Concentrated solar power refers to a technology of generating electricity with the help of mirrors to concentrate the sunrays to a temperature varying between 400 and 1,000°C. This energy is then employed in several applications, such as heating fluid, which produces steam or hot air. The steam produced by it is then used to drive turbines connected to a generator to generate electricity. There are various types of mirror shapes and sun-tracking methods to provide useful energy, but all of them work under one principle of driving a heat engine to generate electricity that can be fed into the grid. Thus, concentrated solar power is a carbon-free source of electricity.
The rising environmental concerns over carbon emissions have compelled the government in formulating initiatives to enable renewable technologies, which will positively impact the growth of the concentrated solar power market during the forecast period. However, the higher cost of generation as compared to other renewable technologies is projected to act as a restraint to the market.
Concentrated solar power energy is a carbon-free source of electricity and is best suitable for regions and countries with strong radiation. The rise in carbon emission in the environment is one of the prime anthropogenic causes of climate change, which is caused mainly due to the burning of fossil fuels, such as oil, coal, and gas, or cutting down and burning of trees. Therefore, various concrete steps are being taken by the government to increase the use of energy-efficient products and promote conserving energy at home or office, purchasing portable gasoline containers, and using public transportation and renewable source of energy.
The countries are now in rush to meet their set targets regarding zero greenhouse gas (GHG) emissions while increasing the share of renewable energy sources in the total electricity generation, which has significantly increased the generation of electricity through resources. For instance, Spain has made a target of 120 GW of installed renewable energy capacity, primarily solar and wind, by 2030 under its national integrated energy and climate plan (NECP 2021-30). In addition to this, Australia's renewable energy target (RET), a federal government policy, aims to generate a minimum of 33,000 GW of the total electricity from renewable sources by 2020. Canada has also set the target of raising the share of zero-emitting renewable sources to 90% by 2030, from approximately 80% in 2016. These efforts by the countries are expected to augment the concentrated solar power market growth.
The concentrated solar power market is projected to grow at a high rate during the forecast period due to the growing solar industry in various regions. Solar power is broadly used as it is an affordable source of electricity and helps to reduce energy bills as well. As per the report shared by Solar Power Europe, solar alone reached a total share of 12.1% in the global total power output in the year 2017. It added twice as much capacity as its renewables peer, wind power, in that year, which shows the continuous growth of this industry.
Concentrated solar power is comparatively a highly capital-intensive technology. The components that are used require huge costs. The Levelized Cost of Energy (LCOE) of concentrated solar power plants is dominated by the initial investment cost, which accounts for around four-fifths of the total cost and the rest of it is for maintenance and operation of the plant and plant insurance, which makes it expensive. Therefore, there is a need to lower the costs through deployment and technology improvement.
Asia-Pacific dominates the concentrating solar power market during the forecast period due to the burgeoning installations of CSP plants. For instance, in 2018, three concentrated solar projects with a total capacity of 200 MW in China were completed and connected to the grid. The market in India, China, and Japan is expected to grow at a significate rate, owing to the rising investments in concentrated solar power for alleviating grid locations.
Japan installed about 6 GW to 7.5 GW of a solar power plant in 2018. Furthermore, the growing need to produce continuous renewable power energy in order to support rising fiscal activities is expected to fuel the growth of the market in the region. Moreover, the low manufacturing cost of components, cheap labor costs, and high solar irradiance levels are some of the key factors propelling the regional market growth.
Europe is expected to be the second-largest market for solar power concentrated, owing to the growing solar industry in the region. According to Solar Power Europe, the share of renewables in the total EU electricity generation rose to 32.3% in 2018. Solar power witnessed a 36% increase in 2018, and its installations rose to over 100% in 2019, reaching close to 17 GW, and meeting a critical milestone of 20 GW of annual installations in 2020.
In addition to this, favorable government policies are predicted to boost the growth of concentrated solar power in the region. Spain is one of the leading nations in the CSP markets on account of the government support schemes and feed-in tariffs in the country. Furthermore, large-scale investments by the manufacturers in the research and development of the technology, new tariff legislation, and growing need for storage in Spain has boosted the growth of the market in the region. Mitsubishi Corporation in February 2020 entered the concentrated solar power (CSP) market with its investments in four CSP power plants in Spain, which were held by Spanish solar power giant, Acciona, owning 15% of its share.