Report to Congress on

Assessment of Potential Impact 

of Concentrating Solar Power

for Electricity Generation

(EPACT 2005 – Section 934(c))

February 2007

Solar Energy Technologies Program

DOE/GO-12007-2400
Executive Summary 

The Energy Policy Act of 2005, section 934(c), directed the Secretary of Energy to: 

(1) assess conflicting guidance on the economic potential of concentrating solar power for 

electricity production received from the National Research Council in the report entitled 

“Renewable Power Pathways: A Review of the U.S. Department of Energy’s Renewable Energy 

Programs” and dated 2000 and subsequent reviews of that report funded by the Department; and 

(2) provide an assessment of the potential impact of technology used to concentrate solar power 

for electricity before, or concurrent with, submission of the budget for fiscal year 2008. 

This report summarizes the Department of Energy’s (DOE) assessment of these issues. 

The reports discussed in this document assess whether concentrating solar power (CSP) 

plants can become cost competitive with fossil fueled plants and how much this would 

cost taxpayers (excluding sunk costs). One report estimates that deployment incentives 

could cost $1.5 to $2.0 billion over 14 years. The reports also estimate that at the end of 

that period CSP could provide hundreds of gigawatts of electricity at 5 to 6 cents/kWh 

without further subsidies while also providing economic, environmental, and security 

benefits. Federal policymakers must weigh the benefits of subsidizing increased CSP 

deployment against the cost to taxpayers and electricity ratepayers. 

 

Assessment of Conflicting CSP Reports 

Between 2000 and 2003, four reports attempted to assess the potential for CSP 

technology. The first report, from the National Research Council (NRC), recommended 

that DOE halt most of its work on CSP because further cost reductions and deployment 

were not likely. The main conclusions of the following three reports were: 

• Large-scale deployment of CSP technology could significantly reduce its cost. 

• Policy incentives would be required to spur the initial deployment of CSP. 

• Research and development could significantly reduce the cost of CSP technology. 

NRC 2000 Report: 

• In 2000, the NRC assessed the potential for CSP technology in a scenario without 

government incentives. 

• The NRC report concluded that “the likelihood of major breakthroughs that will 

affect cost and performance is small,” that there was a “lack of interest in the 

private sector,” that “the absence of buyers for a U.S. solar thermal facility speaks 

for itself, and that there is no reason to expect the situation to change in the next 

10 to 20 years.”1

DOE’s 2002 Report

• In 2002, DOE responded to congressional guidance by issuing a report, prepared 

in consultation with industry, which sought to answer the question of what 

 iii
incentives would be required to make the deployment of 1,000 MW of CSP 

possible. 

• The report concluded that the CSP industry could build 1,000 MW if between 

$1.5 and $2.0 billion in Federal and State financial incentives were available over 

a 14-year period, and that the deployment of 1,000 MW could potentially reduce 

the cost of CSP to as low as 6 cents per kilowatt-hour (kWh).2

• This report contained a fundamentally different assessment of the potential future 

of CSP; the NRC was pessimistic that any CSP development will occur in the 

next 10 to 20 years while DOE was optimistic that government incentives could 

spur the development of CSP and make it economically viable in the future. 

• However, both the NRC and DOE reports agreed that some level of government 

intervention would be required to drive the deployment of CSP. 

Sargent & Lundy Report:

To resolve the differing conclusions of the initial NRC and DOE reports, DOE 

commissioned an independent engineering firm to conduct, “in close collaboration with 

the NRC,” a detailed assessment of the economic potential of parabolic trough and power 

tower technologies.3

 The engineering firm Sargent & Lundy (S&L) was selected to 

conduct this analysis on the basis of its independence from the CSP industry and its 

highly regarded performance in conducting due diligence studies for the fossil power 

industry, among other factors.4 S&L’s report concluded that: 

• “CSP technology is a proven technology for energy production, there is a 

potential market for CSP technology, and that significant cost reductions are 

achievable assuming reasonable deployment of CSP technologies occurs.”5

 

• The cost of electricity from CSP was currently in the range of 10 to 12.6 

cents/kWh, and costs could be reduced to 3.5 to 6.2 cents/kWh by 2020 without 

new research breakthroughs.6 

• “Policy-based incentives are needed for initial introduction of technologies and 

that both R&D and deployment of technology are necessary.”7

NRC 2002 Response to the S&L Report: 

DOE asked the NRC to review a draft of the S&L report. In the critique, the NRC: 

• Agreed with S&L that CSP costs could be reduced to 3.5 to 6.2 cents/kWh by 

2020, given that deployment proceeded at the rate assumed by S&L8 

• Cautioned that the deployment rate assumed by S&L may be overly optimistic, in 

turn making S&L’s cost reduction timeline overly optimistic 

• Agreed with S&L’s conclusion that technology improvement was a necessary step 

to making CSP economically competitive, but that technology improvement alone 

was insufficient to achieve economic competitiveness 

• Agreed with S&L that policy-based incentives are necessary to make CSP 

economically competitive; however, neither the S&L report nor the NRC 

response addressed what level or magnitude of policy-based incentives would be 

required to achieve economic competitiveness. 

• Noted that, since the publishing of its previous report in 2000, in which it had 

concluded that the commercial prospects for CSP “were not very promising,” 

advances had been made: “Significant progress has been made in understanding 

 iv
the potential impacts of thermal storage technologies, thin film glass mirrors, 

improved heat collection units, improved trough support structures, and other 

technical opportunities to improve CSP technology.”9

 

• Noted the commencement of planning for CSP projects in Spain and South 

Africa.10

Assessment of the Potential Impact of CSP 

Just as R&D advancements and the availability of a detailed analysis changed the 

technical conclusions from the first to the second NRC assessments, events that occurred 

after the second NRC report have since changed the outlook for CSP deployment. 

Foremost among the changes are policies initiated by States and the Federal Government: 

• Many States have implemented renewable portfolio standards (RPS’s) which 

encourage the deployment of solar technologies, including CSP. Nevada’s RPS 

specifically encourages the deployment of solar technologies. California leads the 

country with an RPS that requires that 20 percent of the State’s power come from 

renewable energy by 2010.11 

• The Federal Government, through Section 1335 of the Energy Policy Act of 2005 

(EPACT 2005), established a 30 percent investment tax credit for solar 

installations.12 

Since the NRC report in 2002, several CSP projects have been developed or are in the 

planning stage. All these projects are a result of the state RPS’s. A 64 MW project, for 

example, is under construction in Nevada and is expected to become operational during 

2007. It will be the largest solar project built in the U.S. since 1991. 

Increased deployment of CSP could have several benefits: 

• Adding CSP to the generation mix of a State would contribute to expanding a 

domestic energy supply, better air quality, and a hedge against possible future tax 

on carbon emissions. 

• All CSP technologies can be deployed as large centrally-located power plants, the 

type of systems that utilities have operated for years and with which they are most 

comfortable, while some CSP technologies can also be deployed as smaller-scale 

distributed generation resources. 

• CSP could have local economic development benefits because long-term fuel 

costs associated with conventional electricity generation (e.g. natural gas, coal) 

are replaced by operations and maintenance costs (i.e. labor).13, , 14 15 CSP thus 

provides a hedge against the volatile costs seen in energy prices during the past 

several years.16 

A DOE report for the Western Governors’ Association (WGA) in 2005 provided an 

assessment of the potential impact of CSP. It found that by using only available land with 

the most intense sunshine, over 6,800 GW of electricity could be generated in the 

Southwest.17 To put this in perspective, the electric generating capacity of the entire 

country is currently about 1,000 GW.18 The report emphasized that the analysis was 

done only to indicate the size of the solar resource, not to indicate it would be possible or 

practical to build solar plants to produce that much power. 

 v
For cost-competitive CSP, both R&D and deployment are required: 

• Projections by the S&L study indicate that, with continued R&D and incentives 

that encourage deployment, CSP costs could become competitive with the costs of 

conventional natural gas-fired power plants over the next ten years. 

