Fuel From the Sky: Solar Power’s Potential for Western Energy Supply Dr. Arnold Leitner Senior Consultant, RDI Consulting July 2002 NOTICE This report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof. Available electronically at http://www.osti.gov/bridge NREL is the U.S. Department of Energy’s premier laboratory for renewable energy & energy efficiency research, development, and deployment. July 2002 NREL/SR-550-32160 August 1, 2001 to December 30, 2002 Prepared under Subcontract No. NAA-1-31470-01 Dr. Leitner is a senior consultant with RDI Consulting, a strategic information and consulting firm serving the energy industry with research reports, studies, consulting and information services; RDI consulting is a trademark of Platts, a unit of the McGraw-Hill Companies, Inc. Dr. Leitner specializes in the analysis of the cost and performance of conventional and emerging generating technologies and the North American and international electricity supply and demand balance. Leitner developed RDI’s new generating capacity information service, NEWGen. This data and analysis service provides a detailed assessment of the status of proposed power plants and competitive information on major industry players. This work led Leitner to compre- hensively investigate the issues surrounding new plant development and its impact on the future demand and supply balance. Dr. Leitner received a PhD in superconductor physics from the University of Colorado at Boulder. He has published in professional scientific journals and has been an invited speaker. Analysts Jack Ihle, Associate Andrea Capra, Associate Jeff Campbell, Associate GIS and Mapping Keith Holecheck Kari Dosemagen Cover Art Michael P. Marasch Reviewers Dr. Doug Logan, Principal, RDI Consulting Ellen Ewart, Senior Consultant, RDI Consulting David W. Kearney, Kearney & Associates Henry W. Price, National Renewable Energy Laboratory (NREL) Mark S. Mehos, NREL Hughes Reilly, Sandia National Laboratories (Sandia) Thomas R. Mancini, Sandia Robert R. Liden, Stirling Energy Systems Stan Pinkowski, The Boeing Co. Technical Writer Jill S. Tietjen (Technically Speaking) iii Production Team Editorial: Kathy Kaiser Production and Graphics: Heather Arellano, Brent Zeinert, Rob Fair, Jill Kosbau Fuel from the Sky is a multi-client study, which is sponsored by The National Renewable Energy Laboratory (NREL), Stirling Energy Systems (SES) and STM Power. The following RDI databases were used in developing the historical data and the assumptions underlying the projections herein. NEWGen® The NEWGen database provides comprehensive coverage of North American new and planned generating capacity. NEWGen includes detailed information on all potential merchant plants, inde- pendent power projects with contracts for output, utility-built capacity additions, return of off-line capacity, and re-rates of existing capacity. NEWGen provides details for each project, including project overview, project participants, project status, unit detail, upstream and downstream par- ticipants, and financing details. POWERdat® POWERdat is the most widely used strategic intelligence tool in the electric power industry. It contains data on more than 5,000 North American electric power companies and their plants, including investor-owned utilities, municipalities, rural electric cooperatives, public authorities, nonutility generators, power marketers, and power pools. Over 120 files containing more than 6,000 individual data items are included in POWERdat. Ten years of historic data, plus monthly updates, provide users with a valuable time series plus the latest information available. POWERmap® POWERmap is a strategic desktop mapping and analysis system that contains more than 60 map layers and key statistical data pertaining to North American energy markets. The software allows users to understand key geographic relationships in their data and helps answer ques- tions that drive energy markets. POWERmap enables companies to visually perform key energy market applications such as market segmentation, merger and acquisition analysis, new generat- ing station site selection, competitor intelligence, and customer retention. Further information about RDI’s database products is available at www.rdionline.com. iv Table of Contents Executive Summary……………………………………………….……….……….…1 Chapter 1: Western Electricity Markets…………………………………………....3 In 2001 Electricity Supply in the West Remains Tight...................................................5 The Making of the Electricity Crisis..................................................................6 Demand and Supply out of Balance..................................................................7 Transmission Wires Are Stretched...................................................................8 Meeting Future Electricity Demands..........................................................................10 Demand for Power Growing..........................................................................11 The Drivers of Growth...................................................................................12 Reserve Margin Requirements.......................................................................14 The Need for Large Amounts of Capacity Additions.........................................15 Energy Conservation Can Help......................................................................23 Resource Options for the Future................................................................................25 Fossil Fuels.................................................................................................27 Hydro, Wind, and Solar.................................................................................27 Nuclear.......................................................................................................28 Geothermal.................................................................................................29 Biomass......................................................................................................29 Air Emissions from Existing and New Power Plants....................................................29 Base Case Forecast.....................................................................................30 A Comparison of Emissions and Water Use....................................................31 Global Warming Policies Could Restrain Fossil Generation..............................34 Chapter 2: Electricity from Solar Power…………………………………...……41 The Solar Generating Potential.................................................................................43 Amount of Power Contained in Solar Radiation................................................43 The Amount of Sunshine in the West...............................................................45 Intermittence of Sun a Challenge..............................................................................52 Using Supplemental Off-Sun Power................................................................54 Accounting for Cloud Cover...........................................................................58 Seasonality..................................................................................................60 v The True Cost of Using Solar Power...........................................................................61 Solar Energy Production and Electricity Prices................................................63 Putting a Cost on Intermittence.....................................................................65 Capital and Production Costs of Solar Power..................................................65 Revenues and Costs of Thermal Solar Power Plants........................................67 How Solar Power Compares to Other Generating Technologies....................................75 Chapter 3: A Primer on Solar Generating Technologies..............................79 Photovoltaic Electric Power.......................................................................................79 Flat Panel PV................................................................................................80 Concentrating PV.........................................................................................81 Thermal Solar Power................................................................................................82 Power Towers..............................................................................................82 Parabolic Troughs........................................................................................84 Dish Stirling.................................................................................................87 Beyond the Economics................................................................................89