Jeroen van Schijndel, Chief Sales & Marketing Officer at Rioglass

The construction in 2016 of Saudi Arabia’s 50 MW Duba 1 and 50 MW Waad Al Shamal Integrated Solar Combined Cycle (ISCC) plants should encourage further activity in the region as new market entrants boost innovation in CSP components, van Schijndel said.

MENA represents one of the main growth markets for new CSP projects after a slowdown in the more developed US and Spain markets.

Activity fell in Spain and US due to policy and regulation changes and CSP developers moved into emerging markets such as Morocco, Kuwait, the UAE and Saudi Arabia (CSP Today Markets Report, 2014).
Rioglass Solar is the largest manufacturer of CSP mirrors in the world, with manufacturing plants in Spain, the USA, South Africa, Chile and China.

Van Schijndel says further cost reductions for CSP will improve competitively compared with other generation types.

Local level

Developers have to prepare for local content requirements to be successful, van Schijndel said.
Many emerging markets have local content as a pre-requisite in their tendering opportunities. In South Africa, local content requirements increased from 21% in the first bidding window in 2011 to 45% in the fourth (and most recent) bidding window in April 2015.

“We started in Spain with the CSP market there and then followed our customers to the USA where we built a manufacturing plant in 2010. After that we followed this strategy by opening up manufacturing plants in South Africa, Chile and China. We are not just active in these markets, but we invest in them by setting up local production facilities”.

Emerging CSP markets like the UAE, Morocco and Saudi Arabia specifically are also strongly promoting local content in their projects.

King Abdullah City for Atomic and Renewable Energy (K.A.CARE) issued in 2013 ambitious local content targets in its initial White Paper for renewable energy. The terms are currently under review and a tender for CSP is yet to be published.

The potential of Saudi Arabia

Van Schijndel believes Saudi Arabia is a key market for the MENA region, although Rioglass is yet to set up a manufacturing plant in the country.

“MENA is going to play a significant role in the CSP market, with Saudi Arabia being one of the largest economies locally. We have seen this particularly in the commitment made by the government towards renewable energy. They understand that it is easy to consume cheap oil and gas, but it makes more sense to try to use renewable energies to cover their own need to domestic energy use and to export their fossil reserves to other countries for a profit”, van Schijndel said.

The argument that Saudi Arabia needs to invest in renewables to limit the domestic consumption of oil for energy and save it for lucrative export instead, is one backed by a Chatham House study.

The below graph is from the 2010 study. While it does not factor in the impact of the shale gas boom, it shows the need for Saudi Arabia to diversify its energy resources.

Figure 1: Saudi Arabia's predicted consumption vs production to 2045

In January 2015, Dr. Maher Alodan, Head of Research, Development and Innovation at K.A.CARE, reportedly told Sky News that the Kingdom may be reducing K.A.CARE’s renewable energy target from 54 GW to 30 GW.

Nevertheless, van Schijndel remains bullish that CSP will prosper in the Kingdom.

“Currently there are two integrated solar combined cycle (ISCC) projects under development: the Duba 1 and Waad Al Shamal Power Plant ISCCs, each with a 50 MW CSP component capacity. Both projects are currently under tendering with construction expected in 2016. Once these plants are built and functioning well, they will be a convincing argument for the Government of Saudi Arabia to pursue CSP”.

National oil giant Saudi Aramco is involved in supplying gas for the Duba 1 ISCC.

According to van Schijndel, ISCCs offer an exceptionally attractive option for the Middle East.
The levelized cost of energy (LCOE) for a gas ISCC is about $41/kWh, compared with around $55/kWh for PV.
The benefit of ISCCs in the MENA market was covered in-depth by CSP Today in the article, ISCC Plants: Unlocking CSP in the MENA region.

Innovation to drive costs down

New market entrants are helping to drive down costs through innovation, van Schijndel said.
“We really believe that innovation is crucial. The market is currently dominated by just a few players, but we are already seeing new players entering the market which will ultimately bring costs down”, he said.
As a well as lower component prices, developers should also see costs also reduced though efficiency improvements from research and development work, van Schijndel said.

“Plants are operating for 30 or more years and the savings that can be made from the increased efficiencies of components is enormous”.

In 2013, CSP Today conducted a sensitivity analysis of the impact of cost savings on the Levelized Cost of Electricity (LCOE) of a reference CSP plant.

The analysis compared a 5% reduction of the CAPEX of a plant, a 5% reduction on the OPEX of a plant and thirdly, a 5% increase in plant output due to higher performance.

Increased performance led to a significant reduction in LCOE, as shown in the below graph.

Figure 2: Sensitivity Analysis applied to Reference CSP Plant

(Please note: The three parameters are displayed alongside the same axis ranging between 0% and 5% to facilitate the comparison. For CAPEX and OPEX, that percentage represents a reduction in costs, whereas for the performance it represents an increased generation of electricity). The full study can be viewed here.

Rioglass has looked to improve the cost effectiveness of its components.
“In receiver tubes we are looking at increasing the overall performance, e.g through improved lifetime, reduced O&M cost, improved product parameters, and larger apertures. If the trough becomes bigger the efficiencies become better…For example, in South Africa we are producing a 90mm tube – and this is the largest diameter tube anyone has made for a commercial project,” van Schijndel said.

Van Schijndel will be attending CSP Today’s MENASOL event to be held in Dubai from 13 to 14 May 2015.