• DOE’s survey of the CSP industry indicated such incentives could range between 

$1.5 and $2.0 billion. This cost estimate does not account for utility pass-through 

of any increased costs to utility customers (i.e. ratepayers). 

Federal policymakers must carefully weigh the potential benefits of CSP against the 

significant cost to taxpayers in terms of industry subsidies and the cost to ratepayers in 

those states where CSP would initially provide electricity at costs higher than 

conventionally produced electricity. 

 vi
Table of Contents 

Executive Summary................................................................... iii

1.0 Introduction ........................................................................... 1

2.0 Task I: Assessment of Conflicting CSP Reports ............... 1

3.0 Task II: Assessment of the Potential Impact of CSP......... 7

4.0 Summary.............................................................................. 15

Appendix A. Recent and Ongoing Projects........................... 17

Appendix B. WGA Report........................................................ 20

Appendix C. Acronyms and Abbreviations ........................... 22

 vii
1.0 Introduction 

This report responds to section 934(c) of the Energy Policy Act of 2005 which requested 

that the Secretary of Energy: 

(1) assess conflicting guidance on the economic potential of concentrating solar power for 

electricity production received from the National Research Council in the report entitled 

“Renewable Power Pathways: A Review of the U.S. Department of Energy’s Renewable Energy 

Programs” and dated 2000 and subsequent reviews of that report funded by the Department; and 

(2) provide an assessment of the potential impact of technology used to concentrate solar power 

for electricity before, or concurrent with, submission of the budget for fiscal year 2008. 

2.0 Task I: Assessment of Conflicting CSP Reports 

Between 2000 and 2003, four reports were released that attempted to assess the 

commercial potential of CSP. A timeline of these reports is provided in Table 1. 

Table 1. List of Pertinent Publications 

Publication Author Date 

“Renewable Power Pathways: A Review of the U.S. Department of 

Energy’s Renewable Energy Programs” NRC 2000 

“Feasibility of 1,000 Megawatts of Solar Power in the Southwest 

by 2006” DOE August 2002 

“Critique of the draft Sargent & Lundy Assessment of Cost and 

Performance Forecasts for Concentrating Solar Power” NRC November 2002 

“Assessment of Parabolic Trough and Power Tower Solar 

Technology Cost and Performance Forecasts” S&L May 2003 

NRC Assessment of CSP in 200019 In 2000, the National Academies’ National Research Council (NRC) conducted an 

evaluation of DOE’s renewable energy programs of which one program was the 

Concentrating Solar Power Program. In its report, the NRC reached the following 

recommendations regarding CSP technologies (see Figure 1):

• For all intents and purposes, power-tower and power-trough technologies 

could be deployed today. However, no buyers have come forward for 

initiating commercial operations in the United States. 

• The Office of Power Technologies [now, Solar Energy Technologies 

Program] should limit or halt its research and development on power-tower 

and power-trough technologies because further refinements would not lead to 

deployment.20

• Solar dish/engines seem destined for niche operations and likely to be used in 

hybrid systems with other power-generation technologies in remote off-grid 

areas. 

 1
• The Office of Power Technologies should reassess the market prospects for 

the solar dish/engine technologies to determine whether continued research 

and development would result in a technology that warrants further 

expenditures.21

Parabolic Trough 

80 MW Project, Kramer Junction, CA 

Dish Engine

150 kW Project, Albuquerque, NM 

Power Tower

10 MW Project, Barstow, CA 

 Figure 1. Images of CSP Technologies; Source: NREL 

At the time the NRC evaluated CSP, no CSP projects had been built in nearly ten years 

and none were pending. This led to the conclusions that “the likelihood of major 

breakthroughs that will affect cost and performance is small” and that there was a “lack 

of interest in the private sector, even in a proven technology, such as solar-trough 

systems.” The NRC went further to add that “the absence of buyers for a U.S. solar 

thermal facility speaks for itself, and that there is no reason to expect the situation to 

change in the next 10 to 20 years.”22 

 2
Prior to the NRC report in 2002, the last CSP plant to be built was an 80 MW trough 

plant built in the Mojave Desert in California in 1991. It was the ninth trough plant in a 

group called the Solar Energy Generating System (SEGS), which has a total capacity of 

354 MW and continues to operate today. The expiration of Federal solar tax credits in 

1990 along with a drop in the cost of electricity production partly due to deregulation 

rendered any further trough projects uneconomical in California during the subsequent 15 

years.23 

The 2000 NRC review found that a major hurdle facing CSP technologies was that they 

must be relatively large to be competitive, and that large installations are expensive. 

Parabolic troughs have demonstrated performance and reliability over 20 years of 

operation in California,24 and the technical feasibility of power tower systems was proven 

during the mid-1990’s with the 10 MW Solar Two project.25 Both technologies, 

however, require scales approaching those of fossil-fueled power plants to achieve cost 

competitiveness with conventional means of electricity generation. Just as for new 

generation fossil and nuclear plants, such large first-of-a-kind CSP plants are expensive. 

This led the NRC to conclude “unless there is a significant market intervention by the 

Federal and/or State governments, an economically feasible project in the United States 

will not be possible.”26 In addition, it would take several projects to bring the cost down 

to competitive levels. During a period of restructuring in the utility sector in the 1990s 

and into the new millennium, there was little incentive for taking a risk on expensive new 

technologies. A 100 MW CSP plant, for example, could cost $300 million. Further, 

deregulated utilities had few resources to invest in new technologies. The CSP industry 

was faced with the conundrum that its technology was too expensive to be deployed even 

though deployment could have led to lower cost for future CSP installations. This is the 

same challenge faced by many other i

the competitive, commodity-based 

energy market. 

nnovative power plant technologies as they enter 

The NRC further concluded that “the 

s 

y 

lthough some in the CSP industry 

SP from fiscal year (FY) 2002 through FY 2004 

n 

Figure 2. CSP Budgets 

CSP Budget

$0

$2

$4

$6

$8

$10

$12

$14

$16

FY01 FY02 FY03 FY04 FY05 FY06

Fiscal Year

Millions of Dollars

Request

Appropr.

likelihood of major breakthroughs that

will affect cost and performance is 

small and/or not commensurate with

the potential payoff.”27 The report 

thus indicated that there was little 

industry support for CSP, that it wa

too costly to be deployed, and that 

further R&D would not significantl

lower the cost. 

A

strongly objected to the NRC 

findings,28 in the wake of the NRC 

report the decision was made by DOE 

to request phasing out of all CSP 

activities. DOE’s budget requests for C

reflected this decision. As shown in Figure 2, the CSP request dropped from $15 millio

 3
for FY 2001 (made in February 2000) to $1.9 million for FY 2002 (made in February 

2001) following the NRC’s report. Every year, however, Congress has provided fu

levels above DOE’s request and has required DOE to conduct additional assessments o

CSP. 

nding 

f 

DOE’s 2002 CSP Report 

Language in the FY 2002 Energy and Water Development Appropriation Bill directed 

DOE to “scope out an initiative to fulfill the goal of having 1,000 MW of new parabolic 

trough, power tower, and dish engine solar capacity supplying the Southwestern U.S. by 

2006.”29 In response, DOE prepared a report that summarized the CSP industry’s 

estimate of the conditions that would be required to build 1,000 MW of new CSP 

capacity in the Southwest. This report was entitled “Feasibility of 1,000 Megawatts of 

