November 18, 2011
The market for concentrated solar power (CSP) systems began a revival around 2004, at which time several key policy announcements inspired investors and engineers to start developing again. The revival gained further momentum in 2006, fueled by concerns about climate change and energy independence, with a peak in 2007-2008 as silicon-based photovoltaic (PV) modules rose to record prices during a temporary global shortage of solar-grade silicon. While the 2008 global economic crisis did not have an immediate effect on the CSP sector due to strong momentum of projects in the pipeline, the capital crunch along with pullbacks in government incentives eventually caused growth to slow down.
A new report from Pike Research forecasts that the global CSP market will continue to experience ups and downs between now and 2020, rising dramatically from $2.1 billion in 2012 to $5.1 billion in 2013, and then experiencing a gradual decline to $2.0 billion by 2016 before resuming gradual growth again to $4.9 billion by 2020. Despite this volatility in market value, the cleantech market intelligence firm forecasts that total installed capacity of CSP will increase significantly by the end of the decade, rising from 1.7 gigawatts (GW) in 2012 to 35.0 GW by 2020.
“The biggest threat to resumed growth in CSP is the dropping price of PV modules,” says senior analyst Peter Asmus. “PV modules continue to drop beyond 50% of their peak in mid-2008. In addition, the established track record of PV is more attractive to financial backers. Yet, CSP may overcome competition from PV by reducing costs as the result of bigger scale and two technology propositions that increase operating revenue and profits: hybridization with fossil fuel plants through a process called Integrated Solar Combined Cycle (ISCC) and utility-sized energy storage capabilities.”
Asmus adds that, in the United States in particular, a disparity exists between CSP projects awarded and projects brought online as operational. While projects totaling 6.9 GW in capacity have been awarded, only 1.5 GW (spread across five projects backed by U.S. Department of Energy loan guarantees) are under construction. Projects totaling 745 megawatts (MW) have been canceled or delayed to the point that project validity is questionable, projects totaling 1.2 GW have been replaced with PV, and projects totaling 3.4 GW remain in the pipeline with uncertainty. In this uncertain environment, Pike Research believes that CSP market growth is dependent on project bankability/financing, policy, cost reductions in technology, cost competitiveness with PV, and expanded electricity transmission capabilities.
Pike Research’s report, “Concentrated Solar Power”, provides an in-depth analysis of technology issues and policy trends driving CSP adoption in the United States, Europe, the Middle East, North Africa, India, and China. The study analyzes the perceived threat from solar PV and assesses the key challenges and opportunities presented by regional policies, capital environments, utility scale demand, and solar resources well suited for CSP. Market forecasts extend through 2020 and include projections for installed capacity and revenue by region. An Executive Summary of the report is available for free download on the firm’s website.
Pike Research is a market research and consulting firm that provides in-depth analysis of global clean technology markets. The company’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of the Smart Energy, Smart Grid, Smart Transportation, Smart Industry, and Smart Buildings sectors. For more information, visit www.navigantresearch.com or call +1.303.997.7609.