Market Summary and Patent Landscape Overview

Grid-Scale Concentrated Solar Thermal: Market Summary and Patent Landscape Overview

Technology Overview Concentrated Solar Thermal (CST) also referred to as Concentrated Solar Power (CSP) technologies produce electricity by concentrating the sun’s heat to boil a liquid and use the steam to rotate a generator turbine, in much the same way that electricity is produced from steam plants powered by coal or natural gas. There are four main types of solar thermal power plants summarized below: Parabolic trough In parabolic trough collection, linear parabolic shaped mirrors focus sunlight on a linear receiver located at the parabola’s focus. The linear receiver contains a heat transfer fluid (HTF), most commonly oil, which circulates through the receiver and is directed to a series of heat exchangers that produce steam. The steam is then fed to a steam turbine generator to produce electricity. The oil used as a HTF breaks down at 400 degrees C° which limits the maximum operating temperature and therefore the efficiency of the system. Abengoa, Acciona, Solar Millennium, SkyFuel, Solel, and Sopogy are all actively commercializing utility-scale parabolic trough based CST applications. Linear Fresnel Linear Fresnel based technologies replace the expensive curved mirrors or parabolic troughs with large flat or slightly curved mirrors that focus sunlight on a series of linear receivers containing an HTF. Different from parabolic troughs, multiple mirrors can focus light on multiple receivers, allowing for a more compact field of reflectors. Companies currently developing grid-scale linear Fresnel technologies include Ausra, SkyFuel, and Novatec BioSol. Power Tower In power tower systems, arrays of large, movable mirrors known as heliostats are arranged in a circular field to focus the sunlight on a central receiver located on a tower. Each mirror individually tracks the sunlight throughout the day. This approach allows for a higher concentration ratio resulting in a higher operating temperature and therefore an increased thermal efficiency relative to parabolic troughs or linear Fresnel. Abengoa, BrightSource Energy, eSolar, SENER, and SolarReserve are all actively developing power tower commercial-scale plants. Dish- Engine Dish-engine systems consist of parabolic dish-shaped mirrors that focus sunlight to a very small area, the thermal receiver. The thermal receiver absorbs the light, converts it to heat and transfers it to the engine. Most commonly, a Stirling engine is used to convert the heat to mechanical power that drives a generator and creates electricity. The thermal receiver can consist of a series of pipes containing an HTF, most commonly hydrogen or helium. Dish-engine systems currently represent the most efficient CST technology available, featuring a relatively high solar to electrical conversion rate. Active developers of grid-scale dish-engine systems include Abengoa, Stirling Energy Systems, and Infinia.

Market Overview The main market for utility-scale CST is for electricity generation; however there are also potential applications in areas such as water desalination and solar fuel generation which is predominantly dependent on the ability to store solar thermal energy for extended periods of time. The Concentrated Solar Thermal market is still in its infancy however a number of companies have developed demonstration plants and commercialized utility scale plants during the past couple of years. According to a number of sources referenced below, through the end of 2008 utility scale CST plants accounted for approximately 436 MW of worldwide electricity generation. A few of the key companies with major solar thermal plants currently operating or under construction in the USA or Spain at the writing of this report include: Abengoa/Solucar Acciona, Solar Millenium, Solel, Ausra, Stirling Energy Systems, Novatec-Biosol, and Sener. In addition, eSolar and BrightSource have significant proposed projects funded by large electric companies in the USA. Worldwide Energy Demand Outlook Recent estimates from a GreenPeace report published in Q2 2009 based on data from the International Energy Agency’s (IEA) 2007 World Energy Outlook suggest that in the absence of new government policies (“business as usual”) global demand for energy would almost double from the baseline 18,197 Terrawatt hours (TWh) in 2005 to reach 35,384 TWh by 2030. 1 Under conditions in which energy efficiency initiatives are ambitiously exploited, the IEA estimates global demand in 2030 to be 23,131 Twh which is much less than under the ‘business as usual’ scenario. These figures are in line with official energy statistics from the US Government’s International Energy Outlook 2009 recently published by the Energy Information Administration which estimates that World net electricity generation will increase from approximately 20,000 TWh in 2009 to more than 31,000 TWh by 2030.2 Concentrated Solar Thermal Installed Capacity/Electricity Production The IEA report suggests that under a “business as usual” scenario cumulative worldwide installed capacity of CST could be as little as 7,271 MW by 2020 producing 22 TWh of electricity and accounting for less than 1% of the world’s electricity production. In an ambitious scenario where government policy and investment trends follow renewable energy industry recommendations, the GreenPeace report estimates that cumulative global installed capacity would be over 84,000 MW and generated electricity would be 355 TWh produced by 2020 accounting for between 1.5% and 2% of global electricity demand. Capital Requirements It is further estimated that based on reference assumptions, and in order to support the proposed infrastructure and development costs “business as usual” will require between $3.2 Billion annually by 2010 and fall to $1.9 Billion invested annually by 2030. Under the ambitious scenario, capital requirements would be around $19 Billion in 2010 and reach $51 B annually by 2030. This is in comparison to total investment in the power sector that was running between $203 Billion and $240 Billion invested annually throughout the 1990’s.