Solar Power in the Southwest: Report to Congress.”30

Largely based on data from Luz International’s construction of 354 MW of parabolic 

troughs in California between 1984 and 1990, the solar industry indicated it could build 

the 1,000 MW in a five-year period if between $1.5 and $2.0 billion in Federal and State 

financial incentives were available over a 14-year period. The CSP industry felt the 

technology was ready for large scale deployment. The industry provided a list of 

possible incentives (e.g., a 30 percent investment tax credit, a 1.7 cent per kWh 

production tax credit, and a solar energy loan guarantee program) that would enable it to 

finance and build the solar power plants. DOE concurred in the industry’s ability to build 

the plants if the incentives were made available, but DOE did not support the Federal 

government providing the cost of the subsidy that would be required. DOE doubted if it 

could be done by 2006 because the industry’s proposed incentives required enactment by 

Congress and state legislatures. Moreover, even if Congress provided the CSP industry’s 

requested subsidies, significant installations by 2006 were unlikely because of the time 

required for the incentives to be put in place and for industry to arrange financing and 

obtain permits. Industry also indicated its opinion that the establishment of 1,000 MW of 

CSP would enable the establishment of manufacturing capability and provide “learning 

curve” cost reductions that could bring the cost of CSP to as low as 6 cents/kWh without 

further incentives.31

The NRC and DOE assessments are in agreement that some level of government 

intervention would be required for CSP to become economically feasible. Nevertheless, 

the reports do contain fundamentally different assessments of the future of CSP, with the 

NRC pessimistic that any CSP development would occur in the next 10 to 20 years and 

the DOE optimistic that government incentives could spur development in the CSP 

industry that would make it economically viable in the near future. 

To resolve the differences between the NRC and DOE studies and to ensure a thorough 

and rigorous evaluation of the potential of CSP technologies, DOE commissioned a new 

report in 2002; a detailed technical analysis by an independent engineering firm. DOE 

also asked an NRC panel to review and comment on a draft report of the independent 

engineering firm, and this critique constitutes a second NRC report. The engineering 

firm Sargent and Lundy (S&L) was selected to conduct this analysis on the basis, among 

other factors, of its independence from the CSP industry and its recognized performance 

 4
in conducting due diligence studies for the fossil power industry. This approach let 

engineers experienced in due diligence perform the detailed analysis. In its second report 

the NRC’s committee members commented on the assumptions, methodology, data and 

its validation, and the results in S&L’s draft report. 

Sargent and Lundy Study32

S&L examined available industry and national lab analyses, developed its own analyses, 

and used its own engineering expertise to evaluate CSP’s potential. S&L assumed 

deployment rates that it believed were relatively low, ranging from 2.8 to 5 gigawatts 

(GW) over 15 years. S&L found that the levelized cost of energy (LCOE) for CSP was 

currently in the range of 10-12.6 cents/kWh or, stated another way, about $2,400- 

$3,000/kW. S&L concluded that costs could be reduced to between 3.5-6.2 cents/kWh by 

2020.33 LCOE is a measurement of the cost of producing energy from a technology, and 

includes the net present value of all capital, O&M, fuel, and other costs. 

The cost reduction found by S&L was due to three factors: technology development, 

plant size, and mass production. Figure 3 shows an S&L scenario in which the LCOE 

from trough technologies is reduced as the technology is deployed. Deployment is 

important because it enables industry to build increasingly larger power plants which 

incorporate economies of scale and build components in large enough quantities to take 

advantage of savings due to mass production. 

S&L concluded that “CSP technology is a proven technology for energy production, 

there is a potential market for CSP technology, and that significant cost reductions are 

achievable assuming reasonable deployment of CSP technology occurs.”34 However, 

S&L also found that “policy-based incentives are needed for initial introduction of 

technologies and that both R&D and deployment of technology are necessary.”35Analysis 

of incentives required to reach market acceptance was outside the scope of the S&L 

report. 

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0 1000 2000 3000 4000 5000

Cumulative Installed Capacity (MWe)

LCOE 2002$/kWh

1988 30-MW SEGS

1984 14-MW SEGS

Current Potential

2004 Technology, 50-MWe 

Size

1989 80-MW SEGS

Future Cost Potential

2004-2012

Factors Contributing 

to Cost Reduction

- Scale-up 37%

- Volume Production 21%

- Tech Development 42%

 5
Figure 3. Sargent and Lundy Cost Forecast 

NRC Review of the S&L Report36

The NRC committee concluded that “since 1999, significant progress has been made in 

understanding the potential impacts of thermal storage technologies, thin film glass 

mirrors, improved heat collection units, improved trough support structures, and other 

technical opportunities to improve CSP technology.”37 The NRC found the S&L 

analysis plausible and agreed with S&L that CSP costs could be reduced to 3.5 

 to 6.2 cents/kWh by 2020, given that deployment proceeded at the rate assumed by 

S&L.38 

The NRC committee gave S&L high marks for maintaining a credible process, avoiding 

any conflicts of interest, and responding to committee requests. The committee 

interviewed several industry representatives during the process of evaluating the S&L 

report, gathering information which augmented what they found in the report. The 

committee raised some issues and requested additional information of S&L, which was 

provided in the final report.39 

The major issue that the NRC raised was the question of whether the deployment figures 

used by S&L in projecting cost reductions could be achieved. S&L determined that a 

deployment of 2.6 GW would result in the cost of electricity from a solar trough plant 

being reduced from 12.6 to 6.2 cents/kWh. In its critique, the NRC concluded that 

“without substantial incentives, it is very unlikely that CSP trough and tower markets will 

evolve, and that if CSP markets are ever to reach cost competitiveness, market incentives 

for CSP would again have to be created.”40 Due to the high costs of first-of-a-kind plants, 

the committee felt there was little chance that 2.6 GW would be deployed and, because of 

this, they disagreed with S&L’s cost projections. However, the NRC agreed with S&L 

that deployment, should it occur, would affect cost reduction. 

Thus, the NRC continued to believe that CSP technology was too expensive to be 

deployed without policy-based incentives. An analysis of what type and quantity of 

incentives would be required to spur deployment of CSP was outside the scope of S&L’s 

and the NRC’s statements of work. It had been determined by DOE that this was a policy 

issue and was not appropriate for a technical analysis of CSP.41 

 6
3.0 Task II: Assessment of the Potential Impact of CSP 

Land Area

Solar 

Capacity

Solar 

Generation 

Capacity

State (mi2

) (MW) GWh

AZ 19,279 2,467,663 5,836,517

CA 6,853 877,204 2,074,763

CO 2,124 271,903 643,105

NV 5,589 715,438 1,692,154

NM 15,156 1,939,970 4,588,417

TX 1,162 148,729 351,774

UT 3,564 456,147 1,078,879

Total 53,727 6,877,055 16,265,611

The arid region from southern California 

to west Texas has solar energy resources 

that are among the best in the world (see 

Figure 4). A study done by DOE for the 

Western Governors’ Association42

determined that the seven States in the 

Southwest (AZ, CA, CO, NV, NM, TX, 

and UT) have the combination of solar 

resource and available suitable land to 

generate up to 6,800 GW43 (see Table 

2). To put this in perspective, the 

electric generating capacity of the entire 

country is about 1,000 GW.44 In 

California alone, there are nearly 6,800 square miles of land available that could be used 

to establish a solar capacity of about 870 GW; for comparison, California’s total 

generation capacity in 2002 was about 52 GW.45 

Table 2. Potential Solar Capacity in Southwest

 7

Figure 4. Solar Insolation in the Southwest; Source: NREL 
These numbers were based on a Geographic Information Systems analysis to identify 

candidate areas in the Southwest. Several filters were used to determine which land was 

suitable for CSP plants: 

• Only lands with an average daily solar resource of 6.75 kWh/m2 or above 

• 500 contiguous acres of land minimum 

• Land with 1 percent or less slope 

• Excluded designated urban areas, national parks, national preserves, 

wilderness areas, wildlife refuges, or water 

A more accurate analysis would have required filters for land ownership, road access, and 

access to transmission. Discussions with federal, state, and local governments would also 

be required to determine if there were plans to designate public lands for a specific use. 

All of these factors would reduce the solar capacity listed in Table 2. The 6,877,055 MW 

total solar capacity was meant to show that the maximum solar potential of the Southwest 

is much more than is presently needed, not what was either possible or practical. 

