Economics of Storage in Concentrating Solar Power Stations Connected To The Australian National Electricity Market

Economic Optimum Levels of Storage in
a NEM-Connected Concentrating Solar

Power Station
Warwick Johnston BEng (Hons)/BSc
Dissertation for Masters of Science (Renewable Energy)
Murdoch University School of Science, 2009
PEC624 – Student # 30440143

Abstract
Many studies into the Life-cycle Cost of Energy (LCOE) from Concentrating Solar Power Stations
(CSPS) have been performed, however most have taken place in markets in which a constant power
price can be expected, whether through a power purchase agreement or some form of Feed-in
Tariff. However, in the absence of an Australian Feed-in Tariff, a CSPS obtains its revenue dependent
upon the Australian National Electricity Market (NEM) price at the time of power delivery. Hence in
order to maximise revenue when the power price varies, the design objective becomes maximising
Internal Rate of Return (IRR) rather than minimising LCOE.
This dissertation uses the Solar Advisor Model (SAM) software to investigate a 250 MW trough CSPS
connected to the NEM. It answers the following questions:
• In the context of operation within the Australian wholesale electricity market, is there value
in using energy storage in a solar power station? Does this vary by site, dependent on solar
radiation characteristics and wholesale price fluctuation?
• What amount of energy storage generates the greatest revenue from a solar power station?
Given that energy storage costs money, what is the most cost-effective investment in energy
storage?
It is found that the IRR-maximising CSPS plant configuration varies depending upon the electricity
price profile. It is shown that the best location for solar power may not necessarily be that with the
greatest solar resource. It is also demonstrated that inclusion of energy storage facilitates greatest
revenue when electricity price-dependent energy dispatch methodologies are used, but that the
overall impact upon IRR of including energy storage is marginal in most cases. Regardless of this, it is
found that the Australian NEM price is too low and variable to justify NEM-connected CSPS in
Australia without government contribution exceeding previously pledged amounts. A case is
therefore made for increasing government funding and reducing project risk by creating a Feed-in
Tariff.
Table of Contents
Abstract ................................................................................................................................................... 2
Declaration and Acknowledgments ........................................................................................................ 4
1 Introduction .................................................................................................................................... 1
2 Concentrating Solar Thermal Power Stations ................................................................................. 3
2.1 Components ............................................................................................................................ 4
2.1.1 Solar Field ........................................................................................................................ 4
2.1.2 Thermal Energy Storage .................................................................................................. 6
2.1.3 Power Block..................................................................................................................... 8
2.2 Design...................................................................................................................................... 8
2.2.1 Solar Multiple and Energy Storage ................................................................................. 8
2.3 Operation .............................................................................................................................. 10
3 World Status ................................................................................................................................. 11
3.1 Australian Situation............................................................................................................... 11
4 CSPS Economics ............................................................................................................................ 13
4.1 Current .................................................................................................................................. 14
4.2 Future .................................................................................................................................... 17
4.3 Component Cost and Optimisation ...................................................................................... 19
4.3.1 Optimum Level of Storage ............................................................................................ 19
4.4 Australian National Electricity Market Costs ........................................................................ 23
5 Research design ............................................................................................................................ 27
6 Input Data ..................................................................................................................................... 29
6.1 National Electricity Market ................................................................................................... 29
6.2 Weather and Solar Radiation ................................................................................................ 29
6.3 Solar Advisor Module Parameters ........................................................................................ 32
6.3.1 SAM technical inputs .................................................................................................... 32
6.3.2 SAM Financial inputs ..................................................................................................... 33
6.4 Other Financial Parameters .................................................................................................. 33
7 Preliminary Investigation: Greatest Delivered Value of Solar Energy .......................................... 35
7.1 Correlation between NEM price and Solar Radiation ........................................................... 35
8 Results ........................................................................................................................................... 40
8.1 Simulated Solar Power Station Operation ............................................................................ 40
8.1.1 Base Case: Longreach, Queensland, 2007 NEM DataSet, $350/m2 solar field,
$40/kWhth storage, $50/REC ......................................................................................................... 40
8.1.2 Sensitivity Analysis: NEM DataSet................................................................................. 42
8.1.3 Sensitivity Analysis: Cost of Storage ............................................................................. 44
8.1.4 Sensitivity Analysis: Cost of Collectors .......................................................................... 46
8.1.5 Sensitivity Analysis: REC price ....................................................................................... 47
8.1.6 Sensitivity Analysis: Electricity Price Increase ............................................................... 48
8.1.7 Sensitivity to Location ................................................................................................... 48
8.1.8 Variation with Solar Radiation Data .............................................................................. 51
8.1.9 Variation with energy dispatch methodology .............................................................. 54
8.1.10 Sensitivity to Government Contribution ....................................................................... 61
9 Interpretation of results................................................................................................................ 62
9.1 Comparison of Results to Literature ..................................................................................... 62
9.1.1 Project Cost ................................................................................................................... 62
9.1.2 Project Cost Breakdown................................................................................................ 63
9.1.3 LCOE .............................................................................................................................. 63
9.1.4 Configuration with Lowest LCOE................................................................................... 63
9.2 Discussion.............................................................................................................................. 64
9.2.1 Correspondence of lowest LCOE with highest IRR........................................................ 64
9.2.2 Benefits to IRR of incorporating storage....................................................................... 64
9.2.3 Sensitivity to Component Cost of Configuration for Highest Financial Gain ................ 66
9.2.4 Sensitivity to REC Price.................................................................................................. 66
9.2.5 Sensitivity to Location ................................................................................................... 66
9.2.6 Other configurations ..................................................................................................... 66
9.3 Significance of results ........................................................................................................... 67
9.4 Limitations of results............................................................................................................. 67
9.5 Aims....................................................................................................................................... 68
10 Conclusion, .................................................................................................................................... 69
10.1 Recommendations ................................................................................................................ 69
10.2 Opportunities for further study ............................................................................................ 70
11 References .................................................................................................................................... 71
12 Glossary ......................................................................................................................................... 73
13 Appendices .................................................................................................................................... 74
13.1 Solar Radiation Data ............................................................................................................. 74
13.2 Appendix 2: SAM economics inputs...................................................................................... 75
Declaration and Acknowledgments

Except where other input sources have been referenced, this dissertation is my account of my own
research.
I wish to gratefully acknowledge the contribution of the following people, with whom conversations
were held that shaped research directions and confirmed my own findings:
• Sasha Giffard of SMEC

• Fiona O’Hehir of GreenBank Environmental
• Steve Hollis of Lloyd Energy Systems
• Peter Muers and Paul Ebert of Worley Parsons
• Tim Burrows of Climate Managers
I also wish to acknowledge the contribution of my project supervisor, Trevor Pryor, and Murdoch
University Energy Economics Lecturer Adam McHugh
1 Introduction
The alignment of solar power systems’ output with network energy demand profile is a commonly
stated justification for supporting increasing levels of distributed photovoltaic generation 1. During
periods of peak demand, NEM wholesale energy prices soar above $300/MWh, events that often
coincide with high solar radiation levels as they are commonly linked to air conditioner usage. This
leads to two questions:
• Can solar power systems financial return on investment benefit from access to tariffs
reflective of the time at which they generate electricity?
• If solar power systems can access these peak power price events, would their payback be
shorter than if confined solely to retail tariffs?
There are a number of ways in which stakeholders in the solar power industry attempt to access
higher tariffs, reflective of the coincidence of solar power systems output and energy demand:
• Feed-in tariffs (FiT) provide increased prices for solar power. Some studies 2 have
investigated the benefits of deferred infrastructure upgrades and additional generation
capacity, along with other socio-environmental 3 factors, in order to demonstrate that policy
measures such as FiTs are justified. Supported by generous FiTs and other support
mechanisms, the international solar power industry is increasingly moving towards large-
scale systems that take advantage of the available economies of scale to deliver solar power
with a lower Levelised Cost of Energy (LCOE) and development-friendly return on
investment. Meanwhile, low Australian energy prices and FiT caps of 5, 10, and 30 kW 4
currently inhibit development of large-scale systems on our shores. As feed-in tariffs are a
policy measure that lie beyond CSPS developer’s control, this dissertation focuses upon
currently available incentives. In doing so, this dissertation quantifies opportunities for solar
power stations under existing conditions, and may describe and quantify the level of support
needed if Australia is to develop capacity in large-scale solar energy deployment.
• The size and non-dispatchability of small solar power systems inhibits their ability to
participate in the wholesale electricity market, in which generators should be at least 5
MW 5. The CSIRO is currently investigating the creation of ‘virtual power stations’ by
aggregating nearby small renewable energy systems 6. Incorporating telecommunications
and some energy storage, the diversity of renewable energy sources and locations may
increase aggregate system size and reliability to levels that allow smaller solar power
systems to access the premium rates offered by the wholesale market. This dissertation may
demonstrate the value of accessing the NEM through this mechanism, and the results
concerning levels of energy storage will also be relevant to ‘virtual power stations’. For the
moment, CSIRO’s research is not commercialised, meaning that solar system developers
must rely on other mechanisms for accessing increased tariffs, such as the wholesale
market, and the large but limited capacity off-grid diesel market.
• Internationally, solar power stations of the megawatt range are growing increasingly more
common, yet there are few large solar power stations in Australia. Above 5 MW,
participation in the NEM becomes feasible, budgets become large, and - from a developer’s
perspective - maximising revenue becomes more important than maximising efficiency.
Energy storage might assist in obtaining maximum economic value from harvested solar
energy, by dispatching energy when the NEM price is at its highest – a postulation assesses
by this paper. This option is immediately available to developers such as Worley Parsons,
who announced plans to investigate up to 34 $1b solar power stations of 250 MW capacity 7.
[1]
With the above in mind, this dissertation shall investigate the level of energy storage that achieves
the greatest financial value of delivered energy in a solar power station. Towards this outcome, this
study shall assess optimal energy storage levels through a financial analysis that balances the
purchase, operation, and maintenance of standard energy storage technologies with the value they
create by delivering energy at a later moment in time. More explicitly, it uses the Solar Advisor
Model (SAM) software to investigate a 250 MW trough CSPS connected to the NEM and answer the
following questions:
• In the context of operation within the Australian wholesale electricity market, is there value
in using energy storage in a solar power station? Does this vary by site, dependent on solar
radiation characteristics and wholesale price fluctuation?
• What amount of energy storage generates the greatest revenue from a solar power station?
Given that energy storage costs money, what is the most cost-effective investment in energy
storage?
The dissertation is broken into two parts. The first provides a background to Concentrating Solar
Power (CSP), including a literature study. The second concentrates upon the metric study of CSPS
optimisation.
[2]
Part 1: Background and Literature
Survey
2 Concentrating Solar Thermal Power Stations
8
Figure 1: Concentrating Solar Thermal Power Station Types
As illustrated in Figure 1, there are a number of different technologies that are classified as CSPS.
These include:
• towers, in which an array of mirrors focus light onto a centralised receiver,

• dishes, in which a parabolic dish concentrates light onto a central focal point,
• troughs, in which a parabolic trough concentrates light into a linear receiver tube A.
Additionally, the CSPS receiver can be photovoltaic or thermal in nature B. This dissertation
investigates only parabolic trough thermal CSPSs as they are considered proven technology.
From a high level, CSPS consist of a collector field, energy storage, and power generation blocks, as
depicted in Figure 2.
A
A heliostat array of mirrors may achieve simular effect to a parabolic trough, concentrating light onto a
centralised receiver tube; for example Ausra’s technology. See http://www.ausra.com.au/
B
CSP cogeneration can use both PV receiver with thermal cooling water used as low-temperature process
heat, but heat demands of the scale applicable to CSPSs are uncommon.
[3]
9
Figure 2: CSPS overview
2.1 Components
There are many technical variables involved when designing a CSPS. These include the relative size of
the solar field to the power block, the amount of energy storage, the working fluid used in the
receivers and storage vessels, and many others. Each has a significant impact upon the operation of
the plant, its upfront and ongoing cost, and the cost of the electricity it produces.
The following sections explore in more depth the available technologies and the choices available in
parabolic trough CSPSs.
2.1.1 Solar Field

The solar field consists of a large number of reflective parabolic troughs, each with a receiver tube, a
single-axis tracking mechanism, and associated services.
The parabolic trough collector is responsible for intercepting the solar radiation and concentrating it
onto a linear receiver. Temperatures high enough to generate steam are achievable through
concentrating the solar energy by a factor typically in the hundreds. The parabolic trough collector is
a crucial part of the system, and various types of collector exist. Because this dissertation is focussed
more upon storage and economics, variations in trough performance are beyond the scope of this
dissertation, and thus receive no further mention.
A heat transfer fluid flows through the receiver tube, transporting the heat from the receiver to the
power block, via heat exchangers and energy storage in most cases. Important properties of the heat
transfer fluid include its ability to withstand the high temperatures involved, its corrosiveness, its
freezing temperature, and its heat capacity. These are described in the following sections.
[4]
2.1.1.1 Receiving Fluid
The heat transfer medium transports the sun’s concentrated energy from the parabolic trough to
the storage vessel and/or power generation block. The are a number of choices of receiver heat
transfer fluid available, with the key properties being specific heat capacity, greatest operational
temperature, freezing point, pressure, and corrosiveness.
Some of the more commonly used receiver fluids are Solar Salt, Caloria, Hitec XL, VP-1, Hitec,
Dowtherm Q, Dowtherm Rp, and Therminol; the properties of some of which are presented in Figure
3.
10
Figure 3: Characteristics of some Heat Transfer Fluids
Currently, most collector fields use a synthetic thermal fluid in the collectors. The main problem with
synthetic oils is decomposition of the oil during operation, which requires hydrogen absorbers
“getters” in the receivers. However, molten salt’s high heat capacity and maximum operable
temperature is driving research towards its direct use in receivers. This can result in a reduction in
pumping energy, as well as an increased plant efficiency through higher receiver temperature 11.
Anti-corrosive properties of receiver materials are required when using molten salts in the receiver.
Another research direction is towards the direct steam generation (DSG) in receivers, offering
benefits of higher temperatures than thermal oil, cheaper working fluid, simpler plant configuration
(as depicted in Figure 4), and reduced environmental risk 12. The pressures involved (60-100bar)
increase the weight of the collector, and demands upon valves and fittings. Even so, a reduction of
LCOE of 8% is expected 13. The challenges involved in DSG include solar field control under radiation
transients, and uneven heat transfer at the absorber pipe 14.
[5]
15
Figure 4: Direct Steam Generation's Simpler Configuration
The choice of thermal fluid can have significant impact upon the cost and energy production of the
CSPS, and there is an interplay between the choice of receiver and storage mediums. Using the same
fluid in the solar receiver as in the thermal energy storage can avoid the expense (upfront and
maintenance) and inefficiency of the heat exchangers, but the relative costs of fluids as well as the
energy needed to keep them from freezing in the receivers overnight has impact upon the energy
balance.
As many of these heat transfer fluids freeze at temperatures below 100°C, prevention of freezing is a
key issue, as the forced thawing of such an occurrence can cost time and money at best, and damage
the entire collector field at worst. For example, failure of a circulation pump can lead to freezing of
HiTec XL within 35 minutes 16.
Freeze protection can be achieved in a number of ways: ‘cold’ salt can be circulated, the salt can be
directly heated through resistance, and impedance heating or field draining can be used during
maintenance. Obviously, all of the above methods use energy in some form; overnight freeze
protection requirements for a number of proposed thermal fluids is presented in Table 1. The
method of freeze protection can thus impact upon the net energy available for export and
consequently the project revenue.
17
Table 1: Supplementary thermal energy demand for overnight freeze protection
Fluid Annual supplementary heat Temperature

demand (hours/year)
Therminol 10
Sandia Salt 600 130°C
Hitec/ Hitec XL 2300 175°C
Binary salt 4200 250°C
2.1.2 Thermal Energy Storage

