The primary question is: Can solar compete with nuclear as a baseload substitute and in terms of costs? The answer to both is no, not immediately – but that would not be the reason to exclude it as an investment and industrial opportunity.

CSP technologies, though even they were ramped up faster, have baseload potential; and, if combined with hybrid systems such as the use of gas, will reach baseload status at some point.

The article makes several assumptions:

• The energy mix will be better off if we ramp up renewables; and if we use as a guide the portfolio and risk-adjusted theory that Shimon Awerbach long developed, then generation cost over time should come down for the entire energy mix.

• Solar power is a strategic choice because of resource advantages, industrial and export opportunity and new job creation potential.

• Hitherto, renewables have always been pitted as the orphan child in the debate about energy mix in South Africa; this paper argues for its mainstreaming in the New Build programme as well as recognising their limitations.

• The article posits that South Africa cannot spread itself too thinly by dabbling in different renewables, but it must invest in a specific cluster to maximise all the potential advantages it can reap for the long term.

• A strategic opportunity exists, given that nuclear power baseload generation will mostly likely only come online from 2019 onward; and between now and 2019, the power shortages will have to be met through other means such as accelerated PV and a long-term industrial intensive CSP strategy.

• Most renewable energy proposals only give consideration to power needs, but not full industrial and innovation potential that goes beyond the generation of electricity. This article suggests much more can be catalysed from a solar cluster.

• South Africa has a carbon emissions challenge, and a way has to be found to reduce this. Much depends on how many coal-fired power stations we can avoid building or delay building.

• The financing of a solar cluster (of CSP and PV) development attracts non-conventional sources of finance such as climate finance, which nuclear will not attract.

The current renewable energy feed-in tariff (Refit) system and IRP are primarily focused on incentivising CSP and PV development for grid connection – they seek to resolve a supply problem, and not necessarily exploit an industrial and manufacturing opportunity.

The introduction of the Refit takes place in the void of an industrial strategy which, if left too open – as it is – would squander the laying of a foundation for an industrial base.

Figures available from Stellenbosch University indicate that CSP, without consideration of other barriers, is limitless. It has advantages in so far as one can harness solar energy at much greater scales than solar water heating or PV for dispatch purposes.

While the theoretical potential is high, its real potential is constrained by technical, financial, political and other barriers. Theoretically, it has baseload potential, but significant research and development strides have to be made to match conventional baseload capacity. At the moment, this is more of an unknown compared to coal and nuclear power.

One cannot control the sun, the seasons nor the conversion of natural energy into synthetic energy as one can for coal or nuclear, without very quick technical breakthroughs in the near future for CSP. For CSP to displace coal or nuclear, it would need to have a capacity factor of 70% to 80% – innovation in storage and hybrid fuel systems will be key.

CSP and PV offer the best strategic advantage for South Africa at present, as they would support some of our urgent power needs and in which there is potential to catalyse considerable innovation. PV costs are coming down significantly – at least by 40% in the last three years – and their installations can be done quickly.

What is key is the number of CSP plants that would be required to drive a CSP industrial base i.e. the right scale to attract the right amount of capital, skills and entrepreneurial mobilisation. Scale factors can be partially resolved by public-private partnership led initiatives; state enterprise procurement policies would be key to this.

Large public utilities and private facilities that are reliant on sound supply of power can lay the foundation for the rollout of the industrial strategy.

There is both off-grid and grid potential for CSP; and given that Africa’s capacity has to be expanded, off-grid potential for CSP is an attractive prospect for the future.

The second is how much of industrial product development is required before full commercialisation can be taken advantage of. Currently, parabolic trough systems are commercially ready, but have the downside that they have limited storage potential. Troughs are the most installed capacity in the world at the moment.

Industrialisation involves several elements: beneficiation of raw material, development of components (in case of CSP, it would be collectors, mirrors or reflectors, heat collection element, steam generator, heat storage, central control and other components), the establishment of specialised development companies, financing houses, and distribution or support services. There would be ancillary innovations in materials, structures, automation, heat-exchange media, etc.

But to see CSP only as a solution for power is to miss other industrial product development potential that can be catalysed by taking a concentrated and strategic investment in CSP.

New opportunities lie in the following:

• Specialisation in the optimisation of CSP plants in which key value comes from knowledge, management of plants and other technical expertise. This itself is an exportable commodity.

• Development of new uses for CSP as in processing through the generation of process heat or direct solar steam, tailoring CSP development for desalination plants and solar fuels such as the production of oxygen and hydrogen.

• Supporting innovation in the development of hybrid renewable plants.

• Innovations in storage capacity and dispatchability.

• Innovation in business and service models because it has modular plant or utility application.

The question at hand here is whether CSP can displace nuclear entirely.

In the end, initial capital outlay, risk associated with plant development, performance, grid expansion costs and other factors will determine the nature of the levelised costs, but secondary and tertiary benefits from CSP compared to nuclear will have to be factored in.

The key factors in determining whether it is worthy to invest in CSP on a large-scale when compared to long-term costs with nuclear, are
as follows:

• On a megawatt to megawatt basis, CSP plants come out more expensive for now. A factor that would be an important consideration here is deployment of scarce capital, which provides assurance of reliable energy output and longevity of the installation. Investment decisions have to be based on the growth rate and potential of the economy. Economic growth will have to support high upfront investments. The growth path has to be structured well to make these investments viable and have the economy pay for the life of the installation.

• Costs will have to take into account land costs, installation and material costs, and plant retirement costs. Little of the cost analysis takes into account life-cycle costs that enable intelligent comparisons to be made between coal, CSP and nuclear, particularly when it comes to incorporating externalities such as CO2 emissions. In addition, wet cooling systems for CSP are cheaper and so water availability is key. If dry cooling is used, the levelised costs will go up by 2% to 10%, even though they reduce water consumption by 90%. Of course, the price of water will matter here, particularly if new pipelines have to be erected in arid or desert areas.

• The energy output per capital invested will be higher for nuclear compared to CSP, as achieving full baseload is still a technical challenge for CSP, but may well be attained over time once storage capacity improves. This implies there will have to be considerable subsidisation of research and development for the purposes of optimisation – implying that baseload utility will not be achieved very soon.

• On a cost-by-cost basis, CSP will be expensive, but may have other advantages in terms of secondary and tertiary value to the economy because of the higher job ratios and skills development. It may well be more expensive than nuclear, but the hypothesis will have to be tested with regard to its ability to deepen and expand industrial dividend.

• A single CSP plant will not provide any long-term cost and industrial advantage, while a pipeline will bring down costs and create wider industrial and manufacturing opportunities. Cost reductions may be possible through learning, but opinion is divided as to whether this is true for CSP.

It is important to recognise that global competition in the development of CSP options will narrow the future space for South Africa, as there will be stiff competition and first-mover advantage achieved by some countries.

The power sector itself is likely to be saturated at some point and therefore diversification beyond the power sector will be crucial in ensuring industrial sustainability of CSP.

Saliem Fakir

Head of the Living Planet Unit

World Wide Fund for Nature South Africa

(The views expressed here are not that of the WWF, but the personal views of the author.)