I wrote recently about the renewed push to use massive amounts of solar energy from North Africa to provide electricity for Western Europe ("The Sahara Sun Could Power Europe," September 13th).
Well, the idea of scale is beginning to hit in the U.S. market, as well. With everyone starting to let the sunshine in, it seems like we are back in the Age of Aquarius, and it is hitting first exactly where that "Age" began its heyday – California.
Last Thursday, U.S. Secretary of the Interior Ken Salazar gave final approval for a huge project at Ivanpah Valley, California, right up against the Nevada state border. That’s where private (for the moment) company BrightSource Energy Inc. will begin constructing the world’s largest system of solar mirrors – or heliostats. Three solar towers will create the energy to drive generators to produce electricity for southern California.
And the electricity they expect to produce is impressive – 400 megawatts, enough to power more than 140,000 homes and directly reduce carbon dioxide emissions by 400,000 tons a year.
In his announcement, Salazar mentioned benefits like job creation, revitalizing the local economy, and promoting energy independence, in addition to taking a giant step toward clean energy and a reduction in the carbon footprint.
A major new source of clean, renewable energy with so many positive effects would appear to have no downside. Well, that’s not quite true. A coalition of conservationists known as Solar Done Right has attacked the Ivanpah project, arguing that any approaches on such a large scale "should be restricted to heavily degraded land that offers no wildlife habitat, agricultural, or similar values," and where scarce water resources won’t be depleted.
"The project hemorrhages the very heart of the biologically rich eastern Mojave Desert, where plant diversity rivals that of the primeval coast redwood forests of the Pacific Northwest," said desert plant life expert Jim Andre in a press release from Solar Done Right.
Salazar noted that the Bureau of Land Management (BLM) did scale down the size of the site by 15% from BrightSource’s original proposal, following such public comments on the project. But it is still huge: It encompasses 3,471 acres and 173,500 heliostats (down from the original plan’s 4,073 acres and 214,000 mirrored devices).
And it is not the only initiative of size coming on stage right now.
This Technology Can Deliver Solar Power… at Night
Friday morning, SolarReserve – another private California holding that’s developing utility-scale solar power projects – announced it is moving forward on the Rice Solar Energy Project (RSEP). This decision results from the recent approval given by the California Public Utilities Commission (CPUC) to Pacific Gas & Electric Co. (NYSE: PCG) for a 25-year power purchase agreement.
RSEP will provide 150 megawatts of power. According to SolarReserve estimates, that equal about 450,000 megawatt-hours of power and be enough to supply clean electricity to some 68,000 homes during peak use periods.
Even better, the company has also introduced some rather interesting new developments in energy storage capabilities:
"The California Public Utilities Commission’s approval represents an important milestone in bringing non-intermittent renewable energy assets online to meet the state’s renewable portfolio standards and green house gas emission reduction targets," CEO Kevin Smith said in a SolarReserve press release this morning. "Moving ahead on this project is especially exciting for us, given we are a California-based company deploying technology developed here locally, and will provide a reliable electricity product to thousands of Californians."
I believe the technological advance Kevin is talking about may be the most important development of all.
The "Holy Grail" in renewable energy is overcoming the storage problems – producing energy when it’s needed, not simply when the sun is out or the wind is blowing. SolarReserve’s application of UTX’s technology does not solve the problem completely, but it is an encouraging first step in bringing alternative sourcing in line with the reliability of conventional coal- or natural-gas-fueled power facilities.
By the way, this is not some bright, new idea that only looks good on paper and turns out to be impossible outside of a laboratory environment. A U.S. Department of Energy test successfully demonstrated the molten salt process in California over 10 years ago. That test was conducted at a 10-megawatt pilot plant designed and constructed by Rocketdyne (now part of UTX).
Another thing I like about RSEP is its location – in the Sonoran Desert east of Palm Springs, on private, already-damaged land. The project therefore sidesteps conservation and environmental concerns or opposition, like what has formed against the Ivanpah project.
Frankly, these are exciting developments for us investors. But you need to keep them in perspective.
The rising players of note in the sector remain private companies; capital investment is still a problem, as is the availability of sufficient working capital. Solar power continues to have limited regional applications and provides only a small sliver of our power consumption.
There likewise remains too little liquidity in the sector to really power any exchange-traded funds I could suggest at this time. And with no acceptable ETF, there is no way to play this market without adopting high risk and a very complicated investment strategy.
Nonetheless, advances are happening…
And that means places like California and Arizona, where the solar power bandwagon is finally moving, will have some equity plays before long.
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