Option values of concentrating solar power and photovoltaic for reaching a 2°C climate target

In this paper we discuss the role of solar electricity as well as the relative importance of concentrating solar power (CSP) and photovoltaics (PV) for reaching cost-optimal energy related greenhouse gas abatement under the constraint of a 2°C climate protection target. We use the hybrid energy-economy-climate model ReMIND to analyze the use of solar electricity to understand which parameters determine the deployment of one or both solar technologies. We first carry out a literature review of recent studies on costs and potentials of CSP and PV. After consolidating the data into one set of parameters, we implement the two technologies in ReMIND. The results show that solar power technologies supply a significant share of electricity in the optimal abatement scenario. A sensitivity analysis of the investment costs of CSP demonstrates that while investment costs have a major influence on technology deployment, CSP is used over a wide range of values. Furthermore we calculate option values for the solar technologies by running different climate stabilization scenarios in which either PV, CSP, or both, are excluded. These option values serve as an indicator for the strategic relevance of individual technologies to achieve the climate protection target. Our results suggest that excluding solar electricity from the generation mix increases the total mitigation costs as measured by GDP differences by about 80%.