Incorporation of thermal Energy Storage (TES) into CSPSs brings multiple benefits:
• Greater power station availability

• Electricity production later in the day (as depicted in Figure 5), often meaning generation
during periods of higher electricity prices which generally occur after the midday peak in
solar radiation
• Dispatchable power, a significant benefit to the network and power station operator
• Minimisation of energy losses during generator start-up and optimised generator
operational efficiency.
[6]
These benefits can mean improved project economics, but not necessarily so.
18
Figure 5: Effect of Incorporating storage into power production
Just as there are a number of receiver heat transfer fluids, each with their own implications upon the
CSPS, there are a number of thermal energy storage media, the choice of which is explored in
2.1.2.1. Interacting with the choice of energy storage medium is the energy storage tank
configuration, detailed in Section 2.1.2.2
2.1.2.1 TES media

A number of different means of storing thermal energy have been used in existing CSPSs or are
under development. The thermal storage fluids options are essentially the same as those available in
the receiver, as are the design criteria:
• “High energy density (per-unit mass or per-unit volume) in the storage material
• Good heat transfer between heat transfer fluid (HTF) and the storage medium
• Mechanical and chemical stability
• Compatibility between HTF, heat exchanger and/or storage medium
• Complete reversibility for a large number of charging/discharging cycles
• Thermal losses
19
• Ease of control”
Using the same fluid in the receiver and storage tank can eliminate heat exchangers that reduce
efficiency and are expensive to purchase and maintain. This can therefore result in upfront and
ongoing cost savings, but a balance must be struck between costs and performance, particularly as
the receiver and storage tank have requirements of optimal material property.
2.1.2.2 TES configurations

There are two commonly used tank configurations for TES: 2-tank and Thermocline. These are
depicted in Figure 6, and explained in further detail in this section. A heat exchanger is always used
in the steam creation loop unless the solar field is configured to directly create steam (which is a
topic of current research). Although Figure 6 does not depict them, heat exchangers are required if
differing media are used for heat transfer and storage and are noted in the following paragraph.
[7]
2-tank (direct) TES schematic Thermocline (direct) TES schematic
20
Figure 6: Energy Storage Tank Configurations
The most energy efficient method of storing the thermal energy is in two tanks: one ‘hot’ and one
‘cold’. When energy is being transferred from the solar field to the energy storage, fluid flows from
the cold tank to the hot tank via the receiver-to-storage heat exchanger. When energy is being
transferred from the energy storage to the power block, fluid flows from the hot tank to the cold
tank via the storage-to-generator heat exchanger. However, as the TES fluid is costly, alternative
storage methods have been developed.
Thermocline TES use a single tank, in which a heat gradient is maintained. Cold fluid is drawn from
the bottom of the tank, heated in the receiver-to-storage heat exchanger, and placed back into the
top of the tank. To generate power, hot fluid is drawn from the top of the tank, delivers its heat in
the storage-to-generator heat exchanger, and placed back into the bottom of the tank. The major
benefit of thermocline systems is the ability to use fillers; thermal energy storage materials that sit
within the tank and which are far less expensive than the typical thermal storage fluids. Quartzite
rock with silica sand have been demonstrated to be suitable filler materials 21.
Concrete blocks and Phase Change Materials have also been identified as suitable energy storage
materials 22.
2.1.3 Power Block

In most CSPSs, the power block is a Rankine cycle turbine, in common use in the power generation
industry. The choice of wet or dry cooling for heat rejection can significantly impact upon the
efficiency of plant operation and LCOE. In the simulation, wet cooling has been used as it produces
better performance and financial results. However, as the most favourable sites for CSP are those
that are located in arid regions, wet cooling may be impractical – a situation compounded by
Australia’s frequent water shortages.
2.2 Design
This section details the parameters involved in CSPS system design, particularly those pertinent to
the SAM software which is used for the modelling described later in the Dissertation.
2.2.1 Solar Multiple and Energy Storage

The solar multiple (SM) is the ratio of the solar field peak output power to the rated generation
capacity of the generation block. For a fixed power generation capacity, the solar multiple therefore
establishes the size of the solar field.
If the solar field peak capacity is smaller than the generator capacity, then there is no need for
energy storage (except to delay output if desired), as the generator can make use of all solar
[8]
radiation delivered to it. When the solar field capacity is larger than the generator capacity, the
excess energy can either be dumped and lost, or placed into storage for later use. Even when
storage is not incorporated, it typically makes economic sense to size the generator slightly smaller
than the solar field capacity, as significant capital costs can be saved by choosing a smaller
generator, so long as the amount and value of dumped energy is not great. – there being an
economic optimum ratio, as illustrated in Figure 7.
Figure 7: LCOE with respect to solar multiple and hours of TES – Source SAM version 2009.10.2
For systems that incorporate TES, when the solar field produces more power than the maximum
generator output power, the excess solar energy can be stored for later despatch. Incorporation of
energy storage makes the search for an economic optimum more complex, as:
• larger solar multiples become viable,

• energy storage size and technology strongly influence capital cost, and
• energy dispatch methodology influences the net value of delivered energy.
The energy flows that occur when TES is incorporated are illustrated in Figure 8.
[9]
23
Figure 8: Energy Flows for CSPS that incorporate TES
The size of the energy storage unit (hTES), typically expressed in hours of operating the generator at
its rated capacity, is another fundamental design criterion, and there is a strong relationship
between the economically optimum solar multiple and hours of energy storage, as depicted in
Figure 7. Having 12 hours of energy storage is not useful if the solar field never generates more
power than the generator can handle C ; similarly, much energy will be lost if a solar multiple of 10 is
used unless there is a large-capacity energy storage unit.
The time at which peak power prices are available D also strongly establishes the financially-prudent
energy storage amount, although achieving a minimum LCOE is another influence. The losses
incurred in the storage vessel and heat exchangers can result in a reduced thermal efficiency of plant
operation. However, the increase in usability of the energy within the power block can counteract
the efficiency losses, whilst achieving significant increases in other highly-desirable power stations
metrics, principally power station availability and value of energy delivered E.
The dispatch strategy for stored thermal energy storage can also influence the end value of the
power delivered. Energy produced in the morning may be stored for afternoon dispatch if the price
of electricity is anticipated to be greater later in the day; however, as the energy storage approaches
its capacity, then some interplay between the weather forecast and the price forecast may dictate
whether any forthcoming radiation is put directly towards generation, or stored for later use.
2.3 Operation
A CSPS with storage that is operated with the objective of attaining the greatest energy efficiency or
least LCOE typically would base the output power upon the amount of energy in the storage and the
incident solar radiation at that time. In the morning, solar energy is typically stored, at least until
sufficient buffer is available to ride out any intermittent clouds. In the afternoon, the storage is used
to extend full-load generation once solar radiation levels decrease F. In between, there is a high level
of flexibility about how the energy can be stored, dispatched, or even bypass storage. While the
C
Unless the peak power price is at midnight – ie the TES achieves a time shift only
D
In a strict sense, the relationship between peak power price and month of year influences optimal design of
energy storage levels, as attempting to meet peaks that occur in the winter afternoon may result in an
oversized solar field.
E
This demonstrates the value of searching for an economic optimum rather than solely optimum plant
efficiency.
F
An energy dispatch methodology to attain minimum LCOE would still store solar radiation in order to operate
the generator at its maximum efficiency. If the energy prices peak during the late afternoon, storage can also
be used to increase revenue.
[10]
optimum control algorithm for a CSPS is a presently unpublished topic, it appears that control
decisions can have significant impact upon CSPS energy efficiency and revenue.
3 World Status
Trough CSP is considered a proven technology because of its history of reliable operation. In
response to the 1970s oil shocks, nine “Solar Energy Generating Systems” (SEGS) were
commissioned in the USA over the period 1985-1991. representing a total of 354 MW, the largest
individual SEGS plant was 80 MW 24, and the 9 plants cumulatively represent 354 MW of time-proven
generation. These were developed as commercially viable projects at the time, though investment in
CSP subsequently stalled until recent years’ renaissance. The 64 MW Nevada Solar One project in Las
Vegas, USA was commissioned in 2007. The 50 MW AndaSol 1 project in Granada, Spain was
completed in November 2008.
In addition, a number of CSP trough projects are under construction (see Table 2), and many more
are slated for development.
G
Table 2: trough CSP under development
Name Country Size

Martin Next Generation Solar Energy Center USA 75 MW
Andasol 2 solar power station Spain 50 MW
Andasol 3 solar power station Spain 50 MW
Alvarado/La Risca 1 solar power station Spain 50 MW
Solnova 1 solar power station Spain 50 MW
Solnova 3 solar power station Spain 50 MW
Energia Solar De Puertollano SA Solar Plant Spain 50 MW
Extresol 1 solar power station Spain 50 MW
Kuraymat Plant Egypt 40 MW
Hassi R'mel integrated solar combined cycle power station Algeria 20 MW
Keahole Solar Power Hawaii 1 MW
3.1 Australian Situation

At the time of writing, there was only one concentrating solar thermal power station operating in
Australia. Developed by Ausra (then Solar Heat and Power), a 2 MW linear Fresnel lens provides pre-
heated steam to an existing coal power station as a demonstration plant 25. Other large-scale
concentrating solar power systems include:
• Solar Systems deployment a number of concentrating PV dishes. Prior to Solar System’s

collapse, a number of concentrating PV heliostat projects were in development.
• Lloyd Energy’s 3 MW station in Lake Cargelligo, under construction.
• The ANU’s Big Dish test and demonstration installation.
• EnviroMission’s intended solar tower in Mildura 26
A number of projects have also been announced. A trough CSP has been announced for Cloncurry,
QLD, to be developed by SMEC and Lloyd Energy Systems. Worley Parsons announced plans to
investigate up to 34 $1b solar power stations of 250 MW capacity 27, and is presently identifying the
G
Correct at time of writing, http://en.wikipedia.org/wiki/List_of_solar_thermal_power_stations
[11]
most appropriate sites and technologies. The Federal Government’s Solar Flagships program aims to
facilitate the creation of four solar farms of varying technology, which should result in at least one
Australian CSPS.
Proposed non-photovoltaic solar power stations are presented below:

