Blog Post

Tessera Sells Troubled 850MW Solar Project

Stay on Top of Emerging Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Updated: Tessera Solar said Tuesday it has sold an 850-megawatt solar energy project in California that, up until a few months ago, was poised to be a showcase piece for the company.

K Road Power, through its K Road Sun subsidiary, has bought the Calico Solar Power Project, which only recently received approval from the California Energy Commission. The purchase is a strange turn for the saga of a giant power plant project that went through a long gestation period before finally securing the permit to start construction.

But financial woes faced by its parent company quickly overshadowed that achievement, followed by the decision by Southern California Edison to cancel its agreement to buy power from the project. All these developments – from securing permits to selling Calico – took place within weeks.

Neither Tessera nor K Power disclosed the sale price of the project. In a press release, K Power said it plans to build the 850-megawatt project, but most of the project won’t be using the concentrating solar thermal technology that Tessera had in mind. Instead, 750 megawatts of the project will use solar panels. The remaining 150 100 megawatts will still employ the solar thermal technology. The capital investment needed for the project will likely reach about $3 billion, Tessera said.

Update: K Road Power’s spokesperson Anton Nicholas said in an email that the company will need to secure new permits given the use of solar panels for the bulk of the project. The company expects to line up financing and start construction in 2011.

Calico has been under development for years and was initially overseen by Stirling Energy Systems (SES), which develops equipment called stirling engines. Each 25-kilowatt stirling engine system is a giant parabolic dish of mirrors that concentrate and direct sunlight to heat up hydrogen gas inside what’s called a “power conversion unit” in order to run a 4-cylinder engine that in turn drives the generator to produce electricity.

SES signed a contract to sell power from the project to Southern California Edison in 2005. The project languished for some time when SES didn’t have enough to continue its technology development. Then an Irish firm, NTR, came to the rescue in 2008 and pumped $100 million into SES.

SES then created Tessera Solar in 2009 so that Tessera would focus on project development while Stirling would concentrate on technology development and equipment sales. By then, SES was finishing up the re-design of its stirling engine system called SunCatcher and getting ready to move into manufacturing the equipment. In September, 2009, SES announced it manufacturing plans for 2010.

California Energy Commission gave its approval of Calico project in October this year, but then had to change the approval date to Dec. 1 because the commission didn’t file the right documents in time. The project also faced potential legal challenges from critics over its impact on desert wildlife. Meanwhile, Tessera and NTR were having trouble raising the necessary money to move the project forward. Then came the news last week that Southern California Edison decided to cancel its power purchase agreement.

The commission approved the Calico project at 663.5 megawatts, but the project actually has secured an electric grid interconnection agreement for 850 megawatts (the original size of the project before the commission reduced it to minimize its impact on wildlife). The commission doesn’t have authority to approve projects using solar panels. That authority belongs to local governments and perhaps federal government (for projects to be built on public land).

Tessera also has secured the commission’s approval for a 709-megawatt project. This Imperial Valley Solar Project is facing legal challenge from the Quechan Indian Tribe, which claims it wasn’t adequately consulted before the state approved the project. Tessera has signed a deal to sell the power from Imperial Valley to San Diego Gas & Electric. The federal government has approved both solar projects as well.

Related Content From GigaOM Pro (subscription required)

Photo courtesy of Stirling Energy Systems