Energy potential, however, is not meaningful unless it can be brought to market at a 

reasonable cost, which CSP technologies cannot currently do. DOE’s Solar Energy 

Technology Program has been working to reduce the cost of CSP technologies through 

R&D. Much of this effort has been focused on parabolic trough and dish/engine systems. 

The key technical challenges for parabolic trough technology relate to improving the 

efficiency and reducing the installed capital cost of the solar field, including the 

concentrator and solar receiver. To take advantage of the added value for dispatchable 

power, an additional challenge is to develop a low-cost energy storage system that 

enables utilities to generate power to meet grid demand. The key technical challenges for 

dish/engine technology are improving the solar collector (e.g. optics and controls) and 

increasing the reliability of the engine (e.g. valves, seals, and controls). DOE also 

developed a strategy that called for a Federal-State partnership in which DOE provides 

R&D support and the States provide incentives to enable deployment. DOE’s role in 

deployment would be to provide the States and their utilities information about CSP 

technology. 

Recent policy developments at the federal and state level have improved the commercial 

potential of CSP technologies. These policy changes have played a significant role in 

spurring the development of several CSP projects in the Southwestern U.S. In turn, cost 

reductions that are likely to be achieved through these projects may help lead to further 

CSP deployment. 

Recent Policy Developments 

At the federal level, the establishment of a 30 percent investment tax credit for qualified 

solar energy installations through Section 1335 of the Energy Policy Act of 2005 

(EPACT 2005) has helped to significantly reduce the cost of CSP projects.46 The 

investment tax credit currently applies to projects placed in service by December 31, 

2007. 

 8
State policies have played a major role in creating a market that is favorable for CSP 

deployment. Six Southwestern States (CA, NM, AZ, TX, CO, and NV) have established 

incentives to promote the use of renewable energy, including solar energy technologies. 

Because CSP technology operates most efficiently in low-latitude regions where the skies 

are clear, the Southwest offers the best sites for CSP plants in the U.S. 

Chief among the state policies to promote renewables are renewable portfolio standards 

(RPS’s) which require that a specific portion of a state’s electricity consumption be met 

by renewable energy by a certain year. California’s RPS goal, for example, is 20 percent 

of total generation from renewable resources by 2010.47 Table 3 lists the requirements of 

the RPS’s in the six Southwestern States.48

Nevada’s RPS requires each electricity 

provider to generate 9 percent of its 

electricity from renewable sources by 

2007 and 20 percent by 2015. 

Furthermore, it requires that 5 percent 

of the electricity obtained from 

renewable sources in each year must be 

acquired from solar energy systems.49

In addition to its RPS, New Mexico has 

established a Task Force to assess the feasibility of a CSP project. Recommendations 

from the Task Force to the Governor are currently pending.50 

Table 3. RPS Requirements in Southwestern States 

State Requirement 

Arizona 15% by 2025 

California 20% by 2010 

Colorado 10% by 2015 

Nevada 20% by 2015, 5% Solar 

New Mexico 10% by 2011 

Texas 5,880MW (~4.2%) by 2015 

It is important to note that unless a state RPS has a carve-out requirement for solar, 

utilities will most often pursue the cheapest renewable energy projects, which to date has 

been wind energy in most states. However, these policies have led to the establishment 

of several CSP projects since 2004. A list of those projects is provided in Appendix A. 

In addition to state activities establishing RPS’s, in June 2004 the Western Governors’ 

Association (WGA) established the Clean and Diversified Energy Initiative for the West. 

Its goal is to develop 30,000 MW of clean energy in the West by 2015. Under the 

auspices of the WGA, a Solar Task Force comprised of industry, utility, environmental, 

and State and Federal government representatives developed a set of policies and 

incentives it felt were necessary to enable sufficient deployment to bring the cost of CSP 

down to levels competitive with fossil fuel-generated electricity.51 Although DOE 

supported the WGA team that wrote the report, the report was not an independent 

assessment funded by DOE. The report was submitted to the WGA. It was not submitted 

to DOE and DOE does not necessarily agree with the report’s policy recommendations. A 

summary of the WGA Solar Task Force report is provided in Appendix B. 

Benefits of CSP for Utilities 

Although CSP costs more today than other renewable options such as wind, there are 

several reasons for utility interest in CSP: 

 9
• CSP electricity production aligns closely with periods of peak electricity demand, 

reducing the need for investment in new generating plants and transmission 

system upgrades. 

• Thermal storage or the hybridization of CSP systems with natural gas avoids the 

problems of solar intermittency and allows the plant to dispatch power to the line 

when it is needed. 

• The widespread availability of solar energy throughout the Southwest provides 

utilities with flexibility in locating CSP plants near existing or planned 

transmission lines. 

• Placing CSP plants on the “right” side of congestion can reduce grid congestion 

and increase grid reliability. 

• Large centrally-located power plants are the types of systems that the utilities 

have operated for years and with which they are most comfortable. 

• Once the CSP plant is built, its energy costs are fixed; this stands in contrast to 

fossil fueled plants that have experienced large fluctuations in fuel prices during 

the last several years. 

Arizona Public Service, in its description of the Southwestern Utility Consortium CSP 

Initiative,52 gave the following reasons why the consortium of 10 Southwestern utilities 

is considering developing a CSP plant in Arizona: 

• Solar energy is Arizona’s greatest renewable resource 

• CSP is the most effective solar technology 

• CSP’s peaking capacity when paired with storage or natural gas 

• Its potential for cost competitiveness in the near future 

Utilities are also concerned that there may eventually be constraints on greenhouse gas 

emissions. Because CSP plants do not emit carbon dioxide, they allow utilities to 

generate electricity without emitting that greenhouse gas. Utility concerns about future 

greenhouse gas regulations are being fueled by actions taken throughout the country. In 

September 2006, California enacted the California Global Warming Solutions Act of 

2006, which requires California to reduce its greenhouse gas emissions by 25 percent by 

2020.53 As of October 2006, more than 300 mayors representing over 50 million 

Americans had agreed to take steps to reduce greenhouse gas emissions.54 Constraints on 

greenhouse emissions may make fossil fuel-generated power more expensive, thereby 

improving the economics of CSP projects. 

CSP also helps utilities come into compliance with existing Federal, State, and local air 

quality regulations. The environmental impact of solar energy depends on what fuel 

source was used to generate the electricity it is replacing. Relative to a typical natural gas 

combined cycle plant, the cleanest source of fossil-fueled electricity, a 100 MW CSP 

plant with 6 hours of storage reduces NOx emissions by 7.4 tons/year, CO emissions by 

4.5 tons/year, and CO2 emissions by 191,000 tons/year.55 It should be noted, however, 

that this environmental analysis did not include a complete life cycle analysis that took 

into account the emissions resulting from constructing the power plants or from making 

the materials that went into the plants.

 10
The environmental benefits of CSP and other renewables have likely been a factor in 

spurring the State and Federal governments to create incentives for their use. As the next 

section explains, the economic development benefits of CSP also give some state 

governments a reason to provide policy incentives for CSP. 

Benefits of CSP for Southwestern States 

Adding CSP to the generation mix of a State contributes to a reliable and diverse energy 

supply, a better use of natural resources within the State, and better air quality. CSP can 

also serve as a hedge against the high and volatile costs seen in energy prices the past 

several years. In California, for example, the average cost of natural gas in 1999 was 

about $2.20 per million BTU’s. It rose to over $8/MMBtu in 2001, fell to $3/MMBtu in 

2002, and back up to $7/MMBtu by 2005.56 In contrast, the solar energy used as fuel by 

CSP systems is stable. The power purchase agreement determines the cost of CSP power 

for the duration of the agreement (typically for 20 years). Being an indigenous resource, 

solar energy is not subject to disruptions of supply or market conditions that can plague 

natural gas (and to a lesser extent, coal-fired) power plants. 