28
Table 3: Proposed non-photovoltaic Solar Power Stations
Name & state Owned Technology Capacity

(kW)
Mingenew WA Worley Parsons Solar Thermal 250000
Neds Corner Vic Enviromission Ltd Turbine 200000
Mildura Vic Solar Systems Generation Pty Ltd(80%)/ Solar Concentrator 154000
TRUenergy(20%)
Buronga NSW Enviromission Ltd Turbine 50000
Point Patrson SA Acquasol Solar Concentrator 50000
Parkes NSW New Horizon Energy Parabolic Troughs 30000
Whyalla SA Solar Oasis Solar Dish 22200
Cloncurry Qld Ergon Energy Steam Turbine 10000
Stanwell Qld Austa Energy Corp Ltd/Stanwell Corp Solar Concentrator 5000
Ltd
Lake Cargelligo Lloyd Energy Systems Unknown 3000
NSW
Eraring NSW Pacific Power/ANUTECH/Transfield P/L Steam Turbine 2300
Mica Creek Qld CS Energy Ltd Steam Turbine 2000
Alice Springs NT Public Solar Concentrator 1300
Kalgoorlie WA City of Kalgoorlie-Boulder Photovoltaic and mirrors 1152
Coober Pedy SA Government Solar Dish 624
Alekarenge NT Alekarenge Community Photovoltaic and mirrors 576
Ti Tree NT Ti Tree Community Photovoltaic and mirrors 192
Kalkarindgi NT Kalkarindgi Community Photovoltaic and mirrors 192
Perth WA Verve Energy Photovoltaic and mirrors 20
Sydney NSW CSIRO Cogeneration 20
[12]
4 CSPS Economics
For CSP to be deployed at the level necessary to achieve significant reductions of our electricity
supply’s carbon intensity, it must compete with other energy generation technologies, including
traditional and ‘clean’ coal, gas, wind, hydro, photovoltaic, and nuclear power. The Levelised Cost of
Energy, or total project lifetime costs divided by total net energy output, is one economic metric
typically used to compare the attractiveness of different generation technologies. However,
investors make decisions for each individual project based upon its Net Present Value (NPV), or
Internal Rate of Return (IRR). Of course, there is an interaction between LCOE and IRR, for if the cost
of producing solar energy is greater than the price the market will pay for it, then the project will not
be profitable and will thus not proceed.
The revenue for a power station that operates in the NEM depends upon the price of electricity at
the moment of generation, itself significantly dependent upon the amount of electricity demand at
that moment. As seen in Figure 9, the NEM price for Queensland has a somewhat consistent profile,
inasmuch that electricity prices tend to be higher in the late afternoon than they are in the middle of
the day. This late-afternoon price peak may justify the inclusion of storage, depending upon the
relative cost of storage and the cost advantage of delayed output
Figure 9: Average QLD Price by Hour of Day for 2000-2007 (Source NEMMCO)
Wind and photovoltaic power stations generally don’t incorporate energy storage, as the cost of
electricity storage typical outweighs any financial benefit achieved 29. Such power stations have low
operational costs and rely upon intermittent fuel availability, meaning they will generate power
whenever the resource permits, and are thus considered as price-takers. Fully dispatchable power
stations that use fuels such as natural gas operate only when the price of electricity is greater than
the costs of fuel and operational costs. As storing thermal energy is less expensive than storing
electrical energy 30, and considering the other financial benefits of TES within a CSPS, solar power
stations can attempt to gain maximum revenue from that day’s solar resource. In doing so, they are
[13]
still constrained by the price of electricity that is available to them on that day. As such, CSPSs that
incorporate TES are still price-takers, albeit with some ability to achieve greater revenue through
output control.
The fundamental question in the minds of energy industry leaders is: even given the governmental
financial support for Solar Flagships and availability of renewable energy and carbon pollution
markets, will CSP compete with other forms of electricity supply, now or in the future? If so, under
what input assumptions (e.g. REC price)? If not, what is needed to make CSP competitive? Can the
advantages of more easily storable thermal energy provide financial benefits because of
dispatchability? This dissertation intends on answering some of these pertinent questions. To this
end, the IRR of CSPSs in Australia is investigated using available tools. In particular, the effect of the
NEM price upon the IRR is investigated, in order to categorise the profitability of CSP in the absence
of a Feed-in Tariff.
Although IRR is the metric by which an individual project’s financial viability can be measured, LCOE
is a metric that is more commonly reported in international literature. There is a close relationship
between LCOE and IRR; the LCOE must at least be lower than the electricity sale price for a power
station to be financially viable. The tendency to report LCOE may occur because the most favourable
markets for CSPS have Feed-in Tariffs, or because Power Purchase Agreements may also establish a
fixed price of energy. In both cases a profit can be made so long as the LCOE is less than the FiT or
agreed PPA price, the aim therefore becomes to minimise LCOE. However, due to the variable NEM
price that an Australian CSP receives, the project that seeks maximum financial return must design
the power station to obtain the highest IRR. Under these terms, it may be worthwhile investing in
more storage if it gains access to significantly greater revenues at marginal extra cost. Bearing in
mind that minimum LCOE may not mean maximum IRR in Australia, the following sections
summarise available literature on CSP economics.
4.1 Current
Not surprisingly, the largest cost in a CSPS is the cost of the collector itself. Figure 10 shows that the
cost of 6 hours of TES represents about 15% of estimated total project costs, with the major other
cost being that of the turbine itself. In 2007, the price of CSPS projects was found to between
US$2,400- $3,000/kW, with corresponding LCOE in the range of 10-12.6 c/kWh (USD) 31. Component
costs are explored in more depth in Section 4.3.
[14]
Site Work and
100 MW CSP Cost Breakdown Infrastructure
HTF System 0%
Balance of Plant 2%
6%
Contingency
8%
Power Block
10%
Solar Field
59%
Thermal Energy
Storage
15%
32
Figure 10: Cost breakdown of 100 WM CSPS with 6 hours storage, US$2007
There are many factors that affect a CSPS’s LCOE, some of which will be explored in greater depth in
this dissertation. Chief amongst these variables is the (direct normal) solar radiation resource. Figure
11 demonstrates that a 13-23% reduction in LCOE is available at sites with annual direct normal
incidence solar radiation exceeding 2300 kWh/m2a. Assuming that a similar situation applies to
Australia, Figure 12 demonstrates that there are a number of Australian sites that meet this criteria.
33
Figure 11: Dependency of solar LCOE on DNI resource (free load, 6h storage)
[15]
34
Figure 12: DNI radiation at key Australian Sites
A quoted CSP LCOE of 10-12.6 c/kWh compares favourably with LCOE at many foreign Simple-Cycle
gas turbines (18.7 c/kWh) and Combined Cycle gas LCOE (11.9 c/kWh) 35. However, hampering the
economics of Australian CSP development is the cheap price of electricity. One Australian uranium
mining report put the LCOE from a coal power station at 4 c/kWh (AUD) and 5 c/kWh from a
combined-cycle gas turbine, as seen in Figure 13. Unfortunately, even a 23% improvement in LCOE
due to high insolation levels is not going to overcome this difference. However, such an LCOE might
be able to compete with coal or natural gas if their externalities associated with pollution (shown in
Figure 14) were internalised, depending upon the external costs of CSP.
36
Figure 13: Lifecycle economic costs of electricity generation
[16]
37
Figure 14: Lifecycle costs including Environmental Externalities
4.2 Future
Technology experience curves predict that CSP LCOE will reduce as the cumulative installation
capacity increases with time. There are many factors that contribute to this price reduction: as
experience with CSPS grows, risks are reduced and investors’ appetite grows for larger-scale
systems, driving down costs through economies of scale. Specific improvements to contributing
technologies can also deliver better performance with a smaller price-tag. Figure 15 shows a
predicted experience curve for CSP, based upon an investigative study into likely price reductions
from contributing factors. LCOE reductions of between 13 and 29% are demonstrated in Figure 16
for a CSP with 3 hours of TES, and are calculated from expected small advances in a wide range of
contributing technologies. Further technology-driven improvements to LCOE are explored in Section
4.3. S&L and SunLab predict LCOE of 6.2 and 4.3 c/kWh respectively by 2020 38. If these predictions
prove to be correct, then CSP can clearly provide cost-competitive renewable energy in future, if its
deployment is supported today.
[17]
39
Figure 15: CSPS Experience Curve
40
Figure 16: Technology-driven reductions in LCOE
[18]
4.3 Component Cost and Optimisation
There is a myriad of combinations of component technology and overall plant configuration, each
with their own impact upon the overall cost and performance of the power station. Some of the
options include:
• As mentioned in Section 2.1, using the same working fluid in the receivers and the storage
vessel can save the (upfront and ongoing maintenance) expense of the heat exchangers, and
improve storage.
• Use of a thermocline system with appropriate low-cost filler material can reduce LCOE by
0.4c/kWh (see Figure 17)
• Using salt as the receiver heat transfer medium can allow increased receiver temperatures,
increasing plant operational temperature and thus generator efficiency, reducing LCOE by
1.4-1.7 c/kWh, depending on the operational temperature achieved – see Figure 17.
41
Figure 17: LEC gains with use of salt as a receiver
4.3.1 Optimum Level of Storage

Even though there are costs involved in energy storage equipment, and energy losses associated
with transfer and storage of heat, incorporating storage can increase project revenues by shifting
generation to times with higher energy prices, whilst also reducing LCOE by increasing power station
availability and overall plant operational efficiency. Platts 42 claims that on a 100 MW power station,
incorporating 4 hours TES can increase annual revenues by $2.5M when compared to a plant
without storage, raising the average delivered revenue from $51/MWh to $60/MWh (see Figure 18).
[19]
43
Figure 18: Economic Benefits of TES
The question then becomes what amount (and type) of energy storage maximises the economic
attractiveness of the solar power station, whether defined by LCOE or NPV/IRR – a question that
forms the primary investigation direction of this dissertation. In Figure 19, Flagsol places specific
costs of storage at $25-$135/kWh, depending on the energy storage medium used; the least
expensive being thermocline liquid salt.
44
Figure 19: Specific Costs of Different TES Concepts
Due to economies of scale and material efficiencies, larger storage capacities have lower cost and
fewer losses per unit of energy storage, as shown in Figure 20.
[20]
45
Figure 20: Specific Storage Cost
Larger storage capacity reduces the amount of energy that is dumped when storage vessels are full.
However, as shown in Figure 21, there are diminishing returns associated with increasing the
amount of energy storage; beyond a certain point LCOE can actually increase with greater amounts
storage.
46
Figure 21: Selection of Storage Size
Brosseau 47 demonstrates that the advantages of TES are dependent not only on the materials used
in the storage (see Figure 19), but also on the configuration and operating temperature. Figure 22
demonstrates very little benefit to LCOE from incorporating two-tank TES when receiver operational
temperatures are 391°C; in comparison Figure 23 shows that significantly reduced LCOE may result
from including storage when thermocline configuration is used with 500°C molten salt in the
receivers.
[21]
48
Figure 22: Indirect Two-tank TES at 391°C
49
Figure 23: Direct Thermocline TES at 500°C
Ecostar demonstrates that price of electricity can affect the LCOE H, and thereby influence the
optimum design. The search for an optimal solar field size and TES capacity depicted in Figure 24
yields plants with large solar fields and large storage capacity when electricity rates are fixed
(typically by government renewable energy incentive schemes), but smaller solar field and storage
size when electricity rates vary during the day.
H
Presumably this is because even though the ‘fuel’ is free in a CSPS, the night-time parasitic load is a cost
within the project – if no revenue can be achieved in night-time operation, then less storage is warranted.
[22]
50
Figure 24: Comparison of LCOE with fixed and variable electricity sales prices
In a similar way, this dissertation investigates the optimum CSPS design within the NEM’s varying
electricity price. Whilst minimising LCOE is a worthy goal, optimising a project for greatest possible
IRR is a more likely outcome of project design, which drives projects towards obtaining maximum
revenue from minimum investment.
4.4 Australian National Electricity Market Costs

The Australian National Electricity Market (NEM) is the electricity transmission and distribution
network that connects the eastern and southern states of Australia (see Figure 25). The NEM
operator facilitates network balancing, forecasts demand and prices into the future, and provides
the market mechanism for the transfer of electricity and payments between generators and
retailers.
51
Figure 25: NEM extents
The NEM wholesale price of electricity is updated in 5 minute blocks, which varies in a non-linear
manner with electricity demand. Based upon the forecast price of electricity and the generators
marginal cost of production, each generator bids their willingness to generate a certain amount of
energy, and is called upon to do so if the electricity price exceeds their bid. The wholesale price is
then aggregated into half-hour purchasing intervals, which are paid to the generators by the
purchasers of electricity.
[23]
The NEM price varies with demand, according to market principles of supply and demand (see Figure
26). However, Figure 27 demonstrates that the relationship is non-linear, with significant peaks in
NEM prices occurring. Price peaks occur in particular when supply is constrained – particularly by
environmental events such as bushfires and drought damaging power lines or reducing hydro-power
generation capacity – or when demand is particularly high – which often occurs due to air
conditioner use on particularly hot days (see Figure 28). However, although such price peaks can
strongly influence datasets of average price, they are infrequent occurrences (see Figure 29), with
most days following a more typical hourly profile, albeit one that varies from month to month (see
Figure 30).
NEM Average RRP and Demand by

Hour, QLD 2005-06
7000 $60
6000 $50
5000
$40
Demand (MW)
4000
RRP
$30
3000
$20
2000
1000 $10
0 $0
1 3 5 7 9 11 13 15 17 19 21 23
Demand RRP
Figure 26: NEM Average RRP by Demand and Hour, QLD 2005-06 (Data Source: NEMMCO)
Figure 27: NEM Price vs Demand - QLD 2007 (Data Source: NEMMCO)
[24]
52
Figure 28: NEM Price Peaks Explained
Figure 29: NEM Price Distribution Curve (Data Source: NEMMCO)
[25]
Average Electricity Price vs hour of day -
2004 NSW January
35.0 February
30.0 March
25.0 April
May
$/MWh
20.0
June
15.0
July
10.0
August
5.0
September
0.0 October
1 3 5 7 9 11 13 15 17 19 21 23 November
Hour of Day December
Figure 30: Average NSW Price by Hour of Day for Each Month (Data Source: NEMMCO)
Of greatest interest for CSPSs is maximising the value of the power generated. Although Figure 31
demonstrates that power price is generally higher during daylight hours and that there is thus some
correlation between solar radiation and power price, it is clear that the peaks in solar radiation and
wholesale electricity price do not coincide. This fact provides the value for energy storage,
investigated in detail in Part II.
NSW Ave NEM price & Solar Radiation vs

Time of Day
$300 0.4
0.35
$250
0.3
Solar Radiation
$200
0.25
NEM Price
$150 0.2
0.15
$100
0.1
$50
0.05
$0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 0
2004 2005
2006 2007
Direct Solar Radiation Global Solar Radiation
Figure 31: NEM Price & Solar Radiation vs Time of Day, NSW (Data Source: NEMMCO and EnergyPlus)
[26]
Part II: Investigation
5 Research design
The dissertation makes use of CSP simulation software to model the input and operational costs of
various CSP configurations. A financial spreadsheet that incorporates NEM electricity pricing data is
built around the simulator output. This allows calculation of LCOE and IRR for a number of input
variables across a variety of locations and NEM electricity price datasets.
The challenge faced by CSPS operating on the NEM is the variable price of electricity in the absence
of a feed-in tariff. This variance has a daily NEM-price profile that suggests that storage of solar
energy for delivery later in the day might improve the financial performance of a NEM-connected
CSPS. The modelling took a selected year’s hourly NEM price and assumed it applied in the following
thirty years of operation. However, the NEM-price variance also spans years, meaning investment
decisions must make predictions of future years’ NEM price. To provide a sensitivity analysis to NEM
price, each simulation was run four times, once for each of the four chosen years of hourly NEM
price data. This also allows investigation of the relationship between financially optimum levels of
storage and the NEM price profile.
In order to ascertain whether incorporation of storage into a NEM-connected CSPS would deliver
greater income stream, a preliminary investigation was conducted prior to commencing the
dissertation. This investigation used a simple dot-product multiplication between hourly solar
radiation and NEM price to approximate the magnitude of revenue that might be expected. Storage
was modelled by slipping the NEM price by the associated number of hours, and the approximated
revenue metric used to compare the outcome. This investigation is presented in Section 7.
Whilst the preliminary investigation established that there was a possible case for incorporating
storage, it had limited ability to determine the financially-optimum level of energy storage to
include. Determining the optimum amount of energy storage requires a financial model that takes
into account upfront and ongoing costs, revenue streams from sale of electricity and Renewable
Energy Certificates, taxation and depreciation, as well as a sophisticated CSP model.
The more detailed investigation made use of analysis software developed by the National
Renewable Energy Laboratory (NREL) in the USA. Known as Solar Advisor Model (SAM I), it
incorporates sophisticated models of CSP components and their costs, runs detailed thermal energy
analysis using TRNSYS, and provides economic analysis 53. However, SAM has limited ability to
incorporate hourly pricing data. As such, a financial spreadsheet was built around the output of
SAM, thereby allowing sensitivity analysis to be performed upon input variables such as the price of
collectors and cost of storage.
An investigation of the variance of IRR with respect to inputs such as solar multiple, hours of thermal
energy storage NEM price, and location was performed. To model the CSPS proposed under the
solar flagships program, a 250 MW CSPS was chosen. LCOE was investigated for the purpose of
comparison to international literature. To enable greater comparison between LCOE results and
I
SAM version 2009.10.12 was used
[27]
values from international literature, the LCOE was not subsidised in any way. A currency exchange
rate of 1USD=0.8AUD was used.
IRR was investigated as the basis by which various plant configurations could be compared. NPV can
accurately calculate poor financial returns, but is not useful as a comparison metric between
differing investment amounts, as the value of NPV varies with the amount of investment. In
contrast, IRR can be used to fairly compare the financial return on differing investment amounts.
However, there are limitations when using IRR as a reference metric. Scenarios with poor financial
performance may not be profitable even if a 0% (or less) discount rate is used – hence IRR is only an
appropriate metric for situations in which a profitable outcome is possible.
For this reason, an optimistic scenario was chosen as the base case. It was found that a 33%
government contribution to initial capital cost (as proposed by the announced Solar Flagships
Program) did not guarantee good outcomes, and negative IRRs were found in certain years. Instead
a 50% government contribution was modelled for IRR calculations. The sunniest NEM-connected
location in Australia was chosen as the base case site of the power station, with a sensitivity analysis
performed upon location.
[28]
6 Input Data
6.1 National Electricity Market
Half-hourly electricity price and demand data from 1999 to present day is readily available from
http://www.nemmco.com.au/data/market_data.htm. As SAM produces hourly output data, the
half-hourly NEM price was averaged to create an hourly dataset for each state in the years 2004-
2007.
6.2 Weather and Solar Radiation

