Economic, Energy, and Environmental Benefits of Concentrating Solar Power in California

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Economic, Energy, and Environmental Benefits of Concentrating Solar Power in California ( economic-energy-and-environmental-benefits-concentrating-sol )

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NREL CA Solar Benefits Environmental and Hedging Benefits Proxy Fossil Plant Emissions Rate CSP Plant Capacity 2,100 MW (tons/year) 156 95 54 4,000,000 Table 7-1 Emissions Reduction by CSP Plants Pollutant NOx CO VOC CO2 7.2 lb/MMBtu 0.006 0.004 0.002 154 Parts per million 2 4 1.4 100 MW (tons/year) 7.4 4.5 2.6 191,000 4,000 MW (tons/year) 297 181 103 7,600,000 Notes: 1. Proxy Fossil Plant assumed to be a combined cycle combustion turbine with a heat rate of 7,000 Btu/kWh. 2. CSP plants assumed to operate at 40 percent capacity factor. Hedging Impact of CSP on Natural Gas Prices The installation of renewable energy power generation that does not use fossil fuels has the potential to provide a natural hedge against fossil fuel price increases. Generally, renewable energy generators, particularly CSP that serves peak demand, offset the use of natural gas fueled generators. Therefore, this section focuses on the analysis of CSP as a hedge against natural gas price increases. An overview of the consumption and price of natural gas in the US and California is provided first. The two primary hedging effects are then analyzed: the potential decline in prices and volatility from decreased demand, and the hedging effect that the installation of CSP has on the generation portfolio. 7.2.1 Natural Gas Use in the United States Natural gas is a primary fuel for the US residential, commercial, industrial, and power generation sectors. Figure 7-1 shows the growth in overall natural gas demand since 1990. Gas consumption for power generation is a major part of the growth, accounting for 5,721 trillion Btu (TBtu) in 2002 compared with 3,342 TBtu in 1990, a 70 percent increase. Demand growth is expected in all sectors, but demand from electricity generators is expected to grow the fastest, increasing 90 percent by 2025. Various reports project demand to increase to 28 to 31 TCF per year by 2025. April 21, 2006 7-2

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