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2007 Concentrating Solar Power USA DOE

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2007 Concentrating Solar Power USA DOE ( 2007-concentrating-solar-power-usa-doe )

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incentives would be required to make the deployment of 1,000 MW of CSP possible. • The report concluded that the CSP industry could build 1,000 MW if between $1.5 and $2.0 billion in Federal and State financial incentives were available over a 14-year period, and that the deployment of 1,000 MW could potentially reduce the cost of CSP to as low as 6 cents per kilowatt-hour (kWh).2 • This report contained a fundamentally different assessment of the potential future of CSP; the NRC was pessimistic that any CSP development will occur in the next 10 to 20 years while DOE was optimistic that government incentives could spur the development of CSP and make it economically viable in the future. • However, both the NRC and DOE reports agreed that some level of government intervention would be required to drive the deployment of CSP. Sargent & Lundy Report: To resolve the differing conclusions of the initial NRC and DOE reports, DOE commissioned an independent engineering firm to conduct, “in close collaboration with the NRC,” a detailed assessment of the economic potential of parabolic trough and power tower technologies.3 The engineering firm Sargent & Lundy (S&L) was selected to conduct this analysis on the basis of its independence from the CSP industry and its highly regarded performance in conducting due diligence studies for the fossil power industry, among other factors.4 S&L’s report concluded that: • “CSP technology is a proven technology for energy production, there is a potential market for CSP technology, and that significant cost reductions are achievable assuming reasonable deployment of CSP technologies occurs.”5 • The cost of electricity from CSP was currently in the range of 10 to 12.6 cents/kWh, and costs could be reduced to 3.5 to 6.2 cents/kWh by 2020 without new research breakthroughs.6 • “Policy-based incentives are needed for initial introduction of technologies and that both R&D and deployment of technology are necessary.”7 NRC 2002 Response to the S&L Report: DOE asked the NRC to review a draft of the S&L report. In the critique, the NRC: • Agreed with S&L that CSP costs could be reduced to 3.5 to 6.2 cents/kWh by 2020, given that deployment proceeded at the rate assumed by S&L8 • Cautioned that the deployment rate assumed by S&L may be overly optimistic, in turn making S&L’s cost reduction timeline overly optimistic • Agreed with S&L’s conclusion that technology improvement was a necessary step to making CSP economically competitive, but that technology improvement alone was insufficient to achieve economic competitiveness • Agreed with S&L that policy-based incentives are necessary to make CSP economically competitive; however, neither the S&L report nor the NRC response addressed what level or magnitude of policy-based incentives would be required to achieve economic competitiveness. • Noted that, since the publishing of its previous report in 2000, in which it had concluded that the commercial prospects for CSP “were not very promising,” advances had been made: “Significant progress has been made in understanding iv

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