CSP also provides for a growing industry that can provide an economic stimulus to the 

State.57 Several States recommended that it would be useful if DOE provided an 

assessment of the economic development benefits of CSP. As a result, economic studies 

were done for Nevada, New Mexico, and California. In each case the State was asked to 

select an expert organization to perform the study. This was done to assure the analysis 

was done by independent experts that were credible to the State. Nevada and New 

Mexico each selected one of their universities to do the analysis based on its expertise in 

doing similar analyses for the State. There was no peer review of these reports other than 

that done by the States. California did not recommend an organization, but was 

comfortable with the expertise of the organization selected by DOE. This report did 

undergo a peer review. 

The studies were limited to the economic impact of building and operating CSP plants. 

In particular, the studies estimated the number of jobs that could be created and the 

potential addition to gross state product. The California report was expanded to compare 

the economic impact of CSP to combined cycle and simple cycle natural gas plants. This 

showed the net economic benefit of CSP versus building similar sized natural gas plants. 

The Nevada and New Mexico studies did not make this comparison, but compared a 

scenario in which CSP was built against a scenario in which no new generation capacity 

was built. 

Of course, such analyses are most useful at a State level and not the Federal level. The 

economic impact of CSP for a State depends on its portfolio of natural resources. If a 

State has large reserves of natural gas or coal, the shift to solar energy could result in a 

net loss of jobs. To be credible and useful for Federal policymakers, employment studies 

need to look at nationwide impacts on employment and be conducted by independent 

experts. 

 11
Nevada Economic Study 

This study was done to help the State of Nevada estimate the economic impact of 

building CSP plants. It found that if ten 100 MW plants were built in Nevada over an 11-

year period, the following benefits could be expected: 58

• An initial employment increase of 3,830 jobs, rising to a peak of 6,940 jobs 

during construction, with nearly 2,000 permanent jobs for the operation and 

maintenance of the plants59 (see Figure 5) 

• Total personal income increase of $9.37 billion 

• Gross State Product increase of $9.85 billion 

The report concluded that “CSP generation is a potential source of economic 

development throughout the State. Rural Nevada has been shedding high-paying naturalresource-based jobs for the past decade. Solar power generation does not contribute to 

global warming or diminish air quality, but provides opportunities for the skilled labor 

force that has been left unemployed in rural Nevada. Thus, tallying the economic and 

environmental benefits of solar-power generation, it is clear that it could be an important 

contributor to sustainable economic development in rural Nevada.”60 Of course, 

whenever there is a large investment in a capital project, the number of local jobs will 

increase, so the analysis may be somewhat misleading unless it compares the results to an 

alternative investment of the same magnitude that achieves the same goal. The analysis 

did not identify who would pay for the investment (Federal or State taxpayers or 

ratepayers). Finally, the report did not estimate jobs potentially lost elsewhere in the U.S. 

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Figure 5. Estimate of Jobs Generated by Building 1000 MW of CSP in Nevada, 55

 12
New Mexico Feasibility Study61 

This study assessed the feasibility of creating a solar power industry in New Mexico and 

included an assessment of the economic and fiscal impact on the State. One scenario had 

five 100 MW plants built over a ten-year period. The benefits of that scenario included: 

• Creation of 11,696 jobs during the construction phase (direct and indirect) and 

397 permanent operation and maintenance (O&M) jobs 

• Net revenue increase to State and local governments of $1.22 billion over 30 

years 

The study also included a detailed analysis of which components could be manufactured 

within the State and which would likely be imported from other States or overseas. The 

report concluded “Building a beachhead [solar] industry holds tremendous economic 

impact for New Mexico.” 

California Economic Benefits Study62 

Although there are similarities to the above referenced Nevada and New Mexico reports, 

the California study had a broader scope. It provided an assessment of CSP technologies 

and California’s solar resource, determined the environmental and energy benefits of 

CSP, and estimated the economic impact to the state. The California study also 

compared the economic impact of CSP with natural gas power plants. Because 

California’s need for electrical power is much greater than Nevada and New Mexico, the 

study examined deployment scenarios of 2,000 MW and 4,000 MW assumed to be built 

between 2008 and 2020. 

The study found that building between 2,000 and 4,000 MW of CSP would have the 

following effects: 

• $7 to $13 billion in new investment, of which an estimated $2.8 to $5.4 billion 

would be spent in California 

• An increase in Gross State Product of between $13 and $24 billion 

• The creation of 1,500 to 3,000 jobs 

Moreover, the study found that a CSP plant requires an approximately 67 percent larger 

workforce than a comparably sized combined cycle plant. During construction, the 

impact of each 100 MW of CSP on gross State product is significantly higher than that of 

a similarly sized combined cycle gas plant ($628 vs. $64 million). 

The report concluded that “investment in CSP power plants delivers greater return to 

California in both economic activity and employment than corresponding investment in 

natural gas equipment. Each dollar spent on CSP contributes approximately $1.40 - 

$1.50 to California’s gross State product; each dollar spent on natural gas plants 

contributes $0.90 - $1.00 to the gross State product.”63 This is because of the savings 

accrued over the lifetime of the plant from not having to purchase natural gas from out of 

state to keep the plant operating. During 2004, California imported 32 percent of its 

energy from other States or Canada.64 The use of CSP enables California to use an 

energy resource abundant within the State. This keeps more money in the State and helps 

strengthen its economy. Adding CSP also diversifies its sources of energy, lessening its 

reliance on any one source. The California report also references a study that indicates 

 13
that decreasing the demand for natural gas (e.g., by using CSP) reduces its price to the 

benefit of all natural gas consumers.65 

 14
4.0 Summary 

Between 2000 and 2003, four reports were released on the potential for CSP. An 

assessment of the main issues raised by these reports leads to the following conclusions: 

1. Further technology development and deployment could reduce the cost of CSP: 

The S&L study quantified the significant cost reductions that are possible with 

continued technology development and deployment. It concluded that there were three 

elements that could reduce the cost of CSP from approximately 12 cents/kWh today to 

about 5 cents/kWh by 2020: technology development (42 percent), building larger 

plants (37 percent), and volume production (21 percent). All four studies mentioned in 

this report are in agreement that the costs of CSP would fall with greater levels of 

deployment. 

2. CSP requires policy incentives for initial deployment: All the reports emphasized 

that in the near-term, deployment of CSP depends on the establishment of policy 

incentives that offset the current higher cost of solar energy. The CSP industry 

provided a list of incentives it stated were necessary to initiate deployment. These were 

included in DOE’s 2002 report. Six southwestern States have now established 

renewable portfolio standards, and the Federal Government has created an investment 

tax credit that encourages the deployment of CSP. These policies have resulted in the 

establishment of CSP projects in California, Arizona, and Nevada that could result in 

2,000 MW by 2010. 

Development of CSP could provide energy, economic, environmental, and security 

benefits. The following factors could make CSP an attractive option for the Southwestern 

States if policymakers determine that these benefits outweigh the costs. 

1. Energy: CSP could provide hundreds of gigawatts of clean power. 

2. Economic: Analyses for California, Nevada, and New Mexico estimate that there 

could be significant benefits in job creation and additions to gross state product 

accruing from building and operating CSP plants. It is expensive to build a CSP plant 

and it requires a relatively large number of people to operate and maintain it. Counter 

balancing this, however, is the absence of a fuel cost. Much of the money that would 

otherwise be spent on monthly fuel costs, instead is spent on salaries. States and the 

Federal government have indicated their concern over the rising and volatile price of 

fossil fuels and their impact on the economy. 

3. Environmental: CSP plants do not emit criteria pollutants or greenhouse gases, an 

issue of growing concern throughout the Federal and State governments. Thus, CSP 

could be an element of potential future policies related to climate change. 

