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What GlassPoint tells us about the natural gas market

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The woes of the solar thermal industry are well known but mostly boil down to the unexpectedly steep decline in pricing for solar panels, its primary competitor. But the technology and concepts behind concentrating sunlight from parabolic mirrors to generate heat and energy was sufficiently exciting for startup GlassPoint to figure out another, perhaps more lucrative, application of the technology: enhanced oil recover (EOR).

I spent some time recently with GlassPoint’s VP John O’Donnell discussing the engineering ins and out of concentrating solar to produce a valuable application. The company recently picked up a hefty $53 million from a group of investors led by Shell and the sovereign fund of Oman.

O’Donnell explained that GlassPoint’s founders had always liked the idea of concentrating solar technology but found some of the engineering aspects complicated and expensive. Most importantly because of the exact precision needed in angling mirrors correctly, expensive and heavy materials were needed to protect the mirrors from the impact of wind and dust. Even small amounts of wind could be disruptive. Wouldn’t it be great if you could put concentrating solar indoors?

The reality was that you could put concentrating solar indoors but you also needed to find a lucrative application and end market for the technology. For starters GlassPoint decided to put its parabolic mirrors inside a greenhouse to protect them from wind and make them easy to manage. This significantly cut the costs of parts as well as allowed the company to buy as many off the shelf parts as possible rather than getting mired in manufacturing (I see many early startups fail because they have to engineer and build every part, sending costs through the roof. I’m thinking of Fisker right now).

But what about an application? GlassPoint wanted an application that could deliver the product locally rather than rely on transmission as solar farms and concentrating solar do when they must transmit power to where it’s needed. The company came upon the idea of enchanced oil recovery. Rather than use natural gas to heat steam that is then injected into wells to extend an oil well’s lifetime and production rate, they could use parabolic mirrors to turn water into steam and inject it locally into a well.

“We wound up with fundamental cost, land use, durability and opex advantages against the older CSP [concentrating solar power] technology,” O’Donnell noted to me.

A major part of GlassPoint’s strategy involves the Middle East. While people may think of the Middle East as overflowing with cheap fossil fuels, that’s only partially true. Energy use is growing very quickly across the Middle East and it’s expensive for the sovereign oil producers to burn natural gas to enhance oil recovery when it could be exported. We see this story playing out in renewed interest in solar photovoltaic in the region as the countries would rather not use their precious fossil fuels to produce power domestically when it could be exported at a premium.

GlassPoint has deployed pilot projects in California as well as the Middle East, and is benefitting from regulatory pushes in California. Replacing natural gas combustion with solar steam at enhanced oil recovery sites has the potential to save a lot of carbon emissions, even if these technologies don’t take us any closer to actually moving off fossil fuels as the primary source for power generation and transportation.

O’Donnell believes the EOR market could be as large as $100 billion since most wells in the world don’t currently employ EOR technology. The price of natural gas will, to some extent, impact the attractiveness of GlassPoint’s technology, just as it impacts the entire renewable energy sector (more expensive natural gas makes solar steam EOR more attractive).

But few, people, including myself, belief natural gas will get any cheaper, particularly when/if export terminals come online domestically. And with $53 million in the bank, GlassPoint will use that money to accelerate deployment of its technology in the Middle East and elsewhere.