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Solar Thermal Heats up With eSolar deal

Yes, Virginia, there is a solar thermal market. NRG Energy (s NRG) and eSolar have signed an agreement to develop up to 500 megawatts of solar thermal projects in California and throughout the Southwest region of the U.S., the two said today, marking the industry’s second big deal this month.


“We’re investing in eSolar, and we are also partnering with them on the development of these projects,” said Michael Liebelson, chief development officer of low carbon technology for NRG, in a conference call held to discuss the eSolar agreement.

Princeton, N.J.-based NRG, which with this deal is making its first move in solar, plans to put $10 million directly into the Pasadena, Calif.-based startup in return for an equity stake in the startup as well as development rights and power purchase agreements for up to 11 planned eSolar power plants spread over three sites. NRG will develop, build, own and operate the plants, selling the power to local utilities.

Details of where all the projects will be built and when they’ll be complete weren’t released. But details of at least one project were announced months ago — Southern California Edison signed a deal with eSolar last year for 245 MW of solar thermal in the Antelope Valley in Southern California, and that plant is part of the NRG package. It’s expected to start production in 2011.

Liebelson said eSolar has already secured the rights to all the sites on which the plants will be built, and has power purchase agreements that are either already in place or currently being negotiated. eSolar, which is backed by Idealab, (s goog) and Oak Investment Partners, uses concentrated solar power technology, in which a field of sun-tracking mirrors reflect heat onto a thermal receiver that’s mounted on a central power tower.

Things were starting to look dour for solar thermal last month, with startup Ausra saying it was dropping plans for commercial-scale solar thermal, and would instead work on smaller, less expensive projects due to a lack of financing. But a few weeks later SCE unveiled an agreement for 1.3 gigawatts of solar thermal power from BrightSource Energy, calling it the “world’s largest solar deal” at the time.

Despite Ausra’s planned departure from the commercial side of solar, more deals could be on the way, as energy companies sift through the details of the recently passed stimulus bill. Liebelson said he expects NRG to take advantage of the 30-percent renewable tax credit that was already in place before the stimulus was passed, but that his company is also looking at the bill to see if anything can be applied to the eSolar deal.