CSH Cost analysisThird workshop of the MENA CSP KIP - Amman

Sep 2018

STA-Solar José Manuel Nieto

www.sta-solar.com

Picture by rackam.com

Content

• CSH applications

• Historical cost evolution

• Historical scale factor

• Scale factor

• Payback period

• Optimal sizing

• Sizing criteria

• Surface requirements

• Practical configuration example

CSH Applications

Industrial Sector Application 60 80 100 120 140 280 300

Food and

Beverage

Sterilizing

Pasteurizing

Boiling

Washing

Drying

Heat Treatment

160 180 200 220 240 26040

Machinery

Drying

Cleaning

Mining

Nitrate melting

Mineral drying

processes

Copper electrolytic

refining

Paper

Manufacturing

Pulping

Bleaching

Cooking and Drying

Metal Surface

Treatment

Treatment,

electroplating

Bricks and

BlocksCuring

Textile Industry

Dyeing

Fixing

Drying, de-greasing

Bleaching

Pressing

Washing

Industrial Sector Application 80 100 120 140 280 300

Chemical

Industry

Distillation

Soaps

Synthetic Rubber

Various Chemical

Processes

Boiling

160 180 200 220 240 26040 60

All Industrial

Sectors

Industrial Solar

Cooling

Pre-heating of boiler

feed water

Plastic Industry

Separation

Drying

Distillation

Extension

Preparation

Blending

Historical evolution of

Capex

© STA 2018, data for chart sourced from International Energy Agency, Solar Heat for Industrial Processes and self-research

Projects are too diverse and the time series is too short to observe any significant trend

Influence of scale factor

Observed scale factor is low because of the great diversity among projects

© STA 2018, data for chart sourced from International Energy Agency, Solar Heat for Industrial Processes and self-research

© STA 2018

Component Scale factor (α)

Overall 0,8

Collectors 0,9

BoP 0,9

Engineering 0,8

Installation 0,7

CB = CA (SB / SA) α

A value of α less than unity implies increasing returns to scale

Scale factor : 0.6 rule

© STA 2018, data for chart sourced from International Energy Agency, Solar Heat for Industrial Processes and self-research

© STA 2018

Reference configuration

Site yearly radiation 2,300 KWh/m2·YrSolar multiple 6Solar field aperture area 6,500 m2Solar Field Thermal Power 5 MW-tEstimated cost (+/-28%) 1,700,000 USDSteam pressure 15 barSteam temperature 200 ºCAcummulator Capacity 12 tonSolar Steam Production 1 Yr 6,700 tonsConv. Steam Production 1 Yr 2,000 tonsSolar fraction 77%Solar spill fraction 1,600 tonsAnnual Solar Heat Output 5,000 MWh-t

A solar multiple of 1 is the aperture area required to deliver the nominal heat demand at noon on the Summer solstice day

Boiler

Storage

Solar field

The solar fraction is the % of heat supplied by the solar plant

© STA 2018

Payback period

is the length of time required to recover thecost of an investment that will be recoveredas savings in fuel.

The annual savings for year “i” are calculatedas:

𝑆𝑎𝑣𝑖𝑛𝑔𝑠𝑖 = 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑣𝑒𝑑 𝑓𝑢𝑒𝑙𝑖 − 𝑂&𝑀𝑖

And the payback period is the number ofyears, n, when the savings add-up to theinvestment:

𝐶𝑎𝑝𝑒𝑥 ≤

𝑖=0

𝑛

𝑆𝑎𝑣𝑖𝑛𝑔𝑠𝑖

Solar fraction vs. payback period with 2,300 KWh/m2·Yr DNI in 24/7 plant and 1h storage

© STA 2018

Payback period

CSH is competitive versus high-pricedfuels such as Fuel Oil and Gasoil.

Adding storage slightly increases thepayback, but it has the advantage ofenabling higher solar fractions becauseit reduces solar energy spillage.

Storage is also necessary for technicalreasons, mainly to stabilize the outputcharacteristics and to compensate fordemand fluctuations.

