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Solar thermal competitiveness with 2009 U.S. industrial natural gas prices

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Solar thermal technology can deliver some industrial process heat. Properly valuing gas-price volatility can probably make solar process heat competitive with natural gas.

For example, a 2010 Ausra project cost estimate delivers heat costlier than the high end of the range for 2009 industrial gas prices, but valuing the avoided gas-price volatility risk closes that gap. However, the projected cost of a Focal Point project (start up in California) is competitive with the average 2009 gas price. Actual costs may differ and are sensitive to assumptions (20 vs 30 y system life, Investment Tax Credit applicability, etc.). However, solar thermal technologies are expected to get steadily cheaper with production volume, along standard learning curves.

Nonetheless, solar thermal probably can’t meet all of industry’s process heating needs. Complementary gas heating or thermal storage will be needed for 24/7 operation in plants that require it. RMI has not been able to find sound data on industrial process heat needs by temperature, climate zone, timing, or plant shift structure.

*Assumptions: 6%/y real discount rate, 2% O&M costs. Range of costs due to two factors: 20 or 30 y system life and the applicability of a 30% solar investment tax credit.

Sources

RMI analysis using data from:

A. Focal Point. 2008. Personal communication with author, December.

B. Ausra. 2010. Personal communication with author, November 30.

C. U.S. Energy Information Administration. “Selected National Average Natural Gas Prices, 2006-2011.” link

D. CME Group. “Daily Bulletin CME Group.”

The future and options prices of Henry Hub Natural Gas” were used in calculating a $2.15/MMBTU price for 5-year natural-gas volatility. link