CSP Library

Regulatory and Financial Incentives for Scaling Up Concentrating Solar Power in Developing Countries

Publishing date: June 2011

Concentrating solar thermal power (CST) has a tremendous potential for scaling up renewable energy at the utility level, diversifying the generation portfolio mix, powering development, and mitigating climate change. A recent surge in demand for solar thermal power generation projects using different CST technologies in various countries shows that CST could become an important renewable energy technology that would provide an alternative to conventional thermal power generation based on the central utility model.

At present, different CST technologies have reached varying degrees of commercial availability. This emerging nature of CST means that there are market and technical impediments to accelerating its acceptance, including cost competitiveness, an understanding of technology capability and limitations, intermittency, and benefits of electricity storage. Many developed and some developing countries are currently working to address these barriers in order to scale up CST-based power generation.

Given the considerable growth of CST development in several World Bank Group (WBG) partner countries, there is a need to assess the recent experience of developed countries in designing and implementing regulatory frameworks and draw lesson that could facilitate the deployment of CST technologies in developing countries. Merely replicating developed countries’ schemes in the context of a developing country may not generate the desired outcomes.

Against this background, this report (a) analyzes and draws lessons from the efforts of some developed countries and adapts them to the characteristics of developing economies; (b) assesses the cost reduction potential and economic and financial affordability of various technologies in emerging markets; (c) evaluates the potential for cost reduction and associated economic benefits derived from local manufacturing; and (d) suggests ways to tailor bidding models and practices, bid selection criteria, and structures for power purchase agreements (PPAs) for CST projects in developing market conditions.

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