PG&E, NRG Energy Ink 92MW Solar Thermal Power Deal

By Ucilia Wang

Pacific Gas and Electric Co. (PCG) has inked a deal to buy solar thermal power from NRG Energy (NRG), which plans to use the technology developed by eSolar.

The agreement, signed with NRG's subsidiary Alpine SunTower, calls for Alpine to build and operate a 92-megawatt project close to the southern California city of Lancaster. NRG plans to complete the project by 2012.

NRG took over eSolar's power project development business in the United States after it announced in February this year that it would invest $10 million in eSolar.

Earlier this month, NRG said it would build a 92-megawatt solar farm in New Mexico and deliver the electricity to El Paso Electric.

NRG and eSolar have said they would work together on building up to 500 megawatts of solar farms in California and southwestern states. One of the projects is the 245-megawatt solar farm that eSolar agreed in 2008 to build in order to sell electricity to the Southern California Edison.

Pasadena, Calif.-based eSolar has developed the equipment for building solar thermal power projects that make use of mirrors to concentrate the sunlight to heat up water atop a central tower for steam generation. The steam is then piped to run a turbine to produce electricity.

ESolar's mirrors, or heliostats, are smaller than what some of other solar thermal power developers are using. The lower profile and size of the heliostats make them easier and less costly to install, eSolar said.

The company's power plant design also calls installing 64-megawatts of generation capacity at a time. Esolar said the design would enable it to scale up to meet a customer's needs.

Without knowing the project cost, however, it's difficult to gauge the benefits of eSolar's technology or power plant design. The company declined to disclose the project cost, a practice that is normal for developers that have signed contracts with PG&E and other investor-owned utilities in California.

By signing power purchase agreements, PG&E assumes no financial risks. The utility doesn't have to pay until power project developers start to deliver.

PG&E has signed many, many power purchase agreements with developers of all types of solar power technologies in order to meet a state mandate that 20 percent of its power mix be made up of renewable energy by 2010.

NRG has been in the wholesale power generation business since it was founded in 1989.

Comments

[Mad Hedge F...:]

there is going to be a huge surge of deals like this. If you look carefully at your electric bill and calculate the cost per kilowatt hours each month as I do, you will notice that the price has been going up for the last ten years. This is partly because of ineptly handled deregulation, but also because our utility, Pacific Gas & Electric (PCG) is mandated by state law to reduce greenhouse gas emissions. Last year, the collapse of the economy and crude prices drove the cost of thin film solar’s primary raw material, polysilicon, down dramatically. The cost curve is falling, the demand curve is rising, and it is only a matter of time before they cross. The gap now is only a few cents per kilowatt, and that can easily be bridged with government subsidies. This industry is on the verge of becoming truly profitable. All it might take is another rise in crude prices, something you can count on. Watch behemoth First solar (FSLR) position itself to cash in, as well as Suntech Power (STP) and SunPower (SPWRB). But also watch the volatility, as this is definitely an “E” ticket ride.

Jun 25 07:25 PM

[Danny Newton:]

It is difficult to be sure of the data presented as costs when there are such large inconsistencies in how the costs are calculated. Too many projects using solar are claiming impossible efficiencies. The nameplate rating of the project is often used to brag about the size of the project but nothing is said about the cost of transferring the DC to AC that can be put on the grid. Usually it takes about 30% of the power produced to do that. I easily found two solar projects that were claiming the same annual income but one claimed a rating of 20 megawatts and the other claimed a rating of 5 megawatts.

I am also concerned that the government subsidy will be coming at the expense of the average cost of power from other generation means. If the solar is needed just to knock off the air conditioning load, that is one thing but if that is not the case, additional traditional generation will have to carry the solar.

Another problem with energy generation is that gross generation needs have to be about three times the net generation to pay for the cost of distribution. Hooking a solar project up to the grid degrades its net output substantially, especially if it is far from the users. Another risk is that the increasing cost of energy will degrade demand for solar energy too. Solar projects have been unplugged in the past to save money. Nothing has happened to change that.

Jun 26 01:52 PM