Cost-Benefit Analysis for the Concentrated Solar Power in China

Abstract

In 2016, the first batch of concentrated solar power (CSP) demonstration projects of China was formally approved. Due to the important impact of the cost-benefit on the investment decisions and policy-making, this paper adopted the static payback period (SP), net present value (NPV), net present value rate (NPVR), and internal rate of return (IRR) to analyze and discuss the cost-benefit of CSP demonstration plants. The results showed the following. <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" id="M1"><mml:mo stretchy="false">(</mml:mo><mml:mn fontstyle="italic">1</mml:mn><mml:mo stretchy="false">)</mml:mo></mml:math> The SP of CSP systems is relatively longer, due to high initial investment; but the cost-benefit of CSP demonstration plants as a whole is better, because of good expected incomes. <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" id="M2"><mml:mo stretchy="false">(</mml:mo><mml:mn fontstyle="italic">2</mml:mn><mml:mo stretchy="false">)</mml:mo></mml:math> Vast majority of CSP projects could gain excess returns, on the basis of meeting the profitability required by the benchmark yield of 10%. <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" id="M3"><mml:mo stretchy="false">(</mml:mo><mml:mn fontstyle="italic">3</mml:mn><mml:mo stretchy="false">)</mml:mo></mml:math> The cost-benefit of solar tower CSP technology (IRR of 12.33%) is better than that of parabolic trough CSP technology (IRR of 11.72%) and linear Fresnel CSP technology (IRR of 11.43%). <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" id="M4"><mml:mo stretchy="false">(</mml:mo><mml:mn fontstyle="italic">4</mml:mn><mml:mo stretchy="false">)</mml:mo></mml:math> The annual electricity production and initial costs have significant impacts on the cost-benefit of CSP systems; the effects of operation and maintenance costs and loan interest rate on the cost-benefit of CSP systems are relatively smaller but cannot be ignored.