 15
4. Security: The addition of CSP to a State’s portfolio increases its energy diversity and 

makes use of a local resource. Solar power is a domestic resource not subject to 

depletion. Placing CSP plants on the “right” side of congestion can reduce grid 

congestion and increase grid reliability. 

The reports discussed in this document have identified a path by which power from CSP 

plants can become competitive with fossil fueled plants. In DOE’s 2002 report, industry 

estimated the cost of incentives required to achieve this goal would be between $1.5 and 

$2.0 billion over 14 years. At the end of that period CSP could potentially provide 

electricity at 5 to 6 cents/kWh without further subsidies. 

Federal policymakers must carefully weigh the potential benefits of CSP against the 

significant cost to taxpayers in terms of industry subsidies and the cost to ratepayers in 

those states where CSP would initially provide electricity at costs higher than 

conventionally produced electricity. 

 16
Appendix A. Recent and Ongoing Projects 

In 2005 and 2006, several CSP plants were built or entered the planning phase in the 

Southwestern U.S. These projects represent a very small fraction of the enormous energy 

potential in the western U.S. A DOE report done for the Western Governors’ Association 

found that by using only available land with the most intense sunshine, over 6,800 GW of 

electricity could be generated in the 

Southwest. This is nearly 7 times the 

electric generating capacity of the entire 

country. 

These plants, as well as all other CSP 

plants that have been deployed in the 

U.S. since 1985, are listed in Table 4. 

In 2005, Arizona Public Service 

Company (APS) deployed a 1 MW 

trough plant at the company’s Saguaro 

Power Plant near Tucson, AZ, as 

pictured in Figure 6. This was the first 

commercial trough plant built since 

1991. Figure 6. One MW CSP Trough Plant near Tucson, AZ 

Nevada Power signed a power purchase agreement for a 64 MW trough plant in Boulder 

City, NV. The project, called Nevada Solar One and shown in Figure 7, will be the 

largest solar project built since 1991 and the third largest solar power plant in the world. 

Construction started in 2006 and operation is estimated to begin early in 2007. 

Figure 7. Nevada Solar One near Boulder City, NV 

 17
In August 2005, Southern California 

Edison (SCE) signed a power 

purchase agreement for 500 MW of 

CSP dish-engine systems on a 4,500 

acre site near Victorville, CA, with 

an option to expand the project to 

850 MW. Figure 8 provides an 

artist’s rendering of a field of dishengine CSP systems. 

In September 2005, San Diego Gas 

& Electric (SDG&E) signed a power 

purchase agreement for a 300 MW 

dish-engine project in California’s 

Imperial Valley near El Centro, CA, with an 

option of expanding the project to 900 MW.66 Figure 8. Artist’s Rendering of Multi-MW DishEngine CSP Field 

In August 2006, the Pacific Gas and Electric Company initiated plans with Luz II, LLC, 

to purchase at least 500 MW of solar energy beginning in the spring of 2010.67 

In October 2006, APS announced that it was part of a group of 10 Southwestern utilities 

from Arizona, New Mexico, Nevada, Colorado, Texas, and California that was 

considering aggregating their future need for solar power in order to benefit from the 

lower costs associated with larger CSP plants.68 APS listed several reasons why the 

utilities are working together: 

• CSP facilities experience greatest cost effectiveness around 250 MW 

• Few utilities have the appetite for large solar facilities 

• Joint development allows greater scale and lower prices 

• Joint ownership is familiar to most utilities 

In November 2006, SDG&E announced that it had signed a contract with Bethel Energy 

LLC to “add nearly 100 MW of renewable electricity to SDG&E’s energy portfolio.”69 

Each of the four reports assessing the potential of CSP emphasized the importance of 

deployment in reducing costs. Both of the National Research Committee reports 

concluded it was unlikely that CSP would ever be deployed. Recent policy changes, in 

particular the establishment of renewable portfolio standards by several states, have led to 

the CSP deployment activities listed above. 

 18
Table 4. List of CSP Plants in the U.S. 

Name Type

Net 

Output 

(MWe)

Location Status Owner/ 

Operator

SEGS I Parabolic Trough w/ 3 

hours of thermal storage 

13.8 Mojave Desert, Daggett, 

CA 

Operation began in 1985 (thermal storage 

no longer in operation – damaged in 1999 

fire) 

Sunray 

Energy 

SEGS II Parabolic Trough w/ 

auxiliary natural gas boiler 

30 Mojave Desert, Daggett, 

CA 

Operation began in 1986 – natural gas 

augments solar power as necessary 

Sunray 

Energy 

SEGS III Parabolic Trough w/ 

auxiliary natural gas boiler 

30 Mojave Desert, Kramer 

Junction, CA 

Operation began in 1987 – natural gas 

augments solar power as necessary 

Florida 

Power & 

Light 

SEGS IV Parabolic Trough w/ 

auxiliary natural gas boiler 

30 Mojave Desert, Kramer 

Junction, CA 

Operation began in 1987 – natural gas 

augments solar power as necessary 

Florida 

Power & 

Light 

SEGS V Parabolic Trough w/ 

auxiliary natural gas boiler 

30 Mojave Desert, Kramer 

Junction, CA 

Operation began in 1988 – natural gas 

augments solar power as necessary 

Florida 

Power & 

Light 

SEGS VI Parabolic Trough w/ 

auxiliary natural gas boiler 

30 Mojave Desert, Kramer 

Junction, CA 

Operation began in 1989 – natural gas 

augments solar power as necessary 

Florida 

Power & 

Light 

SEGS VII Parabolic Trough w/ 

auxiliary natural gas boiler 

30 Mojave Desert, Kramer 

Junction, CA 

Operation began in 1989 – natural gas 

augments solar power as necessary 

Florida 

Power & 

Light 

SEGS VIII Parabolic Trough w/ 

auxiliary natural gas HTF 

heater 

80 Mojave Desert, Harper 

Lake, CA 

Operation began in 1990 – natural gas 

augments solar power as necessary 

Florida 

Power & 

Light 

SEGS IX Parabolic Trough w/ 

auxiliary natural gas HTF 

heater 

80 Mojave Desert, Harper 

Lake, CA 

Operation began in 1991 – natural gas 

augments solar power as necessary 

Florida 

Power & 

Light 

Solar One Power Tower 10 Barstow, CA Operated from 1982 to 1988 DOE 

Solar Two Power Tower w/ Molten 

Salt Storage 

10 Barstow, CA (Retrofit of 

Solar One) 

Operated from 1996 to 1999 DOE/SCE 

Nevada 

Solar One 

Parabolic Trough 64 Boulder City, NV Under Construction - Operation will begin in 

2007 

Solargenix 

Stirling 

Energy 

Systems 

SES I 

Dish - Stirling Engine 500 Mojave Desert, CA Under Development - (May be expanded to 

850MW): 20-yr PPA with Southern 

California Edison 

Sterling 

Energy 

Systems 

Stirling 

Energy 

Systems 

SES II 

Dish - Stirling Engine 300 Imperial Valley, CA Under Development - (May be expanded to 

600MW): 20-yr PPA with San Diego Gas & 

Electric 

Sterling 

Energy 

Systems 

Saguaro 

Solar 

Generating 

Station 

Parabolic Trough 1 Tucson, AZ Started Operation in 2006 Arizona 

Public 

Service 

Sandia 

Labs/SES 

Test Facility 

Dish - Stirling Engine 0.15 Albuquerque, NM Six-dish test facility –installation completed 

in January 2005 

Sterling 

Energy 

Systems 

PG&E/Luz II, 

LLC 

Parabolic Trough 500 TBD Under Development –Planned to be 

operational by 2010 

TBD 

SDG&E/Beth

el Energy 

LLC 

Parabolic Trough 100 TBD Under Development –Planned to be 

operational by 2010 

TBD 

 19
Appendix B. WGA Report 

The Western Governors’ Association (WGA) established the Clean and Diversified 

Energy Initiative for the West in order to develop 30,000 MW of clean energy in the 

West by 2015. The WGA formed a Solar Task Force comprised of industry, utility, 

environmental, and State and Federal government representatives to develop a set of 

policies and incentives necessary to enable sufficient deployment to bring the cost of 

solar energy down to levels competitive with fossil fuel-generated electricity.70 Initially it 

was estimated that CSP would provide 1,000 MW towards that goal, but the Solar Task 

Force recommended that it be increased to 4,000 MW.71

For the task force’s report, data from Pacific Gas & Electric was used to compile a 

blended average of electricity prices that takes into account the fraction of CSP 

generation that falls into baseload and peak periods (called a market price referent, or 

MPR), as well as the sensitivity of electricity prices to natural gas price fluctuations. This 

data shows that the market price of conventional electricity is about 5.5 cents/kWh when 

the price of natural gas is $5/MMBtu and that it increases as the price of natural gas 

increases.72 The cost of electricity is 8 cents/kWh when natural gas reaches $9/MMBtu. 

