Lockheed Sees 290MW Solar Project It Was to Build Cancelled

By Ucilia Wang

Starwood Energy Group Global has canceled its deal with Arizona Public Service Co. to sell power from a yet-to-be built, 290-megawatt solar thermal power plant, APS said Wednesday night.

The two companies signed the agreement only in May this year, and the project symbolized a grand entrance into the terrestrial solar market by defense contractor Lockheed Martin (LMT). Bethesda, Md.-based Lockheed was to be the general contractor for the project.

"APS understands that after the major subcontractor agreements were negotiated, the size and the final risk profile of the engineering, procurement and construction contract, among other factors, were the reasons Lockheed Martin decided not to go forward," the utility said in a statement.

Lockheed and Starwood couldn't be reached Wednesday night. We will follow up with the companies Thursday morning.

Although few details were available to explain the contract termination, the brief statement by APS provided a glimpse of how difficult it is to plan and build such a large-scale power project. There has been no shortage of super-sized projects being announced by solar thermal power plant developers, but whether they would be built remains a big question.

Lining up financing is one significant hurdle. Investors are typically leery of betting on technologies in an emerging market, even if the technologies were first developed decades ago. They want lots of guarantees from the project developer, and that increases the costs and risks associated with each project. There aren't many large-scale solar thermal power plants in the world, and the largest cluster was built throughout the 1980s in California.

The Starwood project, called Starwood Solar I, would have been the largest solar thermal power plant to serve the Phoenix-based APS, the largest utility in Arizona.

APS also has signed a deal to buy power from a 280-megawatt solar thermal power plant to be developed by Abengoa Solar. This project, called Solana,is set to materialize near Gila Bend, about 70 miles southwest of Phoenix. The developer plans to disclose the project's financing in the first half of 2010, APS said.

Greenwich, Conn.-based Starwood teamed up with Lockheed in 2007 to pursue solar power projects, and the Starwood Solar I was the first, publicly disclosed project. Starwood would line up the financing and own the power plant while Lockheed would draw from its deep experience in engineering and construction.

Starwood and Lockheed had intended to complete the project in 2013.

The power plant would've been located on 1,880 acres in Harquahala Valley, about 75 miles west of Phoenix.

The solar thermal power plant would have made use of 3,000, 100-meter parabolic troughs, which are curved mirrors that concentrate and direct the sunlight to heat oil-filled tubes running along the mirrors. The heated oil is would be used to generate steam to run a turbine for electricity generation.

The parabolic trough technology is considered more proven than other approaches to produce solar thermal power because nine parabolic trough plants totaling 354 megawatts in capacities have been operating in California's Mojave Desert the past three decades.

APS said it's working on deals to replace the lost contract with Starwood. The utility plans to announce a small centralized power project and a distributed power project by the end of the year.

Comments

[mplaut:]

There was an article in the New York Times that said that a lot of solar power plants have trouble arranging for the amount of water that they require to operate. The areas that are richest in sunshine are often very poor in water.

Murphy's Law?

Oct 01 10:26 AM

[User 398063:]

The biggest problem seems to be water use and what type of cooling system is used with concentrated solar power (CSP). While fossil fuel plants use huge amounts of water, some CSP plants, in particular those that use "wet cooling", also use very large amounts of water. On the other hand, CSP plants that use "dry cooling" are very water efficient--especially compared to fossil fuel energy sources--though somewhat more costly... And of course most alternative energy sources use almost no or no water (e.g. wind power)...

So no, Not Murphy's Law, just good energy and resource use sense...

Oct 02 09:24 AM

[jerrydd:]

The real cost effective way to do CSP solar is in home size units where not only power but the waste heat can be used, increasing eff to 50% or so. Now if only Lockheed, GE others would build these better business models.

They don't have land, transmission line, overhead or stockholder costs making them far more cost effective and payback in under 5 yrs with almost free power, heat for 50 yrs after that once in real mass production.

A good company about to start producing these and other waste heat generators is cyclonepower.com . I see they are now in the Pink sheets and moving up. Good time from a ground floor investment in this viable tech.

I use to work for him in 75 and he is very smart, practical and production, profit oriented. He does not know who I am nor do I have any investment in it. In fact I hope to do a similar version so he's a competitor. But this is a tech we really need.

Oct 02 09:25 AM

[nakedjaybird:]

Again - If I were a betting man, which I gues I am, I would place my bets on no-moving-parts SOLAR PV any day, vis-a-vis all the moving parts of solar thermal electricity. No way would I want to carry all the junk from present day power generation being pumps, motors, turbines, generators, etc., with all their maintenance issues - when simple, sweet, silent, forever solar PV can make electricity for free as well. A DUH! for anything solar thermal that is not a panel or two of natural circulation for home hot water or swimming pools, basically.

Oct 02 11:57 AM

[Snitzer:]

Earlier on I had a buy limit order for LMT at 74.00, but that was the day LMT headed for the stars. Today's charts show LMT approaching my target, but alas, I've gone a different way.

Oct 02 12:00 PM

[manya05:]

If you read the type of contract language utilities use when they purchase large-ticket items (a power plant being one of them), you would realize that only 100% proven technology has any chance of hooking up to the grid. The result is that it takes decades to develop and field new tech for utilities, and nobody doing a first-of-a-kind plant would want to risk that type of money unless they were absolutely sure there is a stream of orders coming down the pipeline. Large scale solar (PV or thermal), energy storage, and all sorts of "green tech" are about to discover just how conservative the utility industry really is. Good luck!

Oct 02 01:46 PM

[searcher:]

One, not the only, reason for regulated utility conservatism on 'proven' but relatively innovative technology is that any problem in design, installation or maintenance or production or distribution or unforeseen market forces (competition etc.) will become a political football in including the 'rash' and 'ill conceived' investment in the rate base.

Oct 02 02:33 PM

[nakedjaybird:]

manyao5 and searcher - you may want to take a look at what Duke Power is doing!!

Oct 02 11:46 PM

[nakedjaybird:]

PS - let me make it easy for you:

www.duke-energy.com/nc...

Oct 02 11:56 PM

[nmelendez:]

Well, right now they are building Solar PV at under 1 USD per watt. In 10 years or less you'll get a Solar PV system included into the house sale. 5Kw will be about 5K plus batteries and accesories so 8 to 9 k for a 5Kw system that is included in the sale of the house. Give it time.

Oct 03 10:19 PM