Solar fraction vs. payback period with 2,300 KWh/m2·Yr DNI in 24/7 plant and 4h storage

© STA 2018

Cost of heat

𝑠𝐿𝐶𝑂𝐻 =𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 · 𝐶𝑅𝐹 + 𝐴𝑛𝑛𝑢𝑎𝑙 𝑂&𝑀 𝐶𝑜𝑠𝑡 + 𝐴𝑛𝑛𝑢𝑎𝑙 𝐹𝑢𝑒𝑙 𝐶𝑜𝑠𝑡

𝐴𝑛𝑛𝑢𝑎𝑙 𝑇ℎ𝑒𝑟𝑚𝑎𝑙 𝑂𝑢𝑡𝑝𝑢𝑡

The simplified cost of heat (sLCOH) reflects the cost of capital, O&M and fuel over the life span of the project. This can be expressed with the formula:

𝐶𝑅𝐹 =𝑖 · 1 + 𝑖 𝑛

1 + 𝑖 𝑛 − 1

The Capital recovery factor (CRF) reflects the effort to rquired recover the invested capital is recovered. It depends on the discount rate, i, and the number of years, n, to recover the investment.

© STA 2018

CRF Assumptions

i = discount rate 4%

n = number of years 10

CRF 0.12

© STA 2018

Optimal sizing

A solar field does not output a constantamount of heat every day because thereare variations due to seasonal orweather conditions. Some days, it mayproduce too much heat and it will needto be de-focused. This loss of primaryenergy is called spillage.

Spillage causes an increase in the cost ofheat. When it is above 20%, the sLCOHclimbs 10 USD for every 10% increase ofspillage.

Spillage vs. levelized cost of heat with 2,300 KWh/m2·Yr DNI in 24/7 plant

© STA 2018

Optimal sizing

When the solar multiple increases, sodoes the solar fraction of heat that issupplied to the process and the spillageof primary energy.

From a solar-fraction point of view,storage becomes essential to minimizethis spillage and thus bring down thecost of heat.

The marginal increase of sLCOH withsolar fraction has a strong dependenceof the storage capacity of the plantwhen 24 hours supply is needed.

Solar fraction vs. solar-only sLCOH with 2,300 KWh/m2·Yr DNI in 24/7 plant

© STA 2018, data for chart sourced from International Energy Agency, Solar Heat for Industrial Processes and self-research

© STA 2018

Sizing criteria

- Minimum Payback

Short-term approach

- Maximum savings in operating costs

Long-term approach

- Space availability restrictions

Compromise

Solar fraction vs. combined (solar + conventional) sLCOH with 2,300 KWh/m2·Yr DNI in 24/7 plant

© STA 2018, data for chart sourced from International Energy Agency, Solar Heat for Industrial Processes and self-research

Surface requirements

Linear Fresnel allows a more compact installation, but the output pattern has a peak at noon, which increases the need for storage.

TechnologyLand occupancy

m2/MWh-t·Yr

Parabolic trough 6-8

Linear Fresnel 4-6

Above figures assume a minimum field length of 80 m for linear a Fresnel and 50 m for a parabolic-trough

© STA 2018, data for tables simulated with SAM software (NREL) and self-research

Land usage - 8 hours/day

Hourly consumption(ton/h)

Yearly consump.

(MWh-t/Yr)Parabolic T.

(m x m)Linear F.(m x m)

0.5 1,100 50 x 50 80 x 201 2,200 50 x 100 80 x 402 4,400 100 x 100 80 x 705 10,900 150 x 170 80 x 170

10 21,800 250 x 210 160 x 17020 43,600 300 x 350 240 x 23040 87,200 450 x 460 320 x 350

Land usage - 24 hours/day

Hourly consumption(ton/h)

Yearly consump.

(MWh-t/Yr)Parabolic T.

(m x m)Linear F.(m x m)

0.5 7,800 100 x 80 80 x 501 6,500 100 x 160 80 x 1002 13,100 200 x 160 160 x 1005 32,700 300 x 260 240 x 170

10 65,400 400 x 390 320 x 26020 130,700 550 x 570 400 x 42040 261,500 800 x 780 560 x 590

Practical configuration example

Goal: compare options to lower heat expenses with solar energy and provide decision criteria

Supply charactristics

Demand 3 ton/h

Hours per day 14 h

Pressure 8 barg

Factory Start 8

Factory Stop 21

Heat cap. factor 33%

Yearly consumption 4,745 ton

Current cost of heat

Fuel Gasoil

Cost 0.66 USD/liter

Cost per MWh-t 65.9 USD/MWh-t

Yearly fuel escalation 2.9%

sLCOH63 USD/ton

86 USD/MWh-t

Operation cost(O&M + fuel)

