Scale of the solar thermal power industry:What is the current scale of the solar thermal power industry worldwide?

Q: What is the current scale of the solar thermal power industry worldwide?

A: As of 2024, the global solar thermal power industry, also known as concentrating solar power (CSP), has an installed capacity of approximately 7.5 gigawatts (GW). This is relatively small compared to solar photovoltaics (PV), which exceeds 1,500 GW. The industry is concentrated in a few countries with high direct solar radiation, notably Spain, the United States, Morocco, South Africa, and the United Arab Emirates. Spain leads with about 2.3 GW, followed by the US with 1.8 GW. Most plants are parabolic trough or power tower designs, with capacities ranging from 50 MW to over 500 MW per project. Despite its modest scale, CSP offers unique advantages: thermal energy storage allows dispatchable electricity generation for up to 15 hours, making it valuable for grid stability. However, high capital costs (around $4,000–$6,000 per kW) and competition from cheap PV plus batteries have slowed growth. The industry’s scale remains niche, but ongoing projects in China, Chile, and the Middle East could add several gigawatts by 2030.

Q: How does the scale of solar thermal power compare to other renewable energy sources?

A: Solar thermal power (CSP) is significantly smaller in scale than most other renewable energy sources. By the end of 2023, global installed capacity for CSP was around 7 GW, while solar PV reached about 1,600 GW, wind power about 900 GW, hydropower about 1,400 GW, and bioenergy roughly 150 GW. Even offshore wind, a newer technology, surpassed 70 GW. The disparity stems from CSP’s higher levelized cost of electricity (LCOE), typically $0.10–$0.20 per kWh, compared to $0.03–$0.06 for PV and onshore wind. CSP’s scale is also limited by geographic constraints: it requires direct normal irradiance (DNI) above 1,800 kWh/m² per year, restricting deployment to arid regions like the Sahara, Atacama, and Middle East. In contrast, PV works in diffuse light almost anywhere. Nevertheless, CSP’s ability to store thermal energy cheaply gives it a niche in dispatchable power, and its scale could grow if long-duration storage becomes more valuable. Currently, it remains a minor player in the global renewable mix.

Q: What factors are driving or hindering the growth of the solar thermal power industry scale?

A: The scale of the solar thermal power industry is shaped by several key factors. Drivers include the need for dispatchable renewable energy: CSP with thermal storage can provide firm capacity during peak demand or at night, which is increasingly valuable as grids integrate more variable renewables. Government support, such as Spain’s feed-in tariffs and the US Investment Tax Credit, has been crucial. Emerging markets in the Middle East and North Africa, like Morocco’s Noor complex (580 MW), are scaling up due to energy diversification goals. However, hindrances dominate. First, high upfront costs: CSP plants require $4,000–$6,000 per kW, versus $1,000–$1,500 for PV. Second, competition from PV plus lithium-ion batteries, which have plummeted in price and offer modular, faster deployment. Third, water scarcity: many CSP plants need cooling water, though dry cooling is improving. Fourth, policy uncertainty and lack of long-term storage incentives. As a result, annual additions have slowed to a few hundred megawatts. For scale to grow, CSP must reduce costs, innovate in hybrid systems, and find markets where storage value exceeds its cost premium.

Words of experience

Common scenarios of "Scale of the solar thermal power industry"

【Industry Analyst】 Good morning. I wanted to discuss the current scale of the solar thermal power industry. How would you characterize its global footprint today?

【Project Developer】 Morning. It's still relatively small compared to solar PV, but growing steadily. Global installed capacity is around 6 to 7 gigawatts, with most of it in Spain and the US.

【Industry Analyst】 That's interesting. So we're talking about a niche market. What are the main drivers for scaling up?

【Project Developer】 Energy storage is the big one. Solar thermal with molten salt storage can provide dispatchable power even after sunset, which is crucial for grid stability.

【Industry Analyst】 But isn't the levelized cost of electricity still higher than PV plus batteries?

【Project Developer】 Yes, currently it's about 2 to 3 times more expensive. However, as storage becomes more valuable, the economics could shift. Also, economies of scale are key.

【Industry Analyst】 What kind of scale are we talking about to make a real impact? For example, how many gigawatts would be needed to be considered a major contributor?

【Project Developer】 To be a significant player in the global energy mix, we'd need at least 50 to 100 gigawatts by 2030. That's ambitious but achievable with supportive policies.

【Industry Analyst】 Which regions are leading in deployment and why?

【Project Developer】 Spain, the US, and now China and the Middle East. Spain has excellent direct normal irradiance and early government incentives. China is ramping up fast due to air quality concerns and industrial demand.

【Industry Analyst】 I see. What about the supply chain? Are there enough manufacturers for mirrors, receivers, and turbines?

【Project Developer】 The supply chain is a bottleneck. Only a few companies produce key components like parabolic troughs and molten salt systems. Scaling up production would reduce costs.

【Industry Analyst】 How does the scale of individual projects compare to, say, a nuclear plant?

【Project Developer】 A typical solar thermal plant is 50 to 200 megawatts, while a nuclear reactor is 1000 megawatts. So you need multiple plants to match nuclear output, but they can be built modularly.

【Industry Analyst】 What policy measures could accelerate the scale-up?

【Project Developer】 Long-term power purchase agreements, investment tax credits, and carbon pricing. Also, including solar thermal in renewable portfolio standards with storage requirements.

【Industry Analyst】 Are there any innovative business models emerging, like hybrid plants with PV?

【Project Developer】 Yes, hybrid PV plus solar thermal is promising. PV handles daytime peak, while thermal provides evening power. That optimizes land use and grid integration.

【Industry Analyst】 What about the role of developing countries? Can they leapfrog to solar thermal?

【Project Developer】 Absolutely. Countries in North Africa, South Africa, and India have high DNI and growing energy demand. With international financing, they could deploy large-scale plants.

【Industry Analyst】 So if we sum up, what's the realistic scale by 2030 and 2050?

【Project Developer】 By 2030, maybe 20 to 30 gigawatts globally. By 2050, under a net-zero scenario, it could reach 200 to 300 gigawatts, but that requires strong policy and cost reductions.

【Industry Analyst】 Thank you. That gives me a clear picture of the industry's potential scale and challenges.

【Project Developer】 My pleasure. It's a critical piece of the decarbonization puzzle, especially for dispatchable renewable power.