If anyone doubts the ability of renewable portfolio standards to spur the adoption of clean energy projects, they should look to California. The state is requiring that electric utilities need to get 20 percent of their power from solar, wind and other renewables by 2010, prompting utilities to scramble to cut new deals. In the most recent whopper of an agreement, solar thermal developer Solar Millennium said today that it plans to build, own and operate two 242-MW power plants, with an option for a third, for investor-owned utility Southern California Edison. With the backlog of federal permitting for solar projects, however, its ambitious timeline may be slowed.
The solar developer wants to begin construction on the $1 billion plants — on federal land near Ridgecrest, Desert Center, and Blythe, California — by 2010 and start generating power by 2014. Ray Dracker, senior VP of project development for Solar Millennium’s U.S. subsidiary, said the company is still about a year away from finalizing financing arrangements, and the projects will need approval from the Bureau of Land Management and the California Public Utilities Commission. Besides traditional project financiers, Dracker said the company would consider pursuing Department of Energy loan guarantees.
Erlangen, Germany-based Solar Millennium builds solar thermal power plants using parabolic trough technology, in which solar radiation is concentrated by long rows of parabolic mirrors onto piped fluids that drive a steam turbine connected to a generator. The company has developed Europe’s first parabolic trough power plants — the Andasol projects, currently under construction in southern Spain — that once complete will produce about 180 gigawatt-hours of power per year. Solar Millennium says its reflectors are stiffer and therefore more precise under strong winds and produce more power than older trough technologies. And the length of its collector units can be built up to 50 percent longer than older technologies, leading to cost savings.
But Solar Millennium has not yet built a commercial project in the United States, only installed a demonstration plant with its technology in California. Permitting for the project could be a stumbling block, since the proposed plants would be on federal land. The Bureau of Land Management, which grants permits for renewable energy projects on federal land, reportedly has a backlog of more than 200 proposed solar projects. Solar Millennium is one of the companies on that list, for a 242-MW plant to be built in the Amargosa Valley in Nevada to supply power to Nevada-based utility NV Energy. But the project has not yet been given the go-ahead to begin construction, even though the application was filed in October 2007.
Importantly, Solar Millennium said it wants to begin construction of the California plants before 2010, meaning they would be eligible for stimulus grants from the Treasury Department valued at up to $2.5 billion. So while regulatory approval could be a hurdle, the fact that the company has entered into a power purchase agreement with one of the country’s largest utilities should make potential investors more receptive.