There are a number of data sources of Australian weather and solar radiation. Ultimately, the SAM
requires site latitude and longitude, as well as hourly input data for solar azimuth, direct solar
radiation, dry and wet-bulb temperature, and windspeed. Such information is available for ‘typical
years’ at a large number of NEM-connected locations. However, accurately measured half-hourly
data is needed to investigate whether a correlation between NEM price and solar radiation exists.
This real-time data is only available at a limited number of sites in Australia. In contrast, satellite-
inferred data is available for most meteorological stations in Australia; however, the data is less
accurate and only available as a daily total – it is thus useful for comparative purposes only. The sites
of interest with available data are presented in Table 4 below.
Highly accurate (bankable) solar radiation data is necessary to obtain the investors needed for a CSP
project to proceed. However, for this dissertation, the lack of available measured half-hourly data at
likely CSP sites meant that TMY data was used instead. It is recognised that decoupling the NEM
price and the true solar radiation is a significant step that carries weighty implications should a
strong correlation between NEM price and solar radiation exist. Thus an investigation into
correlation between NEM price and solar radiation data at the sites with half-hourly solar radiation
measurements was performed. It found that there was no discernable correlation between the two
variables. The daily sum of global and DNI radiation is plotted against the daily sum of NEM price for
Rockhampton 2005 in Figure 32 – with subfigures a through to c showing more detailed insight into
the area where most data points are clustered.
This shows that although there is a correlation between the average hourly values of radiation and
price, as shown previously in Figure 31, there is very little correlation between the daily solar
radiation and NEM price. Investigations also showed a lack of correlation between the half-hourly
measurements of these variables. However, there is a high correlation between the TMY data and
averages of the measured values. Thus, use of TMY data for the purposes of this investigation should
not significantly impact upon its findings, and significantly expand the set of available locations. The
impact of this decoupling was further assessed with a sensitivity analysis into weather dataset
(Section 8.1.8).
[29]
Figure 32 (a, b, c): Correlation between 2005 Daily Radiation at Rockhampton and QLD NEM Price (Datasource NEMMCO
and Bureau of Meterology) – Half hourly measured data used.
Table 4 shows that the accurate half-hourly measured data at NEM-connected sites only exists in
Adelaide, Mt Gambier, Rockhampton, Wagga Wagga, Melbourne, and Mildura. In contrast, TMY data
shown in Figure 33 shows that these sites do not have the greatest solar resource, and that CSPS are
therefore unlikely to be sited at these locations unless the power price (and profile) in those states is
sufficiently high to overcome the performance penalty.
[30]
Frequency Measurements of Measured Locations of interest to
interest to study study
Half-hourly Direct Solar Radiation, Bureau of SA: Adelaide, Mt Gambier
Global Solar Radiation, wind Meteorology QLD: Rockhampton
speed, dry-bulb Ground-based NSW: Wagga Wagga
temperature, wet-bulb station Vic: Melbourne, Mildura
temperature measurements
Daily Global Solar Radiation Bureau of Vic: Mildura
Meteorology NSW: Jindabyne, Tharwa,
satellite-inferred Sydney, Parkes, Bathurst,
data Morisset, Broken Hill
QLD: Brisbane,
Rockhampton, Mt Isa,
Cloncurry
SA: Adelaide, Port Augusta,
Whyalla, Leigh Creek,
Woomera
Typical Mean Temperature (dry&wet Australian NSW: Armidale, Coffs
Year bulb), direct normal solar Greenhouse Office, Harbour, Dubbo, Mascot,
radiation, global solar via EnergyPlus Moree, Nowra, Orange,
radiation, wind speed website J Richmond, Sydney,
Thredbo, Wagga Wagga,
Williamtown
QLD: Gladstone, Longreach,
Mackay, Mt Isa, Oakey,
Rockhampton, Townsville
SA: Adelaide, Ceduna, Mt
Gambier, Mt Lofty,
Woomera
Vic: Ballarat, Cape Otway,
East Sale, Melbourne,
Mildura, Moorabbin,
Warrnambool
Half-hourly Temperature (dry&wet Energy Plus Weather VIC: Avalon, Melbourne
(with bulb), wind speed Search Facility K SA: Adelaide, Woomera,
significant QLD: Townsville,
gaps) Rockhampton, Mt Isa,
Coolangatta, Cairns
NSW: Sydney, Dubbo,
Richmond, Tamworth,
Wagga Wagga
ACT: Canberra
Table 4: Real-time Historical Weather Measurements in NEM-connected Locations
http://apps1.eere.energy.gov/buildings/energyplus/cfm/weather_data3.cfm/region=5_southwest_pacific_wm
o_region_5/country=AUS/cname=Australia
K
http://apps1.eere.energy.gov/buildings/energyplus/cfm/weatherdata/weather_request_search.cfm?sortKey=
country&opt=1
[31]
Figure 33: Annual Direct Normal Incidence Radiation (source: EnergyPlus)
6.3 Solar Advisor Module Parameters

6.3.1 SAM technical inputs
The simulation used SAM version 2009.10.2.
The following inputs and configuration was used for SAM:
Item Setting Parameters

System Degradation 0%
Availability 100%
Heat Transfer Fluid Hitec XL Other Parameters Default
Solar Collector SolarGenix (as used in Nevada Solar Default
1)
Power Block Rated Turbine 250 MW
Net Capacity
Power Block Design Turbine 275 MW
Gross Output
Power Cycle As per Library: SEGS 80MWe Default, Wet-bulb Temperature
Turbine correction mode
Thermal Storage Two-tank Only available Option
Configuration
Thermal Storage Fluid Type Hitec XL
Thermal Storage Dispatch SCE (A Californian utility pricing Default
Control structure included in SAM)
Thermal Energy Storage Linked to hTES as per SAM user
Losses guide Table 24 54
Parasitics SEGS VIII Reference Default
[32]
The heat transfer fluid and the energy storage fluid were chosen to be Hitec XL, in order to remove
the cost and inefficiency of heat exchangers.
6.3.2 SAM Financial inputs

Item Setting Remarks
Analysis Period 30 years
Inflation Rate 2.5%
Real Discount Rate 10%
Federal Tax (Business Tax 30%
Rate)
State Tax 0% Land taxes etc covered elsewhere
Sales Tax 0%
Insurance 0.5% Default value
Depreciation 6.66% Custom depreciation values used to reflect
standard Australian depreciation curve
Tax Credit Incentives None 33%/50% government contribution only factors in
separate spreadsheet
Payment Incentives A$0.05/kWh Reflective of REC price of $50, taxable income
Site Improvements US$20/m2 Default value
Solar Field US$350/m2 Default value
HTF System US$50/m2 Default value
Storage US$40/kWhth Non default value reflective of literature
Power Plant US$880/kWe Default value
Electricity Price above 0% Sensitivity analysis performed
inflation
Indirect Costs: EPC 15% Default value
Indirect Costs: Product, Land, 3.5% Default value
Management
O&M: Fixed Annual Costs $0/year Default value
O&M: Fixed Cost by Capacity $80/kW/year Default value
O&M: Variable Cost by $3/MWh Default value
Generation
See the appendices for a more detailed description of the default costs used in SAM, which are
based on quotations and a study commissioned by NREL and undertaken by expert consultants 55.
6.4 Other Financial Parameters

The economic model used the following assumptions:
• The upfront cost is placed entirely in year zero. Any government contribution also occurs in
year zero and is not taxed.
• Annual Revenue is the sum of electricity generation revenue - the constant annual net
electricity output multiplied by reference year NEM price dataset multiplied by (inflation
plus electricity increase) - plus RECs Revenue - constant REC price multiplied by net
electricity output. Inflation is not applied to the REC price in order to reflect expected REC
price decrease over life of system.
[33]
• The annual expenses comprise of insurance, plus Operation and Maintenance.
• The annual after-tax cash-flow is Tax Savings (accounting for depreciation, and tax on RECs
and expenses) plus REC creation minus expenses plus taxed electricity generation
• The LCOE is the sum of the discounted future after-tax costs divided by the sum of the
discounted future electricity generation
• The IRR is the discount rate that sets the sum of the discounted after tax cashflow (NPV) to
zero
• No cost of upgrading or extending the electricity transmission infrastructure is assumed.
[34]
7 Preliminary Investigation: Greatest Delivered Value of Solar
Energy
As part of the preliminary dissertation study, a brief investigation into whether certain sites in
Australia may be better for CSP was undertaken - not just because of high solar radiation but
perhaps owing to a greater coincidence of NEM price with solar radiation that may lead to greater
value of delivered power with less cost invested in storage. Notwithstanding the limitations of the
study, it demonstrates that energy storage does provide a higher overall revenue stream, and
suggested that there was an optimum level of storage.
7.1 Correlation between NEM price and Solar Radiation

The relationship between solar radiation and NEM price was first introduced in Figure 31, and is
repeated below. It is clear that the peak power price and peak solar radiation do not coincide, thus
suggesting that incorporating energy storage may increase the value of the delivered solar electricity
by delaying generation output until electricity prices are higher.
NSW Ave NEM price & Solar Radiation vs

Time of Day
$300 0.4
0.35
$250
0.3
Solar Radiation
$200
0.25
NEM Price
$150 0.2
0.15
$100
0.1
$50
0.05
$0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 0
2004 2005
2006 2007
Direct Solar Radiation Global Solar Radiation
Figure 34: NEM Price & Solar Radiation vs Time of Day, NSW
Notionally, the revenue generated by a CSPS can be considered to be approximately proportional to

the product of solar radiation and wholesale electricity price. The effect of incorporating storage into
a CSPS can be simplistically modelled by applying a time-shift delay to the solar radiation, implying
power generation occurred at a later time. The metric’s limitations include ignoring the effects of:
• energy loss in storage heat exchangers

• energy loss in storage vessel
• energy dumping when storage is full
• varying plant efficiencies at differing radiation and ambient temperatures
• scheduling dispatch of energy to obtain the greatest achievable value
[35]
An accurate assessment of the value of delayed dispatch through ideal energy storage must
maintain the correlation between NEM price and solar radiation, as there is some influence of the
latter on the former, particularly when electric heaters and air conditioners are involved. This limits
the number of locations that can be investigated to those with half-hourly solar radiation data
available, detailed in Table 4.
Figure 35 presents the product of direct normal incident solar radiation at Wagga Wagga with NSW
NEM price at a delay of 0-8 hours for various years. It demonstrates that delaying the dispatch of
solar energy from its time of creation could increase the amount of revenue available by 25%. The
value of delivered energy is maximised by a delay of energy dispatch between 3.5-5 hours, mostly
depending upon the NEM price volatility of that year. However, the NEM price variation from year to
year has a greater influence on the outcome than the amount of energy storage. This, in line with
the infrequence of price peaks illustrated in Figure 29, suggests that although CSPS may utilize and
benefit from price peaks, designing around the more common daily price trend is a less risky
investment; so too forecasting the NEM price is sensible prior to investing in building a CSPS.
NSW
100000
Value of Energy if Delayed 2004-07
Dot product of Radiation and Electricity Price
90000
80000
70000
60000
($.kWh/m2)
2004
50000
2005
40000
30000 2006
20000 2007
10000
0
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8
Hour's delay
Figure 35: NSW Value of Energy with Delayed Output
The variance of revenue with location and hours of TES is presented in Figure 36. It illustrates that
the theoretical optimum amount of storage (ignoring both fluctuations in NEM price trends and CSPS
thermal characteristics) varies with location. It also demonstrates that some sites are more
favourable for revenue generation than others, regardless of the amount of storage involved. For
2004, a CSPS in Rockhampton performed best and 2.5 hours of TES was optimum; Adelaide (2 hours
TES) and Wagga Wagga (4 hours TES) were next best; with Mt Gambier (5 hours TES), Mildura (3.5
hours), and Melbourne (4 hours) being the least favourable sites of the sample data set. Graphs of
the direct solar radiation and electricity price for each hour, averaged over 2004, are presented in
the following figures. Regardless of the limitations of the model, this investigation shows that
revenue generation at some sites is more sensitive to the amount of TES than at others.
[36]
Figure 36: Notional Value of Delivered Energy vs Hours' Storage - 2004 Real Data
Figure 37: SA Direct Solar Radiation and NEM price hourly profile - 2004 average
[37]
Figure 38: Qld Direct Solar Radiation and NEM price hourly profile - 2004 average
Figure 39: Vic Direct Solar Radiation and NEM price hourly profile - 2004 average
[38]
Figure 40: NSW Direct Solar Radiation and NEM price hourly profile - 2004 average
Notwithstanding the limitations of the analysis, the metric does serve to illustrate that:
• there may be financial benefits to incorporating energy storage

• there is some optimum level of storage needed to obtain maximum value of delivered
electricity
• some sites are more valuable, not only because of their greater solar radiation, but possibly
also because of closer alignment between solar radiation and energy price.
More detailed further analysis into the optimum level of energy storage at a variety of Australian
sites using the Solar Advisor Model is presented in Section 8. The sophisticated simulation model
removes the limitations of the previous analysis, but there are some limitations to SAM which
influence its analysis:
• the dispatch of energy cannot be influenced by the real-time NEM price, (although an allegory
can be investigated by a static time-of-use model)
• SAM uses Typical Reference Year solar data rather than historical real-time data, which
increases the number of sites that can be investigated at the expense of losing the correlation
between the solar radiation and NEM price datasets. However, as shown by Figure 32, the
correlation between radiation and NEM price isn’t strong, so losing the correlation between the
two should not be too great a loss – a supposition investigated in Section 9.2.5.
[39]
• Because SAM’s economic analysis uses a fixed price of power rather than half-hourly variable
price as is the case in the NEM, the economic analysis is limited. This has been countered by dot-
multiplying the output power from the power station with the power price at that time.
These limitations restrict the level of depth of analysis into the optimum level of energy storage that
can be entered into within SAM.
8 Results
8.1 Simulated Solar Power Station Operation

