Sep 24, 2021
The role of concentrated solar power (CSP) technology has evolved since the mid-2000s. Its main value today lies in its ability to store energy to meet demand during evening and night-time peaks. The flexibility and dispatchability it provides are valuable assets in energy systems with a large share of variable renewable energies, that are expected to form the backbone of low-carbon energy systems in most geographic areas. However, the global deployment of CSP plants remains low, owing to high costs of financing and a lack of track record.
The Climate Investment Funds’ (CIF) share experiences in supporting CSP projects in Chile, Morocco and South Africa through a recently launched case study. The intention being to draw lessons to enhance the transformational impacts of future investments in the clean energy transition. It describes how the role of CSP in tackling climate change has evolved since 2008 and how investments in CSP have played out in three relevant markets through the lens of transformational change.
Since 2009, CIF, through the Clean Technology Fund (CTF), and in collaboration with national governments and multilateral development banks (MDBs), have provided concessional financing to CSP projects in Morocco and South Africa, and supported a CSP project in Chile. These efforts have made considerable progress in addressing key barriers and advancing the countries towards a low-carbon, climate-resilient future. CIF’s CSP projects have been anchored within national energy planning processes, making them highly relevant to supporting the energy sector transformation in targeted countries.
There have been substantial shifts in technologies, institutions, and behaviors through capacity building, integrated support packages, blended finance approaches, competitive procurement, inclusion of local content mandates and revenue-sharing for poorer communities. The deployment of 1 GW of CSP capacity in Morocco and South Africa demonstrated the value of the technology and supported cost reductions. The projects have mobilized USD 7 billion in investments and contributed to multiple rounds of procurement within each country, creating the potential for future scaling.
However, sustainability is uncertain as technology markets evolve, and CSP remains uncompetitive against most fossil fuel baseload power plants without targeted concessional support. Going forward, it is important for climate funds, such as CIF, to support the early backing of a portfolio of potentially high-impact technologies and business models by ensuring that the most effective and cost-efficient can mature. In addition, efforts to mobilize around a technology at scale need to be undertaken. Supporting and learning from CSP deployment can play a fundamental role in transforming energy systems in countries with relevant environmental, social, technological, and economic contexts.
Click here to download the case study and summary.
