An offshoot of the original developer of the 310 MW of solar installations currently operating in the Mojave Desert in Southern California is the latest entrant in an increasingly competitive push to develop utility-scale solar power generation installations in the desert north and east of the Los Angeles Basin. All three major utilities have contracts for a proposed project, any one of which would dwarf any other solar installation now in existence in the United States.
Oakland, CA-based BrightSource Energy Inc. filed an application with the California Energy Commission (CEC) Aug. 31 for a 400 MW installation. This is one of only two such projects that have gone that far, although there are two other huge projects that were originally announced almost two years ago.
In addition to leading venture capitalist firms, BrightSource has the backing of units of JP Morgan, Chevron and Morgan Stanley, the latter the firm’s most recent investor in a company sitting on nearly $50 million in start-up funds, $10-20 million of which will be needed for the yearlong CEC processing.
“Morgan Stanley also has agreed to provide project development financing for the early-stage development of the project, and that is very substantial cost in California,” said BrightSource Senior Vice President Charles Ricker. “This would be for the first, and possibly the second project.”
Although he would not confirm that BrightSource is close to signing a long-term contract with Pacific Gas and Electric Co. (PG&E), with which it already has a nonbinding deal, Ricker confirmed that PG&E is one of the potential buyers it has been talking to, but he added, “they are not the only utility we are working with.”
“So there is another significant group of funds that has been made available to us for project development activities,” said Ricker, who confirmed that BrightSource is looking at multiple utility-scale solar developments in California. “That way, we don’t have to use all of our equity to fund these project development activities. For example, if you are bidding a project in California and you’re short-listed, you have to write checks for millions of dollars just to stay in the ball game.”
While several projects collectively totaling more than 2,000 MW have been publicly disclosed and major long-term contracts signed with the state’s three largest private-sector utilities, only BrightSource’s Luz II Ltd. unit has a filing at the CEC, but it is without a power sales deal in hand. The City of Victorville has a CEC filing for a 50 MW solar installation as part of a hybrid facility featuring a 513 MW natural gas-fired unit in the high desert.
Founders and current senior executives with both BrightSource and Luz II were founders of original thermal solar facilities in the Mojave Desert that still provide more than 300 MW under contracts with Southern California Edison Co. (SCE). The original Luz filed for bankruptcy and subsequently the units were acquired by FPL Energy.
Israel-based Luz II will supply the solar equipment, but the company is what Ricker calls a “virtual manufacturer.” Luz II specifies and buys the components at or near the project site in a facility that BrightSource will develop; Luz will be the supplier, but not the physical manufacturer of the equipment.
All of the components will be shipped close to the site where they will be put together in the still-to-be-developed BrightSource facilities. This helps minimize the job-site construction time, which involved the most expensive part of any project, said Ricker, who heads marketing and development for the solar firm.
Compared to building a 600 MW combined-cycle natural gas electric generation plant, the onsite installation of the facility is relatively simple, Ricker said, but a lot of shipping, gathering and assemblying of components takes place off of the site, which for 400 MW will need 3,200-3,500 acres (800 acres/100 MW roughly).
“We do hardly any site work because the land does not have to be flat or contoured in anyway,” Ricker said. “The solar field itself is pretty straightforward.”
Luz II was founded in 2004 by the original Luz founder, Arnold Goldman, and what he described as a group of British “angel investors” who put up $1 million to get the firm started. In October 2006 the firm raised $16.5 million through venture capitalists led by VantagePoint Partners and Draper Fisher Jurvetson in the United States.
In late July, PG&E became the last of California’s three major power utilities to sign an agreement with a developer of a major baseload solar installation in the Southern California desert region, inking a 25-year deal for 553 MW from Solel-MSP-1, another Israel-based firm. The project, Mojave Solar Park, will be the “world’s largest single solar commitment,” according to the San Francisco-based utility.
The agreement was filed with the California Public Utilities Commission (CPUC) and requires the state regulators’ approval. It is part of the utility’s push to add more supplies from qualifying renewable resources, which currently provide 12% of its energy. PG&E emphasizes that half of its supplies come from sources that don’t emit greenhouse gases (GHG) due to their heavy reliance on nuclear power and large hydroelectric-generated power.
Two years ago, both SCE and San Diego Gas and Electric Co. signed 20-year agreements with Phoenix-based Stirling Energy Systems Inc. for up to 500 MW and 300 MW to 900 MW, respectively. Southern California also has had collectively 400 MW of large-scale, concentrating solar energy operating in the desert since the early 1980s.
PG&E said it was attracted to Solel’s “patented and commercially proven” solar thermal parabolic trough technology, which over the past 20 years has powered nine operating solar plants in the Mojave Desert, currently generating 354 MW annually.
On a faster track apparently than the Stirling installations, Mojave Solar Park is scheduled to be operational in 2011, according to PG&E, and it will cover up to 6,000 acres, or nine square miles in the Mojave Desert. The project will rely on 1.2 million mirrors and 317 miles of vacuum tubing to capture the desert sun’s heat, the utility said.
A SCE spokesperson confirmed that it has been taking all of the output at the existing Mojave solar installations, but it has no deals for the proposed new BrightSource facility, and would not comment on whether it was talking to that firm about a future contract.
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