8.1.1 Base Case: Longreach, Queensland, 2007 NEM DataSet, $350/m2 solar field,
$40/kWhth storage, $50/REC
Figure 41 shows that the LCOE from a 250 MW CSPS in Australia is greater than A$0.20/kWh. It has a
minimum for a Solar Multiple of 1.66 with 2 hours of thermal storage, although comparable LCOEs
can be achieved with a SM of 2 and 4 or 6 hTES. SAM produces absolute results that are less relevant
to Australian conditions, but the relative results also point to a minimum LCOE for a SM of 2 with 6
hours of storage (See Figure 42).
Figure 41: Real LCOE for a 250 MW CSPS in Longreach with a 10 % discount rate, 1USD=0.8AUD, and no government
contribution
[40]
Figure 42: SAM output of US$ LCOE from 250 MW Longreach CSPS with discount rate 10%
Although the LCOE may have been least for a SM of 2 and 6 hours of TES, the IRR from the project is
greatest for a SM of 2.4 and 6 hours of storage – for the 2007 QLD NEM price data set. Even the
significantly higher LCOE that results from increasing the SM to 3 (with 6 hours of storage) has a
comparably favourable IRR.
Figure 43: IRR for a 250 MW CSPS in Longreach with a 10 % discount rate, 1USD=0.8AUD, and 50% government
contribution. 2007 QLD NEM dataset
[41]
In absolute terms, even with a 50% government contribution L, these IRRs would be considered to be
fairly low by investors wary of such a large project, the first of its kind in Australia.
8.1.2 Sensitivity Analysis: NEM DataSet

The following section investigates the IRR that can be achieved with varying NEM-price datasets.
Figure 44 shows the average hourly profile for each of the annual datasets, and gives insights into
why particular configurations may be more favourable in some years than others.
Average Qld NEM Price Hourly Profile

$250
$200
$150
$/MWh
2004
$100 2005
2006
$50
2007
$0
1 3 5 7 9 11 13 15 17 19 21 23
Hour of Day
Figure 44: Average Queensland NEM Price Hourly Profile for 2004-2007
8.1.2.1 2006
In contrast to using the 2007 NEM dataset, the IRRs obtained using a 2006 NEM dataset are very
poor (See Figure 45). This is likely because the power price for that year was far lower on average.
The incorporation of larger amounts of storage is rewarded, likely due to the late-afternoon peak in
power prices for that year.
L
Recall that an unsubsidised LCOE is presented throughout this document for comparison purposes to
international literature. A 50% subsidy of the upfront cost is used in the IRR analysis in order to produce
positive IRRs across a range of situations, so that optimum storage levels can be investigated.
[42]
8.1.2.2 2005
In contrast to using the 2007 NEM dataset, the IRRs obtained using a 2005 NEM dataset are very
poor (See Figure 46). This is likely because the power price for that year was far lower on average.
Less storage is needed to obtain IRRs exceeding 1%, probably as the peak power price in that year
was at 4pm.
8.1.2.3 2004
In contrast to using the 2007 NEM dataset, the IRRs obtained using a 2004 NEM dataset are not
exceptionally good, but are better than in 2005 and 2006. The maximum IRR plateaus at 3.5% for
both smaller plants with less storage and larger plants with more storage. This is likely due to the
rounded shape of 2004’s NEM-price profile.
[43]
8.1.3 Sensitivity Analysis: Cost of Storage

Simulations were re-run with cost of storage at $20/kWth and $60/kWth (the original calculation
used $40), for both the 2007 and 2004 NEM data sets.
contribution. Left: Storage = $20/kWhth; Right: Storage = $60/kWhth
As to be expected the LCOE is less when storage is cheaper and more when storage is more
expensive. Cheaper storage swings the minimum LCOE towards 6 hours of storage for higher solar
multiples, but comparable LCOEs are produced by 2 and 4 hours of storage at Solar Multiples of 2
and 1.66.
[44]
contribution. 2007 QLD NEM Dataset. Left: Storage = $60/kWhth; Right: Storage = $20/kWhth
contribution. 2004 QLD NEM Dataset. Left: Storage = $60/kWhth; Right: Storage = $20/kWhth
Also as expected, cheaper storage results in slightly higher IRRs (for configurations that include
storage). The peak in the IRR for the 2007 NEM-price dataset swung further in favour of larger
storage amounts for low storage costs; however the evening price peak meant that large amounts of
storage were still warranted even when the storage cost increased by 50%. The plateau of
comparable IRRs remained when the 2004 NEM price-dataset was used, though configurations with
greater amounts of storage moved up or down relative to one another.
A 50% reduction in storage cost impacts IRR by less than 1%, but changes the relative amount of
optimum storage for a particular solar multiple.
[45]
8.1.4 Sensitivity Analysis: Cost of Collectors
A 20% and 40% reduction in the cost of collectors was modelled.
2 2
contribution. Left: Collector = $210/m ; Right: Collector = $280/m
2 2
contribution. 2007 QLD NEM Dataset. Left: Collector = $210/m ; Right: Collector = $280/m
2 2
contribution. 2004 QLD NEM Dataset. Left: Collector = $210/m ; Right: Collector = $280/m
As expected, reducing the price of the collector results in a reduction in LCOE and an increase in IRR.
The relative positions of LCOE and IRR for the selected amounts of storage remain unchanged. A 20%
reduction in collector cost can reduce IRR by a bit less than 1%, but makes higher solar multiples
slightly more favourable.
[46]
8.1.5 Sensitivity Analysis: REC price
A 30% decrease and 30% increase in REC price was modelled. The project 1st year revenues and
expenses (using the 2007 QLD NEM dataset and the base-case REC price of $50) are presented
below. They show that REC revenue makes up 35-40% of overall revenue at $50/REC.
Figure 54: Project 1st year Revenues and Expenses, 2007 QLD NEM dataset, $50/REC
A 30% change in REC price results in a 0.7% change in IRR. This is not a significant impact, because
although RECs represent 40% of revenue, depreciation has a taxation impact that is three times
greater than RECs.
Figure 55: Sensitivity to REC price of a 250 MW CSPS with SM=2.4, hTES=6, Longreach
[47]
contribution. 2007 QLD NEM Dataset. Right: REC price = $38; Right: REC price = $65
As a point of interest, the REC price is presently $38 (as of 7/10/09), not $50 as assumed in the
analysis.
8.1.6 Sensitivity Analysis: Electricity Price Increase

The base case assumes that electricity rises at the same rate as inflation. However, a number of
factors (one of which is the Emissions Trading Scheme) suggest that electricity is likely to increase in
price faster than inflation. Figure 57 shows that a 1% compounding increase in electricity prices can
increase the IRR by 1%.
Figure 57: Sensitivity to Electricity Price Increase for a 250 MW CSPS with SM=2.4, hTES=6, Longreach and 50% govt
subsidy
8.1.7 Sensitivity to Location

As shown in Figure 58, Longreach has the highest average DNI solar radiation resource in NEM
connected locations with available TMY data. Moree has 12% less DNI than Longreach, Woomera
6%, and Mildura 16%. However, Figure 58 demonstrates that the electricity power price in other
states was significantly higher than that in Queensland in some years – for example, in 2004 NSW
had an average price that was 35% higher than Queensland’s; SA’s average NEM price was 22%
higher than Queensland. Thus, a sensitivity analysis was performed across the sunniest locations in
each state.
[48]
Figure 58: Annual Direct Normal Incidence?? Solar Radiation (source: EnergyPlus)
$80
Average NEM Price 2004-07
$70
$60
$50
QLD
$/MWh
$40 SA.
$30 NSW
VIC
$20
$10
$0
2004 2005 2006 2007
Figure 59: Average NEM Price 2004-07
Figure 60 presents the LCOE and the IRR for the locations of Moree (NSW), Woomera (SA), Mildura
(Vic) and Longreach (Qld), using the base case inputs and a 2007 NEM price dataset and the best
plant configuration identified at Longreach. Figure 61 repeats these values for a 2004 NEM dataset.
Just as optimal plant configuration in Longreach varied depending on which year’s NEM price
dataset was used, the investigated plant configuration may be not be optimal for each of these
locations.
[49]
Figure 60: LCOE and IRR for best locations in each state, 250MW CSPS, $50 REC, SM=2.4, 6hTES, 10% discount rate. 2007
NEM data
Figure 61: LCOE and IRR for best locations in each state, 250MW CSPS, $50 REC, SM=2.4, 6hTES, 10% discount rate. 2004
NEM data
Naturally, the LCOE remains independent of the price of the delivered power. However, whilst
Longreach would obtain the best IRR if the prices were equal to those of 2007, Moree would eclipse
Longreach if the prices were equal to those of 2004. Interestingly, it might be expected that
Woomera - which receives only 6% less DNI than Longreach but had a 22% higher average price in
2004 – would have a better IRR than Longreach for the 2004 price dataset. In contrast, Longreach’s
[50]
IRR is better than Woomera’s. This may highlight that it is not the average power price that is
important, but the alignment of prices with the ability to deliver stored solar radiation.
However, this may also have occurred because Woomera’s peak power prices were not able to be
captured by the CSP, at least in its SM=2.4 hTES=6 configuration – a typical configuration used
around the world and the optimum configuration for Rockhampton, but perhaps not the best for
Woomera. Contrasting the late afternoon 2004 NEM price peaks in Queensland (Figure 38) and NSW
(Figure 40) with the early afternoon peak in South Australia (Figure 37), Woomera’s IRR may be
improved by incorporating less storage. Furthermore, had Woomera dispatched its power earlier, it
might have significantly increased its revenue, as will be shown in Section 8.1.9.
8.1.8 Variation with Solar Radiation Data

In Section 6.2 it was demonstrated that there was little correlation between solar radiation and NEM
price. Thus, TMY solar data was used for the analysis, principally because it allowed a greater
number of sunny locations to be investigated. This Section investigates the impact of the decoupling
of solar radiation from NEM price.
The upper half of Figure 62 shows the average monthly direct solar radiation for 2004, 2005, and
TMY, along with the average NEM price for that month. The lower half shows the average product of
solar radiation with NEM price. Comparing the yellow line (2004 NEM price x TMY radiation) with
the brown line (2004 NEM price x Measured 2004 radiation at Wagga Wagga NSW), it is clear that in
last quarter of the year, use of TMY data typically produces significantly greater monthly revenue. In
contrast, comparing the pink line (2005 NEM price x TMY radiation) with the grey line (2005 NEM
price x Measured 2005 radiation at Wagga Wagga NSW), a more balanced outcome is observed –
with use of measured data producing an slightly better revenue overall.
Figure 62: Solar Radiation, NEM price, and their product for 2004 and 2005
[51]
Figure 63 depicts why this discrepancy exists. On January 15, 2005 the NEM price spiked. A
simulation based on TMY data profited more from this occurrence, whereas clouds in Wagga on that
day would have denied a real CSP much revenue on that day.
Figure 63: Solar Radiation, NEM price, and their product for January 14, 2004 and 2005
Figure 64 depicts a contrasting situation on February 15, 2004. On this day the NEM price spiked (red
line of upper graph) whilst the true measured solar radiation (orange line of upper graph) was far
higher than the TMY (blue line of upper graph). This would have resulted in greater revenue from a
true CSP (brown line of lower graph) than the simulation predicted (yellow line of lower graph).
Figure 64: Solar Radiation, NEM price, and their product for February 14, 2004 and 2005
[52]
Overall, 2004 measured values at Wagga Wagga were 2.6% higher than TMY for that year. However,
use of measured data would have resulted in 24% less revenue for a storage-less CSP than the TMY
based simulation, chiefly due to missed opportunities (low radiation at time of peak power prices) –
as shown in Figure 65. In 2005 the situation changed so that a 3.8% greater measured DNI occurred
than TMY, resulting in a 9.6% greater revenue than would have been simulated.
Figure 65: Influence of Peak Power Price Capitalisation on Revenue
All in all, these occurrences balance out, principally due to the low correlation between NEM price
and solar radiation at the investigated sites. The correlation between radiation and power prices
may be higher in cities due to air conditioning demand, however a low correlation at the
investigated sites might be explainable by the distances between Australia’s coastal population
centres and the inland locations with high DNI. The lack of sunny NEM-connected sites with
measured data prevented further investigation into whether other sunny sites may have had a
stronger correlation with NEM price, or whether NEM price frequently spiked on cloudy days.
Whilst this analysis does not examine the benefits that storage can bring by delaying solar output, it
does show that variablility between the NEM price, the solar radiation resource, and their product
can have significant impact upon revenue. Storage would not have changed the situation depicted in
Figure 65: there was little radiation in Wagga on that day to store when the power price exceeded
$9000/MWh (see Figure 66). A 24% lower revenue that could have resulted from poor alignment
between true solar radiation and power price profile would have massive negative impacts upon
IRR; impacts that may have partially been overcome through use of storage. Ultimately, this clearly
demonstrates the need for reliable (“bankable”) hourly direct measurements of DNI in order to
convince investors so that the project may proceed.
[53]
Figure 66: December 2, 2004 Peak Power Price
8.1.9 Variation with energy dispatch methodology

Storing energy brings with it the ability to dispatch the energy at a chosen later time, and the
opportunity to maximise revenue by scheduling power delivery based upon NEM price. Although the
NEM price has a daily average profile, the NEM price profile varies considerably from month to
month and from year to year, as shown in Figure 67. In order to maximise profits, a CSPS could base
its energy dispatch methodology upon the forecast power price and the forecast weather. For
instance, a price spike in the middle of the day may mean that storage is bypassed altogether. If the
storage is nearing its capacity but the afternoon will be cloudy, the stored energy may be utilised
later rather than if the afternoon was forecast to be sunny. Such a dispatch methodology may offer
significantly increased revenues when compared to operating the power plant in a fixed manner.
Annual Average of QLD NEM Price Daily

