An energy storage pilot project run by a Norwegian company at Masdar City could drive costs down for the solar sector by 70 per cent over the next five years.

New Energy Storage Technology (Nest) is testing its 1-megawatt concentrated solar power (CSP) system at the Masdar Institute's Beam Down facility, using a concrete mixture to store energy rather than the usual, much more expensive, molten salt method.

There is an international push to get the price of CSP down to 6 US cents per kilowatt hour by 2020 from its current average of about 20 cents. In the UAE, this would put the power generated from the technology at grid parity, or the same price as power from natural gas. Another type of solar energy in the country, solar photovoltaic (PV), has already reached grid parity at Dubai's Mohammed bin Rashid Al Maktoum Solar Park project.

"We want to help make CSP a leader [in power generation technology],” said Nicolas Calvet, the chairman of the Masdar Institute Solar Platform. He pointed out that since CSP is a newer technology, the sector is still trying to increase its research and development efforts to drive down costs. The price of components is the main obstacle, and energy storage is the main piece of the category's puzzle, making up about 20 per cent of the total costs of a CSP plant.

Nest said its technology could cut the cost of CSP energy storage systems by half.

The company developed the prototype and pays for the operation of the system, while Masdar Institute provides the infrastructure. Nest expects its technology to finish the testing phase in October.

"Nest's is the first large-scale, pre-commercial-scale thermal energy storage system in the Middle East,” Mr Calvet said.

Christian Thiel, the Nest chief executive, said the storage system should reach commercial markets in the fourth quarter once the pilot was validated.

"We see our system as a revolutionising thermal battery with significant cost reduction,” he said.

The Abu Dhabi-based International Renewable Energy Agency (Irena) has released a cost analysis of various renewable energy technologies. It says the price of CSP plants is dominated by the initial investment cost, or capital expenditure, which accounts for about four-fifths of the total cost.

Mr Thiel said the Nest technology could cut capex requirements by 30 to 65 per cent.

Energy storage is one of the biggest obstacles facing renewables as sources of power generation. PV does not have energy storage capabilities, requiring the energy captured from the sun during the day to be immediately fed into the grid. This can curb the use of traditional forms of power generation such as natural gas, but only during daytime hours.

CSP has an advantage in that it is able to save the daytime solar energy to feed into the power grid at night. The current form of storage most widely used for CSP applications is molten salt.

Mr Thiel explained that molten salt, which stores the energy for later use, must maintain a temperature above 275°C or it will crystallise. To do this requires using a constant source of electricity. Switching to a cement source of storage such as Nest's frees that electricity to be sold instead, slashing operation costs by 50 to 75 per cent.

The molten salt costs US$500 to $1,000 per tonne, compared with the concrete mixture at $80 per tonne.

Nest expects to break even within two years of commercial operation. Its total investment so far has been $10 million. The technology could be applied to new CSP plants or those already built without storage units, such as Masdar's 100MW CSP Shams 1 plant in Abu Dhabi.

Mr Thiel said Nest's priority would be to build its storage units in the Middle East. "The technology has been developed with the [Masdar] Institute, and having a project [within Masdar] would be a nice development.”

"We have a good chance to get our first contract signed by the end of this year, since customer interest is already very high,” he said, adding that the company was in advanced discussions with four potential clients.