The WGA task force recommended that the 30 percent Federal investment tax credit be 

extended to ten years and made available to utilities, and that States exempt CSP plants 

from property and sales taxes, extend power purchase agreements to 30 years, and make 

power purchase agreements larger (e.g., 500 MW) to accelerate scale-up cost reductions. 

The report cautions that if these incentives are not available, CSP deployment may 

require the establishment of a production tax credit or buy-down. 

However, if these incentives are in place, the task force estimated that 4,000 MW of CSP 

could be deployed, reducing the levelized cost of energy from CSP to under 6 cents/kWh 

(see Figure 9). This would place the cost of CSP within the competitive range with fossil 

fuel-fired power plants at current natural gas prices. 

In addition to the Solar Task Force, the WGA formed six other task forces: wind, clean 

coal, biomass, geothermal, energy efficiency, and transmission. Each task force wrote a 

report. The reports were submitted to the WGA in 2006. 

 20
0.00

0.02

0.04

0.06

0.08

0.10

0.12

0 1000 2000 3000 4000

Cummulative New Capacity by 2015 (MW)

LCOE (2005$/kwh)

Assumes:

- Trough Technology w ith 6 hours of TES

- IPP Financing, 30-year PPA

- California Property Tax Excemption

- Includes scale-up, R&D, learning effects,

- Barstow , California site

Total Cost

Figure 9. WGA Task Force’s Forecast for CSP Cost 

 21
Appendix C. Acronyms and Abbreviations 

Term Definition 

CPUC California Public Utilities Commission 

CSP Concentrating Solar Power 

DOE Department of Energy 

EPACT Energy Policy Act 

GW Gigawatts (1,000,000 kilowatts) 

kWh Kilowatt-hour 

LCOE Levelized Cost of Energy 

MW Megawatts (1,000 kilowatts) 

NRC National Research Council 

NREL National Renewable Energy Laboratory 

O&M Operation and maintenance 

PV Photovoltaic 

R&D Research and development 

RPS Renewable portfolio standard 

S&L Sargent and Lundy LLC 

SEGS Solar Energy Generating System 

SCE Southern California Edison 

SDG&E San Diego Gas and Electric 

SunLab SunLab comprises researchers from Sandia National Laboratories 

and the National Renewable Energy Laboratory working together 

on Concentrating Solar Power for the Department of Energy 

WGA Western Governors’ Association

 22
Endnotes 

 

1

 “Renewable Power Pathways: A Review of the Department of Energy’s Renewable Energy Programs,” 

National Research Council, 2000, Pg. 63 

2

 “Feasibility of 1,000 Megawatts of Solar Power in the Southwest by 2006,” DOE Office of Energy 

Efficiency and Renewable Energy (EERE), August 2002, Pg. 16 

3

 “Assessment of Parabolic Trough and Power Tower Solar Technology Cost and Performance Forecasts,” 

Sargent and Lundy, LLC, October 2003, Pg. ES1 

4 Ibid.

5 Ibid.

6 Ibid.

7 Ibid.

8

 “Critique of the Sargent and Lundy Assessment of Cost and Performance Forecasts for Concentrating 

Solar Power,” National Research Council, November 22, 2002, Pg. 6 [Note- The review was performed on 

DRAFT 3 of the Sargent and Lundy Report, SL5641, dated October 2002; the final version of the report 

was released in October 2003] 

9 Ibid., Pg. 4 10 Ibid., Pg. 10 11 “Renewable Energy,” California Public Utilities Commission, Retrieved on Sept 1, 2006, from 

http://www.cpuc.ca.gov/static/energy/electric/renewableenergy/index.htm 

12 Section 26 United States Code, 26 USC § 25D (2005), Retrieved on September 1, 2006, from 

http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=US37F&State+Federal¤tp

ageid=1&ee=1&re=1 

13 “The Potential Economic Impact of Constructing and Operating Solar Power Generation Facilities in 

Nevada,” R.K. Schwer, M. Riddel, University of Nevada, Las Vegas, NREL/SR-550-35037, February 2004 

14 “The Economic Impact of Concentrating Solar Power in New Mexico,” University of New Mexico, 

December 2004 

15 “Economic, Energy, and Environmental Benefits of Concentrating Solar Power in California,” L. 

Stoddard, J. Abiecunas, and R. O’Connell, Black and Veatch, April 2006 

16 “Natural Gas Prices Annual Data,” Energy Information Administration, Retrieved on September 1, 2006, 

from http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_a.htm 

17 “Analysis of Concentrating Solar Power Plant Siting Opportunities: Discussion Paper for WGA Central 

Station Solar Working Group,” M. Mehos, NREL, July 2005, Pg. 2 

18 Electric Power Annual, Energy Information Administration, November 2005. U.S. generation capacity at 

the end of 2004 was 1,049.615 GW. 

19 “Renewable Power Pathways: A Review of the Department of Energy’s Renewable Energy Programs,” 

National Research Council, 2000 

20 Ibid., Pg. 65 21 Ibid., Pg. 66 22 Ibid., Pg. 62-66 23 “The Demise of Luz: A Case Study,” N. Becker, Solar Today, vol. 6, no. 1, January/February 1992, Pgs. 

24-25 

24 “An Overview of the Kramer Junction SEGS Recent Performance,” S. Frier, KJC Operating Company, 

August, 1999 

25 “Final Test and Evaluation Results from the Solar Two Project,” J. Pacheco, Sandia National 

Laboratories, SAND2002-0120, January 2002 

26 “Renewable Power Pathways: A Review of the Department of Energy’s Renewable Energy Programs,” 

National Research Council, 2000, Pg. 63 

27 Ibid.. Pg. 62-66 28 “A Rebuttal of the National Research Council’s Review of the U.S. DOE Concentrating Solar Power 

Program,” U.S. Concentrating Solar Power Industry Review Panel (including John Myles), June 2000. 