Profile
$250
$200 2000
2001
$150
2002
$100 2003
2004
$50 2005
2006
$0
2007
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 0
Hour of Day
Figure 67: Annual Average of QLD NEM Price Daily Profile
SAM schedules the dispatch of power based upon the time of day, month of year, and type of day,
and the minimum proportion of stored energy required to start the turbine, as depicted in Figure 68.
Whilst this allows some forward scheduling that can be set according to the average power price
profile, it stops short of full price-responsive scheduling.
[54]
Figure 68: SAM Screenshot: Energy Dispatch Schedule
The benefit of storage is shown in Figure 70 and Figure 71, which demonstrate the energy received
by the solar collector field, the part of which is sent to TES, drawn from TES, and sent to the
powerblock (both directly and from the TES), with the corresponding net output of energy for a
particular 24 hours period. On the right axis, the figures also show the NEM price and the amount of
revenue earned by that power delivery at that time.
Figure 70 shows that the initial storage of the morning’s energy benefits the day’s revenue by being
able to deliver energy from storage later in the overcast afternoon when the NEM price is higher.
However, had the energy been stored for delivery even later when the NEM price was higher still,
even more revenue could have been generated.
Figure 71 shows another day with a limited amount of sunshine. However, on this day the power
price was higher in the early morning than through the middle of the day, and it peaked in the early
evening. However, SAM’s scheduled power delivery algorithm stored the energy during the morning
price peak, and delivered it when the price was lower, also missing out on the evening’s price peak.
The NEM price is forecast for the forthcoming day with a reasonable degree of accuracy, as shown
by Figure 54. Solar radiation can also be forecast. While inaccuracies inherent in these forecasts,
when combined with other financially limiting factors such as turbine start-up and shut-down, may
prevent a CSPS from obtaining the maximum possible revenue, it is clear that greater revenue can be
obtained by a price-adaptive energy dispatch scheduling than SAM’s deterministic algorithm.
[55]
Figure 69: Actual vs Predicted NEM Price, NSW Jan 2009
Figure 70: Energy Flows and Revenue - Jan 26
[56]
Figure 71: Energy Flows and Revenue – Aug 16
The method used in the preliminary investigation of Section 7 has been expanded upon in order to
investigate the amount of additional revenue that may be gained by a more price-responsive
scheduling algorithm. In this method, the output power from the investigated CSP has been dot
multiplied with the NEM price delayed by a nominated amount, for the previously investigated
scenarios without storage for a solar multiples of 2. The difference between this analysis and that of
Section 7 is that Section 7 used solar radiation data dot multiplied by NEM price, whereas this
section uses modelled CSPS output.
This method is extended in this Section to assess the maximum amount of revenue it was possible to
create each day by delaying the output a fixed number of hours for that day. Figure 72 shows the
revenue streams from a Rockhampton CSP without storage for the first six days of 2007, were the
output power to be delayed by 0 to 6 hours. It demonstrates that on day six, a delay of 2 hours
would result in maximum revenue, whereas on day four a delay of 6 hours would create maximum
revenue.
[57]
Figure 72: Revenue Curves for Delaying Each Day's output by a fixed number of hours for the first 6 days in January (one
day per line), 2007 QLD Longreach 250MW 2.4x 6hTES. Each line represents the day of the year.
When taken over the course of the year, the revenue generated by this fixed delay is presented in
the bars of Figure 73. However, a greater amount of revenue is possible by fixing each day’s delayed
output by the optimal number of hours for maximising revenue on that day. The right-most bar
presents the sum of each of the ‘optimal’ delays, while the line graph presents the number of days
for which each of 0,1,2…,6 hours produced the maximum revenue for that day. It can be seen that
the maximum revenue is at least 10% higher than the best of the fixed delay dispatch amounts, and
up to 44% higher than if there was no delay. It is also apparent that zero and three hour delays
between output of power and NEM price produced maximum revenue for that day almost as
frequently as 6 hours of storage.
[58]
Figure 73: Revenue Maximising through Strategic Dispatch of Stored Solar Energy – 2007 QLD Longreach
This metric is a gross simplification – on the one hand it does not take into account energy losses in
storage, and it assumes price fore-knowledge (which the NEM price forecast provides, as shown
previously in Figure 69). Like the previous analysis of Section 7, it assumes no losses in storage and
does not consider the cost of storage and consequent impact upon LCOE and IRR. Some errors are
also introduced in the metric by the shift in delay that occurs at midnight each night, double
counting some NEM prices and skipping others. On the other hand, a dispatch delay that is fixed for
a single day is not reflective of real-time optimisation that might result in even greater maximum
revenue. Unfortunately, these limitations are not able to be resolved within the current SAM
release. However, in spite of its limitations, this metric demonstrates that about 10% greater
revenue can be earned by price-dependent dispatch of energy. If revenue was 10% greater than
SAM’s non-adaptive calculations due to electricity price-determined energy dispatch, the IRR would
increase by 0.8%, as shown in Figure 74.
Figure 74: Potential Impact upon IRR of Price-Determined Energy Dispatch
[59]
As has been alluded to previously, the characteristics of the NEM price profile impacts upon the
amount of delay of energy output (approximating energy storage hours) that maximises revenue.
Figure 75 is a repeat of Figure 72 but for 2004 instead of 2007. Similarly, Figure 76 is a 2004
equivalent of Figure 73. These graphs show that in 2004, lower amounts of storage delivered good
results, though the ability to make use of 6 hours of storage was frequently beneficial.
Figure 75: Revenue Curves for Delaying Each Day's output by a fixed number of hours, 2004 QLD Longreach 250MW 2.4x
6hTES. Each line represents the day of the year.
Figure 76: Revenue Maximising through Strategic Dispatch of Stored Solar Energy – 2004 QLD Longreach
[60]
8.1.10 Sensitivity to Government Contribution
As mentioned in Section 5, the research design assumed a government contribution of 50% in order
to produce positive IRRs for the majority of investigated configurations. However, the initial Solar
Flagships program announcement suggested a government contribution of only 33%. As shown in
Figure 77, this has significant implications for the best case IRR, reducing it by 3% to 4.73%. If the
government were not to fund the project at all, the best case IRR found in this study would be only
1.28%.
Figure 77: Sensitivity of IRR to Government Contribution to Upfront Costs
[61]
9 Interpretation of results
9.1 Comparison of Results to Literature
9.1.1 Project Cost
Literature suggests 56 that the price of CSPS projects was US$2,400-$3,000/kW. This contrasts
strongly with the costs that result from SAM’s default costing assumptions which had a cost range
between US$3,500 and $9,900/kW as shown in Table 5. To obtain this lower price range would
require SAM to produce values that were approximately 60% less than the 250 MW CSPS studied. As
SAM’s default costs are based upon quotations and a study by Worley Parsons 57, these are more
likely to be valid.
Table 5: Price of Systems
250MW Total Capital US$/kW Post 50% US$/kW Post 33% govt
US$/kW
Configuration Cost govt Contribution Contribution
1.0x0h $1,103,209,345 $3,530 $1,765 $2,354
1.6x0h $1,594,742,263 $5,103 $2,552 $3,402
1.6x2h $1,760,960,964 $5,635 $2,818 $3,757
1.6x4h $1,927,179,664 $6,167 $3,083 $4,111
2.0x0h $1,847,956,191 $5,913 $2,957 $3,942
2.0x2h $2,014,174,891 $6,445 $3,223 $4,297
2.0x4h $2,180,393,591 $6,977 $3,489 $4,652
2.0x6h $2,346,612,292 $7,509 $3,755 $5,006
2.4x2h $2,312,073,629 $7,399 $3,699 $4,932
2.4x4h $2,478,292,329 $7,931 $3,965 $5,287
2.4x6h $2,644,511,030 $8,462 $4,231 $5,642
3.0x2h $2,758,921,736 $8,829 $4,414 $5,886
3.0x4h $2,925,140,437 $9,360 $4,680 $6,240
3.0x6h $3,091,359,137 $9,892 $4,946 $6,595
[62]
9.1.2 Project Cost Breakdown
The cost breakdown of the 250 MW CSPS project with 6 hours of storage and a solar multiple of 2.4x
which was the base case for this analysis is presented in Figure 78. This compares reasonably well
with the breakdown suggested by literature (as presented earlier in Figure 10) as follows:
• the solar field is 8% less than in literature

• the heat transfer system accounts for a much higher proportion of cost than in literature (7%
vs 2%)
• the energy storage cost is slightly higher (17% vs 15%)
• the power block cost is slightly higher (13% vs 10 %)
• the power plant and contingency is the same
Cost Breakdown
Contingency - 250MW 2.4x 6hTES
Cost Site Cost
Fossil
3%
Backup Cost 9%
0%
Thermal
Storage Cost
17%
Solar Field Cost

HTF System 51%
Cost
7%
Power Plant
Cost
13%
Figure 78: Cost Breakdown 250MW 2.4xSM 6hTES
9.1.3 LCOE
The Levelised Cost of Energy of A$0.20-$0.28 calculated within this document are significantly higher
than those quoted by one USA source (US$0.10 - $0.126), and the Australian reported value of
A$0.08-$0.10, even with Longreach’s high solar radiation values. The aforequoted US$2,400-$3,000
capital cost would create a minimum LCOE of about 8c/kWh in Longreach, but this seems an unlikely
outcome that requires 60% lower cost than is calculated by SAM. This suggests that the LCOE
calculated in this project might be higher than would likely be expected.
9.1.4 Configuration with Lowest LCOE

Although our simulated CSPS configurations demonstrated that at a solar multiple of 1.6, 2 hours of
storage produced the lowest LCOE, the more detailed exploration of the space shown in Figure 42
demonstrated a minimum LCOE with zero storage and a SM of 1.5. This seems to be an outcome
determined by the relative cost of energy storage and solar array, as the difference between the
LCOEs amongst a wide range of variables is not hugely significant. Minimum LCOE is quite sensitive
to the cost of storage, with a 20% reduction in storage costs swinging the least LCOE in favour of
more storage – as shown in Figure 79, similar to figure Figure 48’s sensitivity analysis. The value of
incorporating storage on LCOE thus depends upon its costs and configuration, as attested to earlier
by Figure 22 and Figure 23.
[63]
2
Figure 79: Minimum LCOE for 250 MW CSPS with solar field costs of $350/m and Storage costs of $32/kWhth
9.2 Discussion
9.2.1 Correspondence of lowest LCOE with highest IRR
It was found that in the absence of a fixed price for generated electricity, the minimum LCOE does
not necessarily correspond with the greatest IRR, the latter being significantly affected by the NEM
price variations. The analysis using SAM showed that in years in which NEM price peaks were closer
to solar radiation peaks, lower amounts of storage produced more favourable outcomes. However,
the daily variation in the energy price profile presents a valuable opportunity to increase revenue
streams by dispatching energy from the CSPS according to the forecast NEM price.
9.2.2 Benefits to IRR of incorporating storage

The question, “Does incorporating storage benefit IRR significantly?” can be answered by comparing
the IRR for zero-storage systems with that of configurations that included storage. In the original
suite of configurations, a solar multiple of 1.6 frequently had an IRR that was within 1% of the
greatest achievable for each selected variable. Such a small gain in IRR may not be worth the
additional risks associated with storage. However, when combined with the ability to dispatch
energy and achieve higher prices (as explained in Section 8.1.8), up to 2% improvement on IRR may
be available. Because configurations without storage exhibited a strong peak in IRR & LCOE around a
solar multiple of 1.6, other solar multiples were investigated in order to determine whether slight
change in solar multiple would significantly change the IRR, and thus swing the favour back towards
storage-less options.
Figure 80 shows that a smaller LCOE can be achieved with a solar multiple of 1.4 and 1.5 than the
previously investigated solar multiple of 1.66. However, Figure 81 and Figure 82 show that the
difference that this brings to IRR is insignificant. This implies that storage is only truly valuable if it is
low-risk and if it can be used to obtain 10% greater revenues than an inflexible dispatch
methodology.
[64]
Figure 80: Longreach Storage-less Configurations LCOE
Figure 81: Longreach IRR for Storage-less Configurations, 2007 QLD NEM dataset
Figure 82: Longreach IRR for Storage-less Configurations, 2004 QLD NEM dataset
[65]
9.2.3 Sensitivity to Component Cost of Configuration for Highest Financial Gain
Naturally, as the largest cost component, a reduction in the cost of collectors can significantly reduce
LCOE and increase IRR. It can also shift optimum configuration towards higher solar multiples, as
seen in the results in Section 8.1.4.
Section 8.1.3 demonstrated that a reduction in the cost of storage can slightly reduce LCOE and
increase IRR. Lower cost of storage also means that configurations with more storage have
reasonably superior LCOE and IRR.
9.2.4 Sensitivity to REC Price

Although RECs produce 40% of revenue (See Figure 54), the financial outcomes are not highly
sensitive to REC price. In theory, as RECs are production-based incentives, higher REC prices should
influence projects towards minimising LCOE rather than maximising the available NEM revenue.
However, there is little observed difference in IRR between the scenarios, and little evidence of an
influence towards configurations with minimum LCOE. This may be because the value to project
cashflow of the RECs is proportionally quite small compared to other revenue. Some factors that
impact upon IRR are not dependent upon output at all – e.g. depreciation – and therefore further
subdue the impact of a varying REC price. This explains why the IRR is fairly insensitive to REC price.
Of course, if electricity price increases faster than inflation, then better outcomes are achieved for
CSP. Countering this trend is the likelihood of a REC price drop as the power price increases – the
theory being that as electricity price increases more wind farms become viable and thus produce
more RECs. Regardless, significantly higher electricity prices are needed for Australian CSPSs to be
viable under these input costing assumptions.
9.2.5 Sensitivity to Location

Location is a significant input variable, and also one with considerable political and social interest.
The choice of location has strong impact upon the solar radiation resource, and consequently the
LCOE. However, a far larger impact upon the project financial return is seen by the differing
electricity price in each state of Australia. This demonstrates that the best location is driven not only
by solar resource but also by projected electricity forecasts. The proximity to a network with an
ability to receive such significant quantities of energy is also likely to have a strong impact upon
project financials and therefore limit suitable locations. The cost of network extension would be very
high, even network connection is likely to be costly, and therefore have a significant impact upon the
outcome.
9.2.6 Other configurations

The IRR of the project might be improved if it was operated as a hybrid solar-natural gas power
station, because the power block represents 10% of the project costs but is not operated at full
capacity the entire day – with six hours of storage, there are at least seven idle hours in summer and
nine in winter. An investment that sits idle is underutilised, so the IRR might be improved if natural
gas was used to create power at night (depending upon the natural gas price and the NEM price
overnight). The incorporation of natural gas would likely lead to no requirement for storage.
However, a hybrid plant would require coincidence of a natural gas resource with the solar radiation
and electricity transmission infrastructure, thereby further constraining suitable locations. Other
technologies such as PV and tower CSP have their own merits, some being more suited to particular
locations than others.
[66]
9.3 Significance of results
The results clearly show that a 33% government contribution is insufficient to achieve return on
investment large enough to attract investment in a project that carries such risk. The government
should look to increase its contribution to such project if it wishes to achieve its aims.
The results also show that regardless of government contribution, a significant reduction in upfront
cost is necessary in order to secure good IRRs. While the LCOE is projected to fall by 40% over the
coming years, this may not result in good enough outcomes to warrant a NEM-connected CSPS
(assuming SAM’s prices are correct).
The dissertation shows that in the absence of a feed-in tariff, the risk associated with variable power
price also weighs strongly against a NEM-connected project. This may suggest that off-grid projects
are more likely to proceed in the near future. As the IRR hurdle rate varies with the investment’s
perceived risk, the introduction of a feed-in tariff may result in more frequent development of
Australian CSPSs.
If high input prices and government support were addressed, then this dissertation demonstrates
that a NEM-connected CSPS with variable pricing will not benefit greatly by incorporating storage,
unless the peak energy price consistently occurs in the late afternoon. The benefits can be
maximised by dispatching according to NEM price predictions, but the 10% increase in revenue may
only result in a 0.8% increase in IRR. This may not be sufficient incentive to include energy storage,
with its associated risks.
9.4 Limitations of results

