The economics of concentrating solar power (CSP): Assessing cost competitiveness and deployment potential

Abstract

A global transition to sustainable energy systems is underway, evident in the increasing proportion of renewables like solar and wind, which accounted for 12 % of global power generation in 2022. The shift to a low-carbon economy will likely require a substantial increase in energy storage in the near future. In this context, concentrating solar power (CSP) is viewed as a promising renewable energy source in the coming decades. However, high generation costs compared to other renewable technologies remain a key barrier inhibiting wider deployment of CSP. Compared to solar PV and onshore wind alternatives, CSP cannot currently compete on the levelized cost of electricity (LCoE). This review provides a comprehensive overview of the vital economic factors and considerations for large-scale CSP expansion. The current state of the market reveals about 8 GW of installed global CSP capacity in 2023, with rapid growth occurring in China, Chile, South Africa and the Middle East. Key economic parameters discussed in this study include capital costs, capacity factors, operating expenses and LCoE. Installation costs for CSP declined by 50 % over the past decade, falling to the current range of $3000–11000 per kW. Adding 6–15 h of thermal energy storage at $20–60 per kW is now considered economical. Capacity factors increased from 30 % to more than 50 % (depending on location) through larger storage capacities and higher operating temperatures. Operations and maintenance costs now range from $12–15 per kW-year. The resulting global weighted average LCoE for CSP plunged 68 % from $0.31 per kWh in 2010 to $0.10 per kWh in 2022. Ongoing innovations in materials, components integrated systems and optimization can further reduce capital expenditures, enhance performance and decrease LCoE. However, appropriate incentives and financing mechanisms remain vital to support continued CSP technology maturation and cost reductions. With its inherent dispatchability and storage capabilities, CSP can become a cost-competitive renewable energy source, but design optimizations and accurate economic appraisals are imperative for CSP to achieve its vast sustainability potential.