California solar project gets $1.4 billion U.S. guarantee

California solar project gets $1.4 billion U.S. guarantee
by Reuters

The United States on Monday gave its biggest backing yet to a renewable energy project, guaranteeing $1.37 billion in loans for a California development by BrightSource Energy that uses the sun's heat to power a steam turbine.

BrightSource's proposed solar thermal plants are expected to generate about 400 megawatts of electricity and power about 140,000 California homes, giving it the heft to compete with plants fueled by coal and natural gas.

President Obama's administration has touted green energy investments as a way to create jobs and increase international economic competitiveness.

"We're not going to sit on the sidelines while other countries capture the jobs of the future--we're committed to becoming the global leader in the clean energy economy," Energy Secretary Steven Chu said in a statement.

The sector has seen projects being launched and agreements being signed with utilities, who count on solar thermal to meet California clean energy goals, but construction has yet to start on a large scale for the solar thermal industry.

Financing of projects has been a big challenge with the tightening of the credit markets as capital requirements of these green energy companies are very large.

Solar thermal technology is different from its better-known rival, rooftop photovoltaic. Solar thermal companies like BrightSource and rivals Abengoa Solar and eSolar have technology that uses the sun's rays, reflected by thousands of small mirrors, to heat liquids to create steam in turbines and generate electricity.

The conditional loan guarantees from the U.S. Department of Energy, the largest federal loan commitment offered to a renewable energy firm, would help BrightSource build three utility-scale solar thermal plants for its Ivanpah project, which will be located on federally-owned land in the Mojave Desert in southeastern California.

"It's a good beginning for the industry," BrightSource CEO John Woolard said in an interview. "It really allows Ivanpah to be the first (solar thermal) project to be constructed in almost 20 years now" in California.

California and other parts of the world are betting heavily on solar thermal. About a quarter of the clean energy contracts approved in 2009 in California by capacity was solar thermal, according to the Public Utilities Commission.

Construction on the first Ivanpah plant is expected to begin during the second half of this year, with commercial operations beginning in 2012.

All three plants are expected be on line by 2014.

The loan guarantee is conditioned on BrightSource meeting financial and environmental requirements, including local, state and federal regulatory approvals.

BrightSource has run into trouble from environmental groups who are concerned that the construction would harm desert plants and wildlife, including the desert tortoise.

The company earlier this month agreed to reduce the footprint for the Ivanpah project to minimize the environmental impact.

The company, which counts search giant Google and Silicon Valley fund VantagePoint Venture Partners among its investors, already has contracts to deliver more than 2,600 megawatts of power to California utilities PG&E and Edison International's Southern California Edison (SCE).

PG&E will purchase approximately two-thirds of the power generated at Ivanpah and SCE will purchase approximately one-third.

Woolard said that the key value of federal loan guarantees is that it helps strong renewable energy projects get financed, especially since the credit markets have yet to reach normal levels of activity.

It "replaces or helps shore up that component," he said.

Woolard did not reveal the total funding needed for the project but said the company would be raising equity financing from sources such as private investors, energy companies and investment funds.

"There is an equity commitment," Woolard said. "We will be going out to raise equity (financing) in the next four to six months. So that will be the next step in the process."

The loan guarantee is the sixth such offer to renewable energy companies by the Obama administration, which has touted green energy investments as a way to create jobs and increase international economic competitiveness.

Under the program, the Department of Energy issues a conditional commitment to guarantee loans to be provided by the U.S. Treasury's Federal Financing Bank.

Comments

by jaguar717 February 23, 2010 12:49 AM PST
Nice talking point, but all this is is another failed venture being propped up by government favorites and paid for with the earnings of people who don't want to buy their products.

If they were financially viable, they'd compete in the market like every legitimate product. Instead, we're moving to a system of political pull where government picks winners and losers (or simply rewards losers).

I guess the "replaces or helps shore up" is kind of like that imaginary "created or saved" metric for jobs.
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by Cold2 February 23, 2010 2:22 AM PST

@ jaguar 717 Its seems that you don't kmow a lot. This is a proven technology whith succes in other countrys around the world including Spain. Just go to this link, it was also coverd by cnet. http://news.cnet.com/8301-11128_3-10228786-54.html
Like this by solitare_pax February 23, 2010 3:02 AM PST
Many technologies and industries that could be called 'failed ventures' started out as government sponsored programs, or benefited from government stimulus to bloom into major economic powerhouses.