The major limiting factor of the results appears to be the input costs. Other inputs, such as REC
prices and energy dispatch scheduling, have lesser impact upon project financial outcomes.
The claim that greater revenue might be achieved by using a price-determined energy dispatch
methodology is based upon a simplistic analysis of the energy prices and CSPS power output.
However, while the quantum of increase in revenue might be debatable, closer investigation of
some sample days’ power output and energy price clearly demonstrated that an increase in revenue
above those predicted by SAM was achievable. The impact of this increase is noteworthy, though
REC price is of equal importance. Beyond the upfront costs, the project financial outcome is more
highly impacted by the electricity price itself and its variation by year, hour, and state.
The financial model itself is somewhat simplified, though it is strongly based upon the SAM financial
model, adapted for Australian taxation conditions. The use of a ‘cash’ financing option does not
reflect the reality that debt and equity will be needed to develop a CSPS. The introduction of debt
and equity into the mix increases the complexity of analysis required to demonstrate a winning
outcome.
The analysis also assumed 100% availability and 0% degradation. In reality, whilst some maintenance
can be performed overnight and on cloudy days, periodic power station shutdowns are inevitable.
Add to this the significant task of cleaning the collectors, and the availability is certain to be less than
100%. The effect upon the IRR would depend upon when the maintenance occurred, though as a
10% increase in revenue results in a 0.8% greater IRR, then a reduction in availability might have
similar impact.
[67]
Although the assumptions mentioned in the previous paragraph may lead to overestimated revenue,
other assumptions do not reflect recent advances in technology that should deliver higher
performance than estimated. The use of a thermocline energy storage vessel with filler should
reduce storage costs, and the use of higher HTF temperatures should increase turbine performance
and reduce input costs. These factors suggest that the assumptions made in this analysis are a
balance between optimistic and conservative in nature.
9.5 Aims
This dissertation has demonstrated that CSPS financial return on investment is not greatly benefitted
by accessing NEM prices that vary in real-time. In fact, the LCOE from a CSPS has been shown to be a
value that is not significantly less than that from a PV array. Given that small PV arrays can access
Feed-in Tariffs, such systems appear to be more lucrative investments that CSP.
This suggests that NEM price spikes occur so infrequently that they represent only a small portion of
total revenue. Indeed, the risk associated with NEM price variations may increase the IRR hurdle rate
for interested investors, thereby denying CSP the opportunity to be developed. For these reasons,
the benefits of accessing the instantaneous higher prices that are available on the NEM seem
outweighed by the frequent low price, and a feed-in tariff seems the logical solution to lower the
investment hurdle rate. For similar reasons, existing feed-in tariffs may also produce better
outcomes for small-scale PV than are achievable by the CSIRO’s creation of NEM-playing virtual
power stations.
At the commencement of this research, it was desired to investigate whether the solar radiation
profile closely matched the power price profile in any of the proposed locations for CSPS. However,
the limited number of historically measured half-hourly data locations severely limited this analysis.
Furthermore, as it became clear that the NEM price profile varied so much from year to year,
investigation of a coincidentally optimal site seemed pointless, as the correlation may cease to exist
the following year.
[68]
10 Conclusion,
This dissertation has demonstrated that the IRR achievable from a NEM-connected CSPS is too low
to lead to significant development of CSPS around Australia without far greater government support
than has been offered. Contributions of 50% of the initial capital cost are needed to obtain
reasonable IRR in the sunniest location for half of the years studied; the Solar Flagships program’s
proposed 33% government contribution is insufficient in the light of these results. The $1.1b-$3.1b
required to build a 250 MW CSPS would quickly exhaust the government’s earmarked funding of
$1.5b. Therefore, greater support is needed if the government is to achieve its policy objectives.
The poor financial outcomes demonstrated may be due to the input costs used, which although
based upon sound methodology, seem to be significantly higher than other claims made in
literature. A reduction of 60% in input costs is required to bring these projects into line with
estimations of upfront costs; the true cost may lie somewhere in between. A 40% reduction in LCOE
is expected in future as the industry grows; however, Australia can ill-afford to delay action.
Characteristics of the NEM price also contribute strongly to poor financial outcomes. The peak
power prices of $10,000/MWh occur too infrequently to benefit CSPS, which averages to receive
about 10c/kWh from the NEM and 5c/kWh from RECs. The variability of the NEM price from year to
year creates strong risk when choosing CSPS location, and the variability in the NEM price daily
profile inhibits the optimisation of energy storage value. Because the IRR is highly dependent upon
the REC price, projects are exposed to significant risk.
Indeed, there seems to be little value in incorporating energy storage into NEM-connected CSPS,
unless storage costs drop significantly. The LCOE is least for storage-less configurations at the
assumed storage cost of $40/kWhth, though the IRR is typically only slightly less than configurations
with storage. However, the benefits of a 1% increase in IRR may be outweighed by an increase in
perceived risk that results in a higher investment hurdle rate. Even a slight reduction in storage costs
(which might be achieved by using thermocline storage with inexpensive filler) may swing the most
favourable outcome towards incorporating of storage. The ability to dispatch power based upon
NEM price may also justify storage’s inclusion.
The optimum location for a NEM-connected CSPS is not necessarily the location with greatest direct-
normal solar radiation. Location of high-capacity transmission lines constrains viable locations. The
variation between states in NEM power price and daily profile can have dramatic impact upon
achievable IRRs. Without certainty of the future NEM power price, economic considerations may
prevail over energy efficiency sensibilities. However, with such risk associated with NEM prices,
developments may simply not proceed.
10.1 Recommendations
For these reasons, the government should consider the following means of supporting the
development of CSPS in order to achieve their Solar Flagships policy objectives:
• Establishment of a Feed-in Tariff to remove price risk and ensure optimal energy-efficient
outcome
• Relaxation of the requirement of storage, letting the market decide if it is justified
[69]
• Increase in funding contribution on a per-project basis, whether upfront or through the
Feed-in Tariff
• Increase in overall funding if four 250 MW CSPS are desired, or alternatively allowing smaller
power stations that carry less risk
In the meanwhile, off-grid locations may present excellent opportunities for CSPS in the range of 1-
100 MW. In such case, depending upon the penetration into the existing diesel mini-grid, at least a
small amount of storage might be warranted for power balancing in the presence of clouds. The
industry might also like to consider solar-gas hybrid systems to maximise the utilisation of the power
block, which represents 10% of their upfront cost. However, the additional constraints imposed by
the availability of natural gas may mean that solar collectors acting as pre-heaters to existing power
stations may be a more viable option.
It is clearly apparent that accurate, “bankable” solar radiation data is required in order to accurately
assess likely project returns. As only a few solar radiation measurement sites exist that are NEM
connected, of which only a couple are very sunny, government investment in solar resource
measurement would greatly facilitate the deployment of CSP in Australia.
10.2 Opportunities for further study

A more sophisticated energy dispatch methodology might more accurately demonstrate the case for
storage. This would need to take into account energy transformations within the CSPS, and balance
the need for minimising power block transients which might cause undue wear and tear.
A more thorough comparison between trough CSP, tower CSP, and tracking PV at various Australian
locations may assist in identifying the scale and locations for which each is suited. For instance,
trough CSP requires flat ground, whereas tower CSP is more flexible in site; CSP requires high DNI,
whereas PV can make use of indirect solar radiation, and might thus be more suited to the coast
where the population lies.
[70]
11 References
Added Values of Photovoltaic Power Systems. Report IEA - PVPS T1 - 09 : 2001
Analysis of PV System’s Values beyond Energy - by Country and Stakeholder. IEA PVPS Task 10, Activity 1.1
Report IEA-PVPS T10-02:2008 March 2008
Antoni Gil, Marc Medrano, Ingrid Martorell, Ana La´zaro, Pablo Dolado, Bele´n Zalba,
Assessment of Parabolic Trough and Power Tower Solar Technology Cost and Performance Forecasts. NREL.
October 2003
Brosseau, D., Hlava, P., Kelly, M. Testing Thermocline Filler Materials and Molten Salt Heat Transfer Fluids for
Thermal Energy Storage Systems Use in Parabolic Trough Solar Power Plants, Sandia National Laboratories, July
2004
Brosseau, D., Kolb, G., Bradshaw, B. 2007. Sandia Thermal Storage Activities. Trough Workshop, NREL
Colorado. www.nrel.gov/csp/troughnet/.../brosseau_sandia_molten_salt_tes.pdf (accessed 20/9/09)
CSIRO’s ‘sustainable cities’ on show. CSIRO. 18/9/08.

http://www.csiro.au/news/SustainableBuildingConf08.html (accessed 5/11/09)
Dennis Anderson, Matthew Leach. Harvesting and redistributing renewable energy: on the role of gas and
electricity grids to overcome intermittency through the generation and storage of hydrogen. Energy Policy 32
(2004) 1603–1614
Eck, M., Hirsch, T. Direct Steam Generation in Parabolic Troughs – Simulation of Dynamic Behaviour.
Ecostar, European Concentrating Solar Thermal Road Mapping, Roadmap Document, DLR, November 2004
Energy markets – Renewable Power Stations. DEWHA.

http://www.ga.gov.au/renewable/gmaps/proposed.html (accessed 5/11/09)
Energy Plus Weather Data. http://apps1.eere.energy.gov/buildings/energyplus/cfm/Weather_data.cfm

(accessed 5/10/09)
Feed-in Tariffs in Australia. Wikipedia. http://en.wikipedia.org/wiki/Feed-in_tariffs_in_Australia (accessed

15/3/09)
Generator Registration Guide. NEMMCO. 2008. http://www.nemmco.com.au/registration/110-0725.pdf

(accessed 5/11/09)
GreenPeace, ESTIA, SolarPACES. Concentrated Solar Thermal Power – Now!. September 2005.
http://www.greenpeace.org/raw/content/international/press/reports/Concentrated-Solar-Thermal-Power.pdf
(accessed 5/11/09)
Herrman, U., Nava, P. Thermal Storage Concept for a 50 MW Trough Power Plant in Spain.
www.nrel.gov/csp/troughnet/pdfs/nava_andasol_storage_system.pdf (accessed 20/9/09)
Kearney, D., Kelly, B., Cable, R., Potrovitza, N., Herrmann, U., Nava, P., Mahoney, R., Pacheco, J., Blake, D.,
Price, H. Overview on Use of Molten Salt HTF in a Trough Solar Field, NREL Parabolic Trough Thermal Energy
Storage Workshop, 2003. www.nrel.gov/docs/fy03osti/40028.pdf (accessed 20/9/09)
Kelly, B., Barth, D., Brosseau, D., Konig, S., Fabrizi, F. Nitrate and Nitrite/Nitrate Salt Heat Transport Fluids.
Parabolic Trough Technology Workshop. March 2007
Kolb, G., Proposed bench-scale tests to investigate recovery from salt freeze-up events in trough fields, Sandia
[71]
National Laboratories, February 2006.
http://www.nrel.gov/csp/troughnet/pdfs/kolb_proposed_hce_freeze_test.pdf (accessed 5/10/09)
Luisa Cabeza. State of the art on high temperature thermal energy storage for power generation. Renewable
and Sustainable Energy Reviews 14 (2010) 31–55
Luisa F. Cabeza, State of the art on high temperature thermal energy storage for power generation”.
Renewable and Sustainable Energy Reviews 14 (2010) 31–55
Maryam Jahanshahi. Lidell Thermal Power Station – greening coal-fired power. EcoGeneration July/August
2008
Nava, P., Herrman, U. Trough Thermal Storage – Status Spring 2007. NREL/DLR Trough Workshop – Denver.
March 2007.
Owens, B. The Value of Thermal Storage. Workshop on Thermal Storage for Trough Power Systems. February
2003
Pilkington Solar International GmbH. Survey of Thermal Storage for Parabolic Trough Power Plants, NREL,
September 2000
Price, H. A Parabolic Trough Solar Power Plant Simulation Model. ISES 2003. March 2003
Report to Congress on Assessment of Potential Impact for Concentrating Solar Power for Electricity Generation.
US Department of Energy Solar Energy Technologies Program. February 2007
S. Jalal Kazempour, M. Parsa Moghaddam, M.R. Haghifam, G.R. Yousefi. Electric energy storage systems in a
market-based economy: Comparison of emerging and traditional technologies. Renewable energy [0960-1481]
Kazempour yr:2009 vol:34 iss:12 pg:2630 -2639
Solar Advisor Model – Draft CSP Reference Manual. December 2008.

https://www.nrel.gov/analysis/sam/pdfs/sam_csp_reference_manual_2.5.pdf (accessed 9/10/09)
Solar Advisor Model (SAM). https://www.nrel.gov/analysis/sam/ (accessed 5/11/09)
Solar Advisor Model User Guide for SAM 2009.10.12.
Solar Energy Generating Systems. Wikipedia. http://en.wikipedia.org/wiki/SEGS (accessed 5/11/09)
State of the energy market 2008. Australian Energy Regulator
Stoddard, L., Abiecunas, J., O’Connell, R. Economic, Energy, and Environmental Benefits of Concentrating Solar
Power in California. NREL. April 2006
Voss, A. LCA and external costs in comparative assessment of electricity chains. Externalities and Energy Policy:
the LCA Approach Workshop Proceedings. France 2001
Watt, M., Partlin, S., Oliphant, M., Outhred, H., McGill, I., Spooner, T. The Value of PV in Summer Peaks.
www.ergo.ee.unsw.edu.au/value%20of%20PV%20in%20summer%20peaks.pdf (accessed 20/9/09)
WorleyParsons' billion-dollar solar plan. Sydney Morning Herald. 12/08/2008.

