeline, SolFocus’ Hartsoch, who is also a chairperson of the CPV Consortium, said this is the year to show off.

“For a long time, the industry could only talk about what is was going to do, but now it’s time to put some meat behind the claims,” she said. “I think this industry in the next 12 months has to show its systems and technology are reliable and performing at the level they were predicted to perform.”

Those two things, she said, will help remove the bankability risk.

Partnerships have also helped.  Amonix is working with Boeing. Solfocus obtained technology performance insurance from Munich Re. A first for CPV, the insurance helps SolFocus reduce its technical risk.

The question is whether all the development activity in 2012 will help secure financing for pipeline projects.

“There are a lot solar projects chasing finance. And the finance providers can be picky,” Prior said. “It’s tough a time to be in the solar market. And it’s even tougher to be in the solar market with a newer technology.”

Steve Graff is a freelance writer who has been featured in the Denver Post and the Journal of the National Cancer Institute. In 2010, he was a principal writer for the U.S. Department of Energy blog “Energy Empowers,” where he covered all aspects of the renewable energy and energy efficiency sectors.

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