Case in point: The Internet (developed partly for the military to survive a nuclear war) and your computer (microchips were insanely expensive, but government needs for their use in military and space exploration caused makers to ramp up production - and lower the cost for consumers, so now it is self-supporting).

Of course, you probably think the interstate highway on Oahu in Hawaii was a bad use of funds too.
Like this by jaguar717 February 23, 2010 4:30 AM PST
If it were a "proven technology", then it would succeed because people would willingly buy it. Instead, it's being propped up by Billions in unearned subsidies (handouts).

Its "success" in other countries is just the same corrupt government handouts, on a larger level. Citing Spain, where the Socialist Party is currently in power, and which is in danger of default, does not help your case.

Earning your business honestly is now dead, replaced by Chicago-style government dominance and political kickbacks.
Like this by sflocal February 23, 2010 12:34 AM PST
What I don't understand is why butcher pristine land for a solar farm, when that money could be better spent on installing solar panels on the roofs of every home, business complex, etc.? No land wasted, and much more efficient I think.

If a company would install solar panels on my home for free, maintain it, and let me use that electricity at a reduced rate compared to what I normally pay, I'd be game for that. Is that logic bad?
Like this Reply to this comment by jaguar717 February 23, 2010 12:51 AM PST
You'd be willing to let a bunch of other people be forced to pay for the massive costs and all labor in return for artificially cheap power that actually costs 10x market price?

I'm shocked. The government that robs Peter to pay Paul can always count on the support of Paul.
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by js555554 February 23, 2010 1:44 AM PST
"BrightSource's proposed solar thermal plants are expected to generate about 400 megawatts of electricity and power about 140,000 California homes..."

What will power those homes at night?
Like this Reply to this comment by jonathan0766 February 23, 2010 2:10 AM PST
Why, desert turtles of course (who live in the "pristine" desert). You see, they're nocturnal, and their movement at night generates heat and static electricity. The solar thermal technology captures the turtle's energy and converts it to grid ready electricity. It's really quite an amazing concept. I think it's terrible we're going to turn poor, endangered turtles into batteries however.
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by Cold2 February 23, 2010 2:30 AM PST

The answer is simple, the solar panels reflect the sun's heat and produce steam which in turn propels a turbine to produce electricity. The trick is to store the steam for night use and cloudy days. It is stored in tanks and it's released when needed.
Like this by jaguar717 February 23, 2010 4:32 AM PST
Steam stored in tanks? Isn't that called water?

Or do you heat them to make it stay steam, thus putting in more energy than you hope to take out?
Like this by GreenDem007 February 23, 2010 5:35 AM PST

I love Brightsource and the loan guarantee program, but this is EXTREMELY disappointing in: the use of ARRA funding, the encouragement of multiple technologies, and the leveraging of private investment. Financing ONE project would have been enough, what exactly was the argument for THREE???
This was ALL about jobs for Administration, but at 1,000 construction jobs and 86 permanent jobs, this is valued at $1.26m per job?
Note that Brightsource has entered into multiple PLAs, (Unions are all the rage now at DOE)
Only ONE of the three projects is slated to start this year, the rest AFTER 2013, so much for proper use of ARRA funding?
Finally, The conditional commitments contemplate that the Federal Financing Bank will provide the financing for the project, effectively muting the whole ?encouraging private sector investment? argument

Someone set me straight and explain why DOE needed to give loan guarantees for 3 of Brightsource?s projects?why not just one and give another solar technology a go? There can still be A LOT of winners in this tech game, why triple down so early?
Like this Reply to this comment by iptofar February 23, 2010 6:21 AM PST
There's no reason a bunch of mirrors and a steam generator/turbines should cost so much. Its effectively at least twice if not four times as expensive as nuclear and not nearly as reliable. And why do you need loan guarantees for relatively cheap technology unless they know they will default??? This isn't anything near rocket science.

The problem with green jobs is that they cost a lot more green than they create.

Comment

ALL new technologies cost a lot in the beginning. Look at computers, chips, the Internet, electric cars.