The world's biggest solar deal
By Todd Woody
California utility PG&E on Wednesday expanded an agreement with BrightSource Energy to buy 1,310 megawatts of carbon-free electricity to be generated by seven giant solar power plant projects – the world’s biggest solar deal to date. Coming on top of a 1,300 megawatt agreement with Southern California Edison in February, the Google-backed, Oakland, Calif.-based startup says it now holds more than 40% of the Big Solar contracts in the United States.
PG&E had previously signed a power purchase agreement with BrightSource in April 2008 for 500 megawatts with an option to buy another 400 megawatts. The new 1,310-megawatt deal will supply enough electricity to power about 530,000 homes in California.
Those are impressive numbers, but not an electron of electricity has been produced yet. BrightSource now faces the challenge of licensing, financing billions of dollars in construction costs and then building nearly a dozen large-scale solar power plants to meet a 2016 deadline for the Southern California Edison (EIX) contract and a 2017 completion date for PG&E (PCG). (The big wild card is whether transmission lines will be available to connect the power plants to the grid.) The first PG&E project is set to go online in 2012 with the first SoCal Edison solar farm to begin generating electricity the next year. Those first two power plants are part of a 400-megawatt complex BrightSource is planning for the Ivanpah Valley on the California-Nevada border.
“The biggest part of our strategy is to ramp up slowly and methodically,” BrightSource CEO John Woolard told Green Wombat. “We’re very, very careful about how we sequence the projects.”
To give you an idea of how arduous the licensing process is in California, consider that BrightSource filed its application to build Ivanpah with the California Energy Commission on Aug. 31, 2007 — the state’s first large-scale solar power plant application in two decades. But the energy commission currently estimates that it won’t sign off on the license until around 2010, more than six months’ behind schedule as a multitude of state and federal agencies and green groups weigh in on the project’s environmental impact. The clock is ticking as BrightSource needs to start shoveling dirt on the construction site by the end of 2010 to qualify for federal loan guarantees that are part of the Obama stimulus package.
BrightSource may also build solar power plants in Nevada and Arizona, where licensing is easier, to supply electricity to PG&E and Southern California Edison. Woolard says the company controls enough land for nine gigawatts’ worth of solar farms.
While BrightSource’s technology is untested on a large scale, the company has built a six-megawatt demonstration plant in Israel, where its technology development arm is headquartered. BrightSource deploys arrays of mirrors called heliostats that concentrate sunlight on a water-filled boiler that sits atop a tower. The intense heat vaporizes the water to create high-pressure steam that drives a standard electricity-generating turbine.
Woolard says an independent engineering firm, R.W. Beck, has validated the technology at the Negev Desert demo plant. That no doubt helped persuade PG&E, which has sent executives to Israel to inspect the project, to supersize its contract. (And while BrightSource represents the biggest solar deal PG&E has signed, it’s probably far more likely to be fulfilled than the utility’s agreement in April to buy electricity from a space-based solar farm to be built by Southern California startup Solaren.)
“What it came down to is that they saw us delivering,” Woolard says. “Our plant in Israel performed above expectations. The fact that we have a solar plant producing the highest quality, highest temperature, highest pressure steam anywhere in the world is the most important thing.”
The company’s pedigree also provides a certain amount of corporate comfort. BrightSource was founded by American-Israeli solar pioneer Arnold Goldman, whose Luz International built nine large-scale solar trough power plants in the Mojave Desert in the 1980s that continue to generate electricity for Southern California Edison. BrightSource has also raised more than $160 million from a blue-chip group of investors that includes Google (GOOG), Morgan Stanley (MS) and VantagePoint Venture Partners as well as a clutch of oil giants – Chevron (CVX), BP (BP) and Norway’s StatoilHydro.