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Direct Solar Energy

Hydrogen has been touted as a future transportation fuel due to its versatility, pollutant-free end use and storage capability. The key is a sustainable, CO2-free source of hydrogen such as solar, cost-effective storage and appropriate distribution infrastructure. The production of solar hydrogen, in and of itself, does not produce a hydrogen economy because many factors are needed in the chain. The suggested path to solar hydrogen is to begin with solar enhancement of existing steam reforming processes, with a second generation involving solar electricity and advanced electrolysis, and a third generation using thermolysis or advanced thermochemical cycles, with many researchers aiming for the production of fuels from concentrated solar energy, water, and CO2. In terms of making a transition, solar hydrogen can be mixed with natu- ral gas and transported together in existing pipelines and distribution networks to customers, thus enhancing the solar portion of the global energy mix.

Steam reforming of natural gas for hydrogen production is a con- ventional industrial-scale process that produces most of the world’s hydrogen today, with the heat for the process derived from burning a significant proportion of the fossil fuel feedstock. Using concentrated solar power, instead, as the source of the heat embodies solar energy in the fuel. The solar steam-reforming of natural gas and other hydrocar- bons, and the solar steam-gasification of coal and other carbonaceous materials yields a high-quality syngas, which is the building block for a wide variety of synthetic fuels including Fischer-Tropsch-type chemicals, hydrogen, ammonia and methanol (Steinfeld and Meier, 2004).

The solar cracking route refers to the thermal decomposition of natural gas and other hydrocarbons. Besides H2 and carbon, other compounds may also be formed, depending on the reaction kinetics and on the presence of impurities in the raw materials. The thermal decomposition yields a carbon-rich condensed phase and a hydrogen-rich gas phase. The carbonaceous solid product can either be sequestered without CO2 release or used as material commodity (carbon black) under less severe CO2 restraints. It can also be applied as reducing agent in metallurgical processes. The hydrogen-rich gas mixture can be further processed to high-purity hydrogen that is not contaminated with oxides of carbon; thus, it can be used in proton-exchange-membrane fuel cells without inhibiting platinum electrodes. From the perspective of carbon seques- tration, it is easier to separate, handle, transport and store solid carbon than gaseous CO2. Further, thermal cracking removes and separates carbon in a single step. The major drawback of thermal cracking is the energy loss associated with the sequestration of carbon. Thus, solar cracking may be the preferred option for natural gas and other hydro- carbons with a high H2/C ratio (Steinfeld and Meier, 2004).

3.4.3

Impact of policies4

Direct solar energy technologies support a broad range of applications, and their deployment is confronted by many of the barriers outlined in

4

Non-technology-specific policy issues are covered in Chapter 11 of this report.

366

Chapter 3

Chapter 1. Solar technologies differ in levels of maturity, and although some applications are already competitive in localized markets, they generally face one common barrier: the need to achieve cost reductions (see Section 3.8). Utility-scale CSP and PV systems face different bar- riers than distributed PV and solar heating and cooling technologies. Important barriers include: 1) siting, permitting and financing challenges to develop land with favourable solar resources for utility-scale projects; 2) lack of access to transmission lines for large projects far from electric load centres; 3) complex access laws, permitting procedures and fees for smaller-scale projects; 4) lack of consistent interconnection standards and time-varying utility rate structures that capture the value of distrib- uted generated electricity; 5) inconsistent standards and certifications and enforcement of these issues; and 6) lack of regulatory structures that capture environmental and risk mitigation benefits across technolo- gies (Denholm et al., 2009).

Through appropriate policy designs (see Chapter 11), governments have shown that they can support solar technologies by funding R&D and by providing incentives to overcome economic barriers. Price-driven instru- ments (see Section 11.5.2), for example, were popularized after feed-in tariff (FIT) policies boosted levels of PV deployment in Germany and Spain. In 2009, various forms of FIT policies were implemented in more than 50 countries (REN21, 2010) and some designs offer premiums for building-integrated PV. Quota-driven frameworks such as renewable portfolio standards (RPS) and government bidding are common in the USA and China, respectively (IEA, 2009a). Traditional RPS frameworks are designed to be technology-neutral, and this puts at a disadvantage many solar applications that are more costly than alternatives such as wind power. In response, features of RPS frameworks (set-asides and credits) increasingly are including solar-specific policies, and such pro- grams have led to increasing levels of solar installations (Wiser et al., 2010). In addition to these regulatory frameworks, fiscal policies and financing mechanisms (e.g., tax credits, soft loans and grants) are often employed to support the manufacturing of solar goods and to increase consumer demand (Rickerson et al., 2009). The challenge for solar proj- ects to secure financing is a critical barrier, especially for developing technologies in market structures dominated by short-term transactions and planning.

Most successful solar policies are tailored to the barriers posed by spe- cific applications.Across technologies, there is a need to offset relatively high upfront investment costs (Denholm et al., 2009). Yet, in the case of utility-scale CSP and PV projects, substantial and long-term invest- ments are required at levels that exceed solar applications in distributed markets. Solar heating and cooling technologies are included in many policies, yet the characteristics of their applications differ from electric- ity-generating technologies. Policies based on energy yield rather than collector surface area are generally preferred for various types of solar thermal collectors (IEA, 2007). See Section 1.5 for further discussion.

Similar to other renewable sources, there is ongoing discussion about the merits of existing solar policies to spur innovation and accelerate deployment using cost-effective measures. Generally—and as discussed

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