In September, China's National Energy Administration released an RFP for solar thermal generation (Chinese, English). This is big news for CSP players, who are scrambling to submit applications before the deadline of October 31st.
Chinese solar industry watcher CSP Plaza estimates that about 50 project applications have been submitted, totaling around 4 GW. Among those in the running are state-owned generators (China General Nuclear, China Power Investment Corporation, China Huadian Corporation, China Huaneng Group and Shenhua Guohua), Chinese privately-owned enterprises (SUPCON, Rayspower, RoyalTech CSP and TeraSolar), and a couple of foreign entities (Abengoa and BrightSource).
Industry watchers have commented that SUPCON and TeraSolar are the only Chinese companies with the requisite technology and experience to operate these projects. China Power Investment Corporation has partnered with BrightSource before on a project in Qinghai. But the remaining contenders are almost certainly going to need to find experienced partners for a successful project.
There are a lot of unknowns about how this RFP is going to shake out, including how feed-in tariffs are to be valued and how large the procurement will end up being.
We do know that government planners originally set a 1 GW capacity target for solar thermal generation in the country's 12th five-year plan, which comes due this year. According to statistics from CSP Plaza, total operating solar thermal capacity in China at the end of 2014 was only about 17 MW, so there's a good chance this RFP is driven to speed up development to meet a separate 3 GW target set for 2020.
Current Projects in China
In 2014, construction began on a 50 MW storage plant in Delingha, Qinghai province, and a 10 MW CSP project in Dunhuang, Gansu. This year, several projects were accepted for construction and operation, the most notable being the following three:
Akesai Molten Salt CSP Project
This project, a 2 billion yuan (US$312m) parabolic trough CSP installation in Gansu, is being built by the Gansu Concentrating Solar Power Co., Ltd. (肃光热发电有限公司), with assistance from the Shenzhen Jinfan Technology Co. The project is planned to encompass 500 MW over the course of three construction phases. It will provide 5200 annual equivalent full load hours, and supply 256 GWh to the grid each year. In July 2015, construction started on an experimental platform project, which is expected to come online in March 2016. Planners expect to have 50 MW operational by August 2017. Upon construction, it will be the world’s largest commercially-operating parabolic trough molten salt CSP power station.
Honghai New Energy 300 MW Solar Plant and Equipment Factory
Dalian Honghai New Energy Technology Development Co. Ltd. (大连宏海新能源科技发展有限公司) is independently financing a 10 billion yuan (US$1.58b), 300 MW power plant located in Jiushan, Gansu province. The project will include both parabolic molten salt generation and dish Stirling systems. The project is also to be co-located with a solar generator equipment factory. Phase one will include the construction of 100 MW of smart grid-connected generation, and is expected to cost 3.8 billion yuan (US$600m). Construction will take two years, after which the project is expected to produce 585 million kilowatt-hours per year.
Dacheng Technologies 100 MW CSP Project
This project is located at a solar power industrial park in Dunhuang, Gansu. The project is owned by Dunhuang Dacheng Concentrating Solar Power Co., Ltd. (敦煌大成聚光热电有限公司) and is being built by Lanzhou Dacheng Concentrating Solar Technology Co., Ltd. (兰州大成聚光能源科技有限公司). This 110 MW project will include 16 hours of thermal storage, produce 6000 utilization hours annually, and is expected to generate 600 million kilowatt hours each year. Total investment is 3.58 billion yuan (US$560m). Construction will be completed in 2017.
In phase one, the project will have a scale of 10 MW, 16 hours of energy storage, and a total investment of 380 million yuan (US$60m). Construction on phase one began in May 2015, and is expected to be grid-connected by the first half of 2016. This will be China’s first 10 MW linear Fresnel reflector CSP project.
Research on Molten Salt-based Tower CSP
This research project, which began in May 2015, is being led by Nanjing Nanrui Solar Energy Technology Co., Ltd. (南京南瑞太阳能科技有限公司). Partner organizations include State Grid Qinghai Power Co., the Chinese Academy of Sciences Institute of Electrical Engineering, the State Grid Smart Grid Institute, and the China Three Gorges New Energy Company. The project primarily examines tower CSP installations which include molten salt thermal storage. Researchers aim to better understand solar/thermal/electrical energy conversion mechanisms as well as methods of coordination, operation, and control. Research results will help achieve more stable and smooth solar generation, improve energy utilization, increase renewable energy consumption and dispatch, and provide theoretical foundations and technical support.
In terms of geographical distribution, these projects are located in China’s solar-rich western region, particularly in Jiuquan, Gansu, where local government policies have supported renewable energy development and the solar thermal industry.
From a technological perspective, the aforementioned projects all include molten salt thermal storage systems in order to provide around-the-clock power. These projects also aren’t restricted to tower or parabolic CSP, but rather include other concentrating solar power technologies such as dish Sterling and linear Fresnel reflectors.
Most of the investment for these projects is coming from the private sector.
According to the China National Solar Thermal Energy Alliance, the potential power from solar thermal in China is around 16,000 GW. This suggests that the potential market for solar thermal generation could be in the trillions of yuan, which places these early movers in an advantageous position in this developing market.
At present, solar thermal generation in China is in a development/demonstration stage. The largest solar thermal plant in China is a 10 MW tower CSP facility owned by Supcon. Although China is technologically on par with the rest of the world, a number of factors are constraining the potential for commercialization of this technology. The government has not released a set solar thermal feed-in tariff. There is a lack of experience in project construction, operation, maintenance, and system integration. Product quality has also not be commercially proven in-country.
Future Policy Directions
In consideration of China’s national circumstances and experience with the solar industry, there are solutions to these problems on both the pilot and commercial levels. In the pilot phase, efforts should be made to improve capacity in R&D, system integration, and maintenance. This is also the time to gradually establish quality standards and control systems. In the process of scaling up, work is needed to bring technologies, system integration, and installation design and operation to maturity. Additionally, feed-in tariffs are needed to bring about commercialization of solar thermal generation in China.
Last year, the Price Bureau of the National Development and Reform Commission approved the country’s first feed-in tariff for a solar thermal pilot project, set at 1.2 yuan per kWh. Although this tariff only applies to the Supcon tower CSP pilot project in Delingha, Qinghai, the measure has boosted the solar thermal industry and attracted private investment. A number of listed companies and private enterprises with strong finances have begun to position themselves in the market. By acquiring pilot project technologies and building up experience, they hope to gain an advantage in the solar thermal generation market.
As policies begin to emerge, we expect the solar thermal generation market to make big gains in the next one to two years.