Financing from the Clean Technology Fund (CTF) was approved late last year, and will involve investing in CSP programmes of five countries in the Middle East & North Africa (MENA): Algeria, Egypt, Jordan, Morocco and Tunisia.
The deployment at 11 commercial-scale CSP plants over a five-year timeframe will provide the critical mass of investments necessary to attract significant private sector interest, benefit from economies of scale to reduce cost, result in learning in diverse operating conditions, and manage risk.
The CTF is a multi-donor trust fund to facilitate deployment of low-carbon technologies at scale. It is part of the Climate Investment Funds (CIF) implemented jointly by the African Development Bank, Asian Development Bank, European Bank for Reconstruction & Development, Inter-American Development Bank, International Finance Corp and the World Bank.
CSP funding benefits
The investment plan will enable MENA to “contribute the benefit of its unique geography to global climate change mitigation” because no other region has such a favourable combination of physical and market advantages for CSP.
It will support deployment of 1 GW of CSP generation capacity, which amounts to tripling the global capacity of CSP, and will support associated transmission infrastructure as part of the Mediterranean grid enhancement to enable the scale-up of CSP through market integration in the region.
The investment plan will also leverage public and private investments for CSP plants and support MENA countries to achieve their development goals of energy security, industrial growth and diversification, and regional integration.
“This is a most strategic and significant initiative for MENA countries,” says Shamshad Akhtar of the World Bank.
“The initiative would leverage energy diversification, while promoting Euro-Mediterranean integration to the benefit of MENA countries that will be able to exploit one of the major untapped sources of energy. This endeavour is far-reaching with global objectives, implications, and potential impact; it will facilitate faster and greater diffusion of this technology in this region which holds significant potential for CSP.”
Reducing CSP costs
The transformational objective of the CSP investment plan is served by accelerating cost reduction for a technology that could become least-cost globally, and then be replicated in other countries with high GHG emissions.
Expected results
Expected results from the investment plan include the installation of 900 MW of CSP capacity by 2020 and US$4.85bn of co-financing mobilised, including sufficient concessional financing to ensure viability of CSP plants. The cost of typical solar field in per square metre is expected to decline over the life of the programme.
The International Energy Agency has identified CSP as a key of the energy technology revolution because it can make the largest contributions to reducing GHG emissions. But CSP “has higher costs and risks than current technologies,” says the CTF background document. “It is only through technology learning as a result of marketplace deployment that these costs are reduced and the product adapted to the market.”
“The greater the scale of such deployment, the earlier such technologies will be commercialised; therefore, international collaboration is required to accelerate the global deployment of technologies such as CSP through targeted schemes that provide positive incentives for their adoption at scale,” it explains.
“As much as 87% of the cost of electricity produced by a solar thermal plant is related to the initial capital investment and installation cost; therefore, a CSP plant costing US$4,000/kW operating at capacity factors of 22-24% can be four times as expensive as combined cycle gas turbine plants.”