29 Senate Report 107-039 – Energy and Water Development Appropriation Bill, 2002, Retrieved on 

October 11, 2006 from http://thomas.loc.gov/cgibin/cpquery/?&dbname=cp107&sid=cp107alJsu&refer=&r_n=sr039.107&item=&sel=TOC_577066& 

 23
 30 “Feasibility of 1,000 Megawatts of Solar Power in the Southwest by 2006,” DOE Office of Energy 

Efficiency and Renewable Energy (EERE), August 2002, Pg. 3 

31 Ibid., Pg. 3 32 “Assessment of Parabolic Trough and Power Tower Solar Technology Cost and Performance Forecasts” 

Draft 3, Sargent and Lundy, LLC, October 2002 

33 “Assessment of Parabolic Trough and Power Tower Solar Technology Cost and Performance Forecasts,” 

Sargent and Lundy, LLC, May 2003, Pg. ES3 

34 Ibid., Pg. ES2 35 Ibid. 36 “Critique of the Sargent and Lundy Assessment of Cost and Performance Forecasts for Concentrating 

Solar Power,” National Research Council, November 22, 2002 

37 Ibid., Pg. 4 38 Ibid., Pg. 6 39 “Assessment of Parabolic Trough and Power Tower Solar Technology Cost and Performance 

Forecasts,” Sargent and Lundy, LLC, May 2003, Pgs. I-1 to I-13 

40 “Critique of the Sargent and Lundy Assessment of Cost and Performance Forecasts for Concentrating 

Solar Power,” National Research Council, November 22, 2002, Pg. 11 

41 S&L’s scope of work was to develop a “reasonable” deployment scenario assuming policy measures 

were in place to support it and then estimate the impact of that deployment on the cost of the technology. It 

was to be left to the Federal and/or State governments to determine if establishing such policies were 

prudent. However, the importance of policy on the development of solar energy can be seen from 

international examples. Over the last several years, the market for photovoltaics has been driven by 

incentives offered by the Japanese and German governments. Japan offered a buy-down that began at 

$9.00/Watt (W) in 1994 and was slowly reduced until phasing out in 2005. This established a photovoltaic 

(PV) market in Japan of over 50,000 systems in 2004 (Ref: “Toward Expanding New Energy Introduction,” 

Japanese Ministry of Economy, Trade and Industry, July 2006). The Spanish established an incentive 

which shows how sensitive the market is to the size of the incentive. In 2002, Spain issued a Royal Decree 

that offered a premium of 12 Euro cents/kWh for solar thermal power. No projects were established. In 

2004, the premium was increased to 18 Euro cents/kWh. This level of incentive quickly resulted in 

projects being developed totaling the 200 MW maximum allowed (Ref: “CSP Project Developments in 

Spain,” SolarPACES, July 2005, Retrieved on September 1, 2006, from 

http://www.solarpaces.org/projects.htm#CSP%20Projects%20Spain).

42 “Analysis of Concentrating Solar Power Plant Siting Opportunities: Discussion Paper for WGA Central 

Station Solar Working Group,” M. Mehos, NREL, July 2005, Pg. 2

43 Ibid., Pg. 2 44 “Country Analysis Brief – United States,” Energy Information Administration, January 2005 

45 “California’s Electricity Generation and Transmission Interconnection Needs Under Alternative 

Scenarios,” Electric Power Group, LLC, prepared for the California Energy Commission, 700-04-003, 

March 2004. 

46 Section 26 United States Code, 26 USC § 25D (2005), Retrieved on September 1, 2006, from 

http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=US37F&State+Federal¤tp

ageid=1&ee=1&re=1 

47 “Renewable Energy,” California Public Utilities Commission, Retrieved on Sept 1, 2006, from 

http://www.cpuc.ca.gov/static/energy/electric/renewableenergy/index.htm 

48 “State Clean Energy Maps and Graphs,” Union of Concerned Scientists, Updated October 14, 2005, 

Retrieved on October 12, 2006 from http://www.ucsusa.org/clean_energy/clean_energy_policies/stateclean-energy-maps-and-graphs.html 

49 “Nevada Revised Statutes: 704.7821,” Nevada Legislature, Retrieved on September 12, 2006, from 

http://www.leg.state.nv.us/nrs/NRS-704.html#NRS704Sec7821

50 “Governor Richardson’s Task Force on Concentrating Solar Power in New Mexico: Member Roster,” 

Retrieved on September 1, 2006, from 

http://www.emnrd.state.nm.us/emnrd/ecmd/ConcentratingSolarPower/documents/CSPTaskForceComposition-04-13-04.doc 

51“Clean and Diversified Energy Initiative Solar Task Force Report,” Western Governors’ Association, 

January 2006.

 24
 52 “Southwestern Utility Consortium CSP Initiative” , Retrieved on November 13, 2006 from 

http://www.cc.state.az.us/utility/electric/5%20-%205ACC%20CSP%20-

%Final%20(10%2006%2006).ppt#287 

53 “AB 32 Assembly Bill,” California Legislature, Retrieved on September 31, 2006, from 

http://www.leginfo.ca.gov/pub/bill/asm/ab_0001-0050/ab_32_bill_20060831_enrolled.html 

54 “US Mayors Climate Protection Agreement,” U.S. Conference of Mayors, September 8, 2006, Retrieved 

on October 12, 2006, from http://www.seattle.gov/mayor/climate/default.htm 

55 “Economic, Energy, and Environmental Benefits of Concentrating Solar Power in California,” L. 

Stoddard, J. Abiecunas, and R. O’Connell, Black and Veatch, April 2006, pg. 8-1 

56 “The Impacts of Natural Gas Prices on the California Economy: Final Report,” Global Insight, Inc., 

February 2006, Pg. 17 

57 Discussions with advisors to the Governors of Arizona, New Mexico, Nevada, and California 

58 “The Potential Economic Impact of Constructing and Operating Solar Power Generation Facilities in 

Nevada,” R.K. Schwer, M. Riddel, University of Nevada, Las Vegas, NREL/SR-550-35037, February 2004 

59 Jobs reported in the Nevada economic impact study include direct, indirect, and induced jobs, while jobs 

reported in California and New Mexico studies report direct and indirect jobs only. 

60 “The Potential Economic Impact of Constructing and Operating Solar Power Generation Facilities in 

Nevada,” R.K. Schwer, M. Riddel, University of Nevada, Las Vegas, NREL/SR-550-35037, February 2004 

61 “The Economic Impact of Concentrating Solar Power in New Mexico,” University of New Mexico, 

December 2004 

62 “Economic, Energy, and Environmental Benefits of Concentrating Solar Power in California,” L. 

Stoddard, J. Abiecunas, and R. O’Connell, Black and Veatch, April 2006 

63 Ibid., Pg. ES-4 64 “Overview of California’s Electricity System,” Bob Thorkelson, California Energy Commission, January 

2005. 

65 “Easing the Natural Gas Crisis: Reducing Natural Gas Prices Through Electricity Supply 

Diversification,” R. Wiser, Lawrence Berkeley National Laboratory, testimony to Senate Committee on 

Energy and Natural Resources, March 8, 2005 

66 “SDG&E Signs Solar Power and Other Renewables Energy Pacts,” San Diego Gas & Electric Press 

Release, September 7, 2005 

67 “PG&E Announces Significant New Green Power,” PG&E Press Release, August 10, 2006 

68 “Southwestern Utility Consortium CSP Initiative” , Retrieved on November 13, 2006 from 

http://www.cc.state.az.us/utility/electric/5%20-%205ACC%20CSP%20-

%Final%20(10%2006%2006).ppt#287 

69 “SDG&E to Buy 120 Megawatts of Solar, Geothermal Energy”, Retrieved on November 13, 2006 from 

http://public.sempra.com/newsreleases/viewpr.cfm?PR_ID=2094&Co_Short_Nm=SDGE 

70 “Solar Task Force Report,” Western Governors’ Association Clean and Diversified Energy Initiative, 

January 2006. 71 “Solar Task Force Report,” Western Governors’ Association Clean and Diversified Energy Initiative, 

January 2006, Pg. 5. 

72 “Solar Task Force Report,” Western Governors’ Association Clean and Diversified Energy Initiative, 

January 2006, Pg 17. 

 25
A Strong Energy Portfolio for a Strong America

Energy efficiency and clean, renewable energy will mean a stronger 

economy, a cleaner environment, and greater energy independence 

for America. Working with a wide array of state, community, industry, and university partners, the U.S. Department of Energy’s Office 

of Energy Efficiency and Renewable Energy invests in a diverse 

portfolio of energy technologies.

For more information contact:

EERE Information Center

1-877-EERE-INF (1-877-337-3463)

www.eere.energy.gov

Produced for the

1000 Independence Avenue, SW, Washington, DC 20585

By the National Renewable Energy Laboratory

A DOE National laboratory

DOE/GO-102007-2400

February 2007