Most of the time, solar project developers have made a technology choice: develop solar photovoltaic (PV) projects, or develop solar thermal projects that use mirrors and lens to concentrate and capture the sun’s heat. But that trend appears to be changing. Solar Trust of America, which just won a conditional commitment for a $2.1 billion federal loan guarantee for a giant solar thermal power plant, is now teaming up with a fellow German company SolarHybrid to develop large-scale PV power plants, the company said Monday.
While a couple of years ago, solar thermal projects were thought to be by far the lowest cost solar option out there for utility-scale solar projects, more recently a debate has risen over whether solar PV has started to rival solar thermal in attractiveness for utility-scale projects. Solar thermal power plants need to be large, at hundreds of megawatts, to be economically feasible. Lining up permits and financing for large-scale solar thermal can be tough because of the land requirements.
Solar PV projects can be smaller and located closer to where people live, and project developers create economies of scale by building multiple PV projects at the same time. Generous government incentives to encourage PV installations worldwide, from home- to utility-scale, have boosted solar panel sales and in turn drive down their costs.
New Jersey-based NRG Energy, which owns mostly coal and natural gas power plants in the U.S., has been snapping up PV projects developed by companies such as SunPower and First Solar. At the same time, NRG has also been investing in solar thermal power plants as well, such as the 392 MW Ivanpah project by BrightSource Energy that is being built in California’s Mojave desert with a $1.6 billion federal loan guarantee.
However, NRG has more recently replaced two solar thermal power plant projects in favor of using solar panels. The company scrapped a 92 MW project that would’ve used eSolar’s technology because the project wouldn’t have started on time. NRG said it would use solar panels instead for the California project. NRG replaced a second project of the same size with a 20 MW project that’s currently being built by solar panel maker and project developer First Solar in New Mexico.
Back in 1999, Sempra Generation’s then-CEO Michael Allman said PV power plants were cheaper to build. The company has hired First Solar to build power plants, including the 48 MW in Nevada that was done last year and is now the largest PV power plant in the country.
Solar Trust plans to form a joint venture with German company SolarHybrid — called SolarHybrid of America — to develop PV power plants for serving utilities in North America. Solar Trust’s CEO, Uwe T. Schmidt said in a statement that from the start the company wanted to develop solar power plants using all sorts of technologies and that “Developing CSP (solar thermal) and PV in tandem will allow us to achieve better cost and production efficiencies than with either technology on its own.” Solar Trust said it could possibly build PV power plants next to solar thermal power plants in some cases.
U.S. Solar Market
Solar Trust’s joint venture will serve as the coming-out party for SolarHybrid in this new market. The company said it has been developing projects in Germany, Italy, Slovakia, the Middle East and South Africa, and is on its way to build at least 220 MW by the end of this year.
Solar companies – from equipment manufacturers to project developers – have long pegged the U.S. as a must-conquer market. As policies tilt to favor more renewable energy, the U.S. is attracting established energy players domestically and overseas. This shift also means that many home-grown, independent project developers who need to lined up hefty financing for their projects will be gobbled up or go out of business.
The latest example of this is French oil and gas giant, Total, which recently agreed to spend $1.38 billion to buy a 60 percent stake of SunPower, a long-time solar panel manufacturer that jumped into the power project development business in mid-2000s. SunPower said the deal is attractive partly because of a promise by Total to provide $1 billion in credit over five years to help finance SunPower’s power plant projects around the world.
Solar Trust, based in Oakland, Calif., is itself a joint venture formed in 2009 between two German firms, Solar Millennium and Ferrostaal. The group set out to build solar thermal power plants that use curved mirrors to concentrate and direct light to heat up fluid for production steam, which then drives generators to make electricity. Solar Trust gained spotlight with its 1,000 MW project in Southern California called Blythe Solar, that won an approval from the California Energy Commission last September and then the tentative, $2.1 billion loan guarantee from the U.S. Department of Energy last month.
At 1,000 MW, Blythe is the largest solar power plant under development in the world now and its electricity will go to Southern California Edison. The $2.1 billion loan guarantee will help build half of the project and related transmission lines and other infrastructure.
Photo courtesy of Oregon Department of Transportation via Flick