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The environmental benefits of CSP and other renewables have likely been a factor in spurring the State and Federal governments to create incentives for their use. As the next section explains, the economic development benefits of CSP also give some state governments a reason to provide policy incentives for CSP. Benefits of CSP for Southwestern States Adding CSP to the generation mix of a State contributes to a reliable and diverse energy supply, a better use of natural resources within the State, and better air quality. CSP can also serve as a hedge against the high and volatile costs seen in energy prices the past several years. In California, for example, the average cost of natural gas in 1999 was about $2.20 per million BTU’s. It rose to over $8/MMBtu in 2001, fell to $3/MMBtu in 2002, and back up to $7/MMBtu by 2005.56 In contrast, the solar energy used as fuel by CSP systems is stable. The power purchase agreement determines the cost of CSP power for the duration of the agreement (typically for 20 years). Being an indigenous resource, solar energy is not subject to disruptions of supply or market conditions that can plague natural gas (and to a lesser extent, coal-fired) power plants. CSP also provides for a growing industry that can provide an economic stimulus to the State.57 Several States recommended that it would be useful if DOE provided an assessment of the economic development benefits of CSP. As a result, economic studies were done for Nevada, New Mexico, and California. In each case the State was asked to select an expert organization to perform the study. This was done to assure the analysis was done by independent experts that were credible to the State. Nevada and New Mexico each selected one of their universities to do the analysis based on its expertise in doing similar analyses for the State. There was no peer review of these reports other than that done by the States. California did not recommend an organization, but was comfortable with the expertise of the organization selected by DOE. This report did undergo a peer review. The studies were limited to the economic impact of building and operating CSP plants. In particular, the studies estimated the number of jobs that could be created and the potential addition to gross state product. The California report was expanded to compare the economic impact of CSP to combined cycle and simple cycle natural gas plants. This showed the net economic benefit of CSP versus building similar sized natural gas plants. The Nevada and New Mexico studies did not make this comparison, but compared a scenario in which CSP was built against a scenario in which no new generation capacity was built. Of course, such analyses are most useful at a State level and not the Federal level. The economic impact of CSP for a State depends on its portfolio of natural resources. If a State has large reserves of natural gas or coal, the shift to solar energy could result in a net loss of jobs. To be credible and useful for Federal policymakers, employment studies need to look at nationwide impacts on employment and be conducted by independent experts. 11PDF Image | 2007 Concentrating Solar Power USA DOE
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