Costs to Generate Electricity

According to a Greentech Media article 3 published in February of 2009, “Severin Borenstein, director of the University of California Energy Institute and a business school professor at UC Berkeley, has looked closely on the costs of solar energy.” Borenstein estimates that a “solar-thermal power plant could cost 18 cents per kilowatt-hour over the power plant's lifetime, a figure that would include the cost of land” …”In comparison, electricity from coal-fired power plants costs about 5 cents to 6 cents per kilowatt- hour.”

According to the GreenPeace report, the cost to generate electricity from CST currently ranges between approximately $0.19 cents to approximately $0.29 cents per kWh depending on the amount of solar resource. With increased plant sizes, better component production capacities, new storage solutions, more suppliers, government subsidies and improvements from R&D, costs are expected to fall to between $0.15 - $0.20 cents per kWh (by 2020).

Besides the estimates of further price drops, the gap with generation costs from conventional fuels is expected to decrease rapidly due to increased prices of conventional fuels at world markets. The competitiveness with mid-load, for example gas-fired plants, might be achieved between five to ten years from now.

Additional Benefits of CST vs. Fossil Fuels

Additional benefits when making comparisons between traditional fossil fuel plants and CST include the cost to the environment, the introduction of carbon trading markets, fuel price volatility/energy independence, and avoiding costs for the installation of fossil fuel plants. Furthermore, it is estimated that anywhere between 13,000 and 210,000 jobs would be created based on the IEA scenarios outlined above. Finally, CO2 emissions would be reduced by an estimated 82 Million tons to 887 Million tons under the “business as usual” and more ambitious scenarios, respectively.

Competition

Of course, because the energy generation markets are so large relative to other markets, there are a lot of competing renewable energy technologies such as Solar PV, Wind, biomass and geothermal. However, up until now, the predominant generation technologies continue to be traditional Fossil Fuels such as coal and natural gas as well as nuclear.

Venture Capital funding

Because of the emerging nature of CST technology paired with issues around global climate change and attempts to become less dependent on fossil fuels, there has been significant investment predominantly in the USA around new iterations of CST technology. It was estimated by The Cleantech Group that Venture Capital investors put more $745 million to work in the CST technology space in 2008 through early October. 4

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1 http://www.greenpeace.org/international/press/reports/concentrating-solar-power-2009 2 http://www.eia.doe.gov/oiaf/ieo/electricity.html 4 Concentrated Solar Thermal Technology Innovation Report- Cleantech Group LLC, October 2008. 3 http://www.greentechmedia.com/articles/read/solar-thermal-vs-pv-which-tech-will-utilities-favor-5774/

Landscape Breakdown Assignee Size Breakdown

Patents in Landscape 941 (w/3 or more filings)

Publications 456 Large Corporations/Conglomerates 6

Granted 485 Small and Medium Sized Companies 34

Research Institutions, Government, Unique Assignees 275 14 Universities

Assignees w/3 or more 60 filings Individual Inventors 6

Patents Per Top 10 Assignees Patents Per Top Primary IPC

100 Total Landscape Patent Filing Velocity

0 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 The content map sorts and groups patent documents based on thematic, conceptual, and contextual content, enabling one to visualize how similar and competing technologies relate within a user‐determined landscape. The map labels, situated on the “mountains,” are the most prevalent concepts in a particular context. There are no X or Y axes on the map. Each of the 941 patent documents (grey dots) are positioned on the map based on their conceptual relationship to each other and to the labels situated on the “mountains.” The highest ‘mountain peaks’ (white areas) show the largest number of patent documents in a technical area. Blue or ‘water’ areas represent yet to be developed spaces within the technology landscape. The closer the documents are to each other, the greater the similarity is between them with respect to their contextual concepts. Map labels that are repeated in more than one area of the map represent similar concepts used in different contexts.