Cost Evolution of Components and Services in the STE Sector: a Two-Factor Learning Curve

When compared with other renewable energy alternatives, CSP is currently not competitive on energy production costs. Nevertheless, production cost is only one of the pieces of the value provided by CSP: when backup and other externalities are considered, the picture changes. Due to the relatively low CSP installed capacity, there is room for improvements. The cost reduction experienced by CSP technologies has been significantly slower than for the other "big solar",PV, for several reasons: the long construction time of CSP plants slows down the visibility of cost reduction; the larger average size of CSP plants makes the application of cost reduction less gradual; the better modularity of PV allowed for a greater number of players (investors, developers, suppliers, etc.), which in turn led to a healthy level of competence that lowered the price for final consumers; PV support has quickly moved to mechanisms that foster competition (such as reverse auctions) while, for CSP, around half of the installed power was developed under a FiT. This paper proposes a model to reflect the real cost reduction that CSP has experienced through history: a two-factor learning curve (TFLC) to take into account both the effect of experience (or "learning by doing") and the impact of R&D (or "learning by researching") where the rate of decrease in cost is different for each component and service. For this component-based learning curve, the investment cost for CSP plants (both tower and parabolic) has been divided into budget chapters, and each chapter is treated separately, inferring its cost evolution from historical data. The total expected investment cost of a solar power plant has been estimated by adding the different components and services provided to build the power plant, and adjusted considering the scale factor. The component-based TFLC model has been compared to one-factor and two-factor learning curves using the whole plant investment cost.