Incentives and financial conditions effect analysis on levelized cost of electricity (LCOE) and government cost for concentrated solar power (CSP) projects in Chile

Abstract

Chile has excellent conditions by having one of the best solar potential worldwide due to the aridness and the high sky clearness index for the energy generation. This potential can be a solution for mining industry which has heavily energy consumer activities in the north of the country and currently both thermal and electricity energy is provided from fossil fuels for these activities. Thermal solar power technologies such as parabolic trough and solar tower are good alternatives to meet the thermal and electricity demand of mining industry. This study focuses on solar incentives as support mechanism with lowest government cost and maximum reduction of levelized cost of electricity. With the research; sensitivity and effectiveness analysis of financial parameters and incentives have been performed. Key findings of this assessment show that for evaluated intervals of financial parameter; debt fraction and discount rate illustrate meaningful sensitivities on both LCOE and government cost. In contrary, debt interest rate shows less sensitivity on government cost while having significant sensitivity on LCOE for both CSP technologies. Also investment tax credit (ITC), production tax credit (PTC), and production base incentive (PBI) have the best effectiveness for all financial conditions. Show more