Solar-plus-storage beats combined-cycle gas in Jordan and Morocco, study
22-01-2019 14:51:00 | by: Pie Kamau | hits: 5174 | Tags:

Solar-plus-storage is already competitive with the world's most efficient form of gas generation in Morocco and Jordan, according to new research from Wood Mackenzie Power & Renewables.

Solar on its own is much less than combined-cycle gas turbines (CCGTs) in both markets, states the Solar-Plus-Storage in the Middle East and Africa market opportunity assessment published this month.

The fact that solar was still competitive with the most efficient gas technology, which was "quite big news," said Rory McCarthy, senior storage analyst for Wood Mackenzie Power & Renewables.

The firm's latest figures show the level of energy for solar-plus-storage ranging between $ 60 and $ 100 per megawatt-hour across five Middle East and African countries: Egypt, Jordan, Morocco, South Africa and the United Arab Emirates.

This is the combination of CCGTs in Morocco, which have a fuel cost of $ 6.90 to $ 9 per million btu, and starting this year in Jordan, where the fuel costs are from $ 5.60 to $ 6.80 per mmbtu. In Egypt, for comparison, the gas price to the power sector is currently $ 3 per mmbtu.

"For gas-poor countries like Morrocco and Jordan, solar-plus-storage will be driven by the need to reduce gas emissions," the report states. Wood Mackenzie predicts that by 2023, the cost premium for storage will have dropped to 85 percent, and solar's level of energy (LCOE) will have come down, too.

In South Africa, the most expensive market surveyed, Wood Mackenzie expects solar LCOEs to go from $ 41.70 per megawatt-hour to $ 32.90 in 2023 today. are forecast to drop from $ 25.70 to $ 20 per megawatt-hour.

These cost reductions mean that by 2023 the LCOEs or PV with batteries will have fallen between $ 40 and $ 60 per megawatt-hour, beating CCGTs in all of the countries surveyed except for Egypt. Egyptian solar-plus-storage will remain unable to compete with CCGTs because of the low cost of gas in the country, which is expected to be a gas exporter between now and 2023.

And while PV and batteries are expected to reach cost competitiveness in four of the five spotlight countries, analysts say it's unlikely that demand will spike, due to the duration limits of energy storage. The Wood Mackenzie report modeled PV coupled with four hours of lithium-ion battery storage.

For comparison, the authors also consider the competitiveness of concentrated solar power (CSP) plus thermal storage in Morocco, South Africa and the UAE. The report noted that CSP thermal stores are typically designed for long-duration discharge applications, with up to 15 hours of storage. "If tenders are designed for long-duration storage, lithium-ion projects may find it difficult to scale and compete at this level," the report states.

"However, if tenders are modeled based on a technology-neutral approach, solar-plus-storage could compete and win on an LCOE basis after the expected cost of producing fruit for four-hour systems."

McCarthy noted that in pitting solar-plus storage against CCGTs, the analyst team was not intending to carry out an apples-to-apples comparison, since the gas turbines are designed for baseload operation. Instead, the aim was to chart how far solar-plus-storage had come in terms of competitiveness in the Middle East and Africa.

"CCGTs are arguably the most efficient fossil-fuel plants out there," McCarthy said. Still, the report shows that solar-plus-storage, which was a very expensive combination until recently, "is the most cost-effective fossil-fuel plant in areas where fossils are among the cheapest in the world," he said. "Five years ago, you would have been called crazy to say this was in the cards for 2019."

It remains to be seen whether Middle East and African policymakers will take note, though. Although appetite for PV is booming, only 147 megawatts or front-of-the-meter storage has been commissioned or contracted across Wood of Mackenzie. Around 38 megawatts of this is made up or co-located PV and battery storage.

"It's unlikely that solar-plus-storage will see the same growth pattern in the region as a standalone PV, as many of the market fundamentals are yet to be," the report states. "But in markets that will face grid-balancing issues from high-penetration renewables or are in the process of phasing out gas subsidies, it is likely that PV projects will increase co-site battery storage where grid services are valued. "