http://business.smh.com.au/business/worleyparsons-billiondollar-solar-plan-20080812-3u3u.html (accessed
5/11/09)
Zarza, E. Overview on Direct Steam Generation and Experience at Plataforma Solar de Almeria.
www.nrel.gov/csp/troughnet/pdfs/2007/zarza_dsg_overview.pdf (accessed 20/9/09)
[72]
12 Glossary
Acronym Meaning
CSP Concentrating Solar Power
CSPS Concentrating Solar Power Station
DSG Direct Steam Generation
DNI Direct Normal Incident
FiT Feed-in Tariff
hTES Hours of Thermal Energy Storage
HTF Heat Transfer Fluid
IRR Internal Rate of Return
LCOE Levelised Cost of Electricity
NPV Net Present Value
SM Solar Multiple, the ratio between the solar field output power and the turbine power
TES Thermal Energy Storage
[73]
13 Appendices
13.1 Solar Radiation Data
http://gis.ncdc.noaa.gov/website/ims-cdo/ish/viewer.htm
http://eosweb.larc.nasa.gov/cgi-bin/sse/grid.cgi?email=wbj%40tpg.com.au&step=2&lat=-
35&lon=139&num=320056&p=grid_id&p=swv_dwn&p=ret_tlt0&veg=17&hgt=+100&submit=Submit
– monthly only
http://gis.ncdc.noaa.gov/website/ims-cdo/ish/viewer.htm
RMY:
http://apps1.eere.energy.gov/buildings/energyplus/cfm/weather_data3.cfm/region=5_southwest_p
acific_wmo_region_5/country=AUS/cname=Australia
Realtime weather data: http://apps1.eere.energy.gov/buildings/energyplus/cfm/weatherdata/x-

weather_request.cfm
[74]
13.2 Appendix 2: SAM economics inputs
The following is an extract of a paper 58 which details the input cost assumptions that are covered in
SAM.
“The optimum design must consider the capital cost, operations and maintenance cost, annual generation,
financial requirements, and time-of-use value of the power generated
NREL has developed a detailed cost model for parabolic trough solar power plants. The model is a based
largely on input from FSI, which supplied the mirrors for all of the Luz plants, and has been actively working to
promote parabolic trough plants since Luz’s bankruptcy in 1991 [2]. FSI has developed a detailed cost model
based initially on the cost data from the Luz SEGS X project and later updated with more recent vendor quotes
[7]. FSI provided cost data to NREL as part of its participation in the 1998 Parabolic Trough Road-Mapping
Workshop [8] and updated the solar field costs under contract
The FSI cost model is very detailed and uses reference quotes for each cost element. Land: A parabolic trough
2 2
field uses approximately one hectare per 3,000 m of collector area, or a coverage of factor of about 0.3 m of
2
collector for every 1.0 m of land area.
Site Works and Infrastructure: The site works and infrastructure includes general land preparation, roads,
fences, and site infrastructures, such as firewater system, warehouse, and control building. The cost model
assumptions are based on the FSI input. This category scales based on the size of the solar field.
Solar Field: The solar-field cost estimates are based on an updated cost assessment produced by FSI [9]. The
cost estimate is based on the LS-3 collector design. Several adjustments are made to the collector cost to
account for a specific collector design used:
• The number of receiver tubes, flex hoses, drives, sensors, and local controllers are adjusted per unit area
of collector.
• The drive costs are adjusted to account for the collector size.
• The mirror, steel structure, pylons, header piping, and civil work costs are assumed to be the same on a
per-square-meter basis for different collectors. Heat Transfer Fluid (HTF) System: The HTF system includes
the HTF pumps, solar heat exchangers, HTF expansion vessel, piping, valves, and instrumentation. HTF
system costs scale based on the power-plant size, except for the HTF pumps, which scale based on solar-
field size. The HTF costs are based on the FSI roadmap data. The later data was only appropriate for an
ISCCS-type plant.
Thermal Energy Storage (TES): The thermal storage costs are based on the detailed design study performed by
Nexant for a two-tank, molten-salt storage system [10]. Thermal storage tanks and costs are based on detailed
data from Solar Two and Solar Tres. The heat exchanger costs are based on manufacturer quotes. Storage
costs were broken into mechanical equipment (pumps and heat exchangers), tanks, nitrate salt, piping,
instrumentation and electrical, and civil and structural. The mechanical equipment and piping,
instrumentation, and electrical costs were scaled by power-plant size. The tank, salt, and civil costs were scaled
by storage volume. All storage costs assume a scaling factor of 1.0, so a storage system twice as big costs twice
as much. Thermal storage tank and salt costs are consistent between the trough and tower designs. The
trough thermal storage system must be approximately three times as big as the tower storage system (both in
tank size and volume of salt required) to store as much energy because of the much lower temperature
difference between the fluid in the hot and cold tanks in the trough plant.
Power Cycle: The power cycle includes the steam turbine and generator and all condensate and steam cycle
equipment including pumps, heat exchangers, piping, valves, instrumentation, and controls. The FSI studies [2]
have the most recent Rankine steam-cycle cost data for the systems used in trough designs.
[75]
Balance of Plant: The BOP includes other power plant systems, such as cooling towers, water treatment and
storage, electrical, and control systems.
Contingencies: Contingencies of 10% are included for all costs, except the solar field (5%), structures and
improvements (20%), and thermal storage. The cost of the solar field is very well understood at this point. The
larger contingency for structures and improvements is included to account for potential differences in site
preparation. Nexant included cost contingencies separately in the thermal storage.
Indirect Costs: Indirect costs include services, project costs, and management reserve. The indirect cost
assumptions were based on input from Nexant. Service costs include project management, project
engineering, and construction management services. Project costs include permits and licenses, utility
connections, and telecommunication links. No interest during construction is included; this is accounted for in
the financial model.
The primary advantage of the NREL trough simulation model is that it integrates the capital cost, O&M cost,
performance and financial constraints into a single model. This allows detailed design or project optimizations
to be carried out where all interactions between cost and performance can be accounted.“
1
Watt, M., Partlin, S., Oliphant, M., Outhred, H., McGill, I., Spooner, T. The Value of PV in Summer Peaks.
www.ergo.ee.unsw.edu.au/value%20of%20PV%20in%20summer%20peaks.pdf (accessed 20/9/09)
2
Added Values of Photovoltaic Power Systems. Report IEA - PVPS T1 - 09 : 2001
3
Analysis of PV System’s Values beyond Energy - by Country and Stakeholder. IEA PVPS Task 10, Activity 1.1
Report IEA-PVPS T10-02:2008 March 2008
4
Feed-in Tariffs in Australia. Wikipedia. http://en.wikipedia.org/wiki/Feed-in_tariffs_in_Australia (accessed
15/3/09)
5
Generator Registration Guide. NEMMCO. 2008. http://www.nemmco.com.au/registration/110-0725.pdf
(accessed 5/11/09)
6
CSIRO’s ‘sustainable cities’ on show. CSIRO. 18/9/08.
http://www.csiro.au/news/SustainableBuildingConf08.html (accessed 5/11/09)
7
5/11/09)
8
GreenPeace, ESTIA, SolarPACES. Concentrated Solar Thermal Power – Now!. September 2005.
http://www.greenpeace.org/raw/content/international/press/reports/Concentrated-Solar-Thermal-Power.pdf
(accessed 5/11/09)
9
Luisa F. Cabeza, State of the art on high temperature thermal energy storage for power generation”.
Renewable and Sustainable Energy Reviews 14 (2010) 31–55
10
11
12
13
Eck, M., Hirsch, T. Direct Steam Generation in Parabolic Troughs – Simulation of Dynamic Behaviour.
14
15
Ecostar, European Concentrating Solar Thermal Road Mapping, Roadmap Document, DLR, November 2004
[76]
16
Kolb, G., Proposed bench-scale tests to investigate recovery from salt freeze-up events in trough fields,
Sandia National Laboratories, February 2006.
http://www.nrel.gov/csp/troughnet/pdfs/kolb_proposed_hce_freeze_test.pdf (accessed 5/10/09)
17
Kelly, B., Barth, D., Brosseau, D., Konig, S., Fabrizi, F. Nitrate and Nitrite/Nitrate Salt Heat Transport Fluids.
Parabolic Trough Technology Workshop. March 2007
18
Nava, P., Herrman, U., Trough Thermal Storage – Status Spring 2007. NREL/DLR Trough Workshop – Denver.
March 2007.
19
Pilkington Solar International GmbH. Survey of Thermal Storage for Parabolic Trough Power Plants, NREL,
September 2000
20
2004
21
2004
22
Luisa Cabeza. State of the art on high temperature thermal energy storage for power generation. Renewable
and Sustainable Energy Reviews 14 (2010) 31–55
23
Solar Advisor Model – Draft CSP Reference Manual. December 2008.
https://www.nrel.gov/analysis/sam/pdfs/sam_csp_reference_manual_2.5.pdf (accessed 9/10/09)
24
Solar Energy Generating Systems. Wikipedia. http://en.wikipedia.org/wiki/SEGS (accessed 5/11/09)
25
Maryam Jahanshahi. Lidell Thermal Power Station – greening coal-fired power. EcoGeneration July/August
2008
26
27
5/11/09)
28
29
Dennis Anderson, Matthew Leach. Harvesting and redistributing renewable energy: on the role of gas and
electricity grids to overcome intermittency through the generation and storage of hydrogen. Energy Policy 32
(2004) 1603–1614
30
S. Jalal Kazempour, M. Parsa Moghaddam, M.R. Haghifam, G.R. Yousefi. Electric energy storage systems in a
market-based economy: Comparison of emerging and traditional technologies. Renewable energy [0960-1481]
Kazempour yr:2009 vol:34 iss:12 pg:2630 -2639
31
Report to Congress on Assessment of Potential Impact for Concentrating Solar Power for Electricity
Generation. US Department of Energy Solar Energy Technologies Program. February 2007
32
Stoddard, L., Abiecunas, J., O’Connell, R. Economic, Energy, and Environmental Benefits of Concentrating
Solar Power in California. NREL. April 2006
33
Ecostar. European Concentrating Solar Thermal Road Mapping, Roadmap Document. DLR. November 2004
34
Energy Plus Weather Data. http://apps1.eere.energy.gov/buildings/energyplus/cfm/Weather_data.cfm
(accessed 5/10/09)
35
Stoddard, L., Abiecunas, J., O’Connell, R. Economic, Energy, and Environmental Benefits of Concentrating
Solar Power in California. NREL. April 2006
36
37
Voss, A. LCA and external costs in comparative assessment of electricity chains. Externalities and Energy
Policy: the LCA Approach Workshop Proceedings. France 2001
38
Assessment of Parabolic Trough and Power Tower Solar Technology Cost and Performance Forecasts. NREL.
October 2003
39
40
Ecostar, European Concentrating Solar Thermal Road Mapping, Roadmap Document. DLR. November 2004
[77]
41
42
2003
43
2003
44
March 2007.
45
46
47
March 2007.
48
49
50
Ecostar. European Concentrating Solar Thermal Road Mapping, Roadmap Document. DLR. November 2004
51
52
53
Solar Advisor Model (SAM). https://www.nrel.gov/analysis/sam/ (accessed 5/11/09)
54
Solar Advisor Model User Guide for SAM 2009.10.12.
55
Solar Advisor Model – Parabolic Trough Default Cost Values. October 5, 2009. Refers to a study undertaken
by WorleyParsons commissioned by NREL under contract KAXL‐9‐99205‐00
56
57
Solar Advisor Model – Parabolic Trough Default Cost Values. October 5, 2009. Refers to a study undertaken
by WorleyParsons commissioned by NREL under contract KAXL‐9‐99205‐00
58
Price, H. A Parabolic Trough Solar Power Plant Simulation Model. ISES 2003. March 2003
[78]

Economics of Storage in Concentrating Solar Power Stations Connected To The Australian National Electricity Market

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Economic Optimum Levels of Storage in

a NEM-Connected Concentrating Solar

Warwick Johnston BEng (Hons)/BSc

Dissertation for Masters of Science (Renewable Energy)

Murdoch University School of Science, 2009

PEC624 – Student # 30440143

Declaration and Acknowledgments

• Sasha Giffard of SMEC

• towers, in which an array of mirrors focus light onto a centralised receiver,

2.1.1 Solar Field

Fluid Annual supplementary heat Temperature

2.1.2 Thermal Energy Storage

• Greater power station availability

2.1.2.1 TES media

2.1.2.2 TES configurations

2.1.3 Power Block

2.2.1 Solar Multiple and Energy Storage

• larger solar multiples become viable,

Name Country Size

3.1 Australian Situation

• Solar Systems deployment a number of concentrating PV dishes. Prior to Solar System’s

Proposed non-photovoltaic solar power stations are presented below:

Name & state Owned Technology Capacity

4.3.1 Optimum Level of Storage

4.4 Australian National Electricity Market Costs

NEM Average RRP and Demand by

Figure 29: NEM Price Distribution Curve (Data Source: NEMMCO)

NSW Ave NEM price & Solar Radiation vs

6.2 Weather and Solar Radiation

6.3 Solar Advisor Module Parameters

The following inputs and configuration was used for SAM:

Item Setting Parameters

6.3.2 SAM Financial inputs

6.4 Other Financial Parameters

7.1 Correlation between NEM price and Solar Radiation

NSW Ave NEM price & Solar Radiation vs

Notionally, the revenue generated by a CSPS can be considered to be approximately proportional to

• energy loss in storage heat exchangers

Figure 35: NSW Value of Energy with Delayed Output

• there may be financial benefits to incorporating energy storage

8.1 Simulated Solar Power Station Operation

8.1.2 Sensitivity Analysis: NEM DataSet

Average Qld NEM Price Hourly Profile

8.1.3 Sensitivity Analysis: Cost of Storage

8.1.6 Sensitivity Analysis: Electricity Price Increase

8.1.7 Sensitivity to Location

Figure 59: Average NEM Price 2004-07

8.1.8 Variation with Solar Radiation Data

Figure 65: Influence of Peak Power Price Capitalisation on Revenue

8.1.9 Variation with energy dispatch methodology

Annual Average of QLD NEM Price Daily

Figure 67: Annual Average of QLD NEM Price Daily Profile

Figure 70: Energy Flows and Revenue - Jan 26

Figure 74: Potential Impact upon IRR of Price-Determined Energy Dispatch

Figure 77: Sensitivity of IRR to Government Contribution to Upfront Costs

Table 5: Price of Systems

• the solar field is 8% less than in literature

Solar Field Cost

Figure 78: Cost Breakdown 250MW 2.4xSM 6hTES

9.1.4 Configuration with Lowest LCOE

9.2.2 Benefits to IRR of incorporating storage

9.2.4 Sensitivity to REC Price

9.2.5 Sensitivity to Location