58 USD/ton

78 USD/MWh-t

Photo: courtesy African Improved Foods

Financial Assumptions

Expected ROE 10%

Loan interest 3%

Percent Debt 80%

Corporate Tax Rate 20%

i = discount rate = WACC 3.9%

n = number of years 10

CRF CSP 0.12

Spec. Inv. (USD/KWh-t)Solar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 391 347 329 347 374 410

1 401 355 337 339 354 376

2 418 370 352 349 352 379

4 448 397 377 375 375 402

SpillSolar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 0% 0% 2% 11% 21% 30%

1 0% 0% 2% 7% 14% 22%

2 0% 0% 2% 6% 10% 19%

4 0% 0% 2% 6% 9% 18%

PaybackSolar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 5 4.3 4.1 4.3 4.8 5.3

1 5.2 4.5 4.2 4.2 4.5 4.8

2 5.4 4.7 4.4 4.4 4.4 4.9

4 5.9 5.1 4.8 4.8 4.8 5.2

Criterion 1 : Minimum payback

Minimum payback period is achieved by:

- minimizing the spill; and

- keeping size big enough so that scale factor does not penalize the investment / KWh

Cost of heat (USD/KWh-t)Solar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 75.1 69.3 63.7 62.2 63.0 65.7

1 75.3 69.8 64.3 60.7 59.5 60.3

2 75.7 70.5 65.3 61.4 58.3 60.0

4 76.5 71.9 67.2 63.8 60.7 62.5

Spec. Inv. (USD/KWh-t)Solar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 391 347 329 347 374 410

1 401 355 337 339 354 376

2 418 370 352 349 352 379

4 448 397 377 375 375 402

Solar fractionSolar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 18% 36% 53% 64% 71% 76%

1 18% 36% 53% 67% 77% 85%

2 18% 36% 53% 68% 81% 88%

4 18% 36% 53% 68% 82% 89%

Criterion 2: Minimum cost of heat

Minimum cost of heat is achieved by:

- Adding solar field until the combined solar + conventional cost reaches a minimum

PaybackSolar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 5 4.3 4.1 4.3 4.8 5.3

1 5.2 4.5 4.2 4.2 4.5 4.8

2 5.4 4.7 4.4 4.4 4.4 4.9

4 5.9 5.1 4.8 4.8 4.8 5.2

Spec. Inv. (USD/KWh-t)Solar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 391 347 329 347 374 410

1 401 355 337 339 354 376

2 418 370 352 349 352 379

4 448 397 377 375 375 402

Solar fractionSolar field aperture (m2)

Storage (h.) 1,000 2,000 3,000 4,000 5,000 6,000

0.5 18% 36% 53% 64% 71% 76%

1 18% 36% 53% 67% 77% 85%

2 18% 36% 53% 68% 81% 88%

4 18% 36% 53% 68% 82% 89%

Criterion 3: Adapt to available space

If only so much space is available to install the solar field, the project will be feasible if it still has an acceptable payback period.

Linear Fresnel collectors may have a advantage in this situation because they require less land.

Comparison between criteria

Minimum payback has the lowest risk but also the lowest reward.

Minimum cost of heat has the highest risk but produces optimal results in the long run

A solution is possible if insufficient space is available so long as it results in some savings in heat cost

1. Plot size assumes parabolic trough, linear Fresnel require about half of the surface

Current cost of producing heat with gasoil (Fuel + O&M) = 78 USD/MWh-t

OutputsMinimum payback

Minimum cost of heat

Restricted space

Investment 922,000 1,503,000 372,000 USD

Solar heat 3,786 5,776 1,286 tons

Total heat 7,118 7,118 7,118 tons

Solar fraction 53% 81% 18%

Payback 4.1 4.4 5.0 years

New cost of heat 64 58 75 USD/MWh-t

Savings 14 20 3 USD/MWh-t

Cost of heat after payback 37 18 61 USD/MWh-t

Current expense on fuel 411,700 411,700 411,700 USD/Yr

Avoided fuel first year 184,700 281,800 62,700 USD

Plot size 7,900 13,200 2,600 m2

CSH Cost analysisThird workshop of the MENA CSP KIP - Amman

Sep 2018

STA-Solar José Manuel Nieto

www.sta-solar.com

Picture by rackam.com