Cloudy Skies For Solar Power  

The Green Wombat reports that the land rush for good solar thermal power sites has shifted from California to Nevada, where there are fewer constraints - Credit crisis shakes up solar land rush.

The land rush to stake prime sites in the Mojave Desert for solar power plants has moved east from California to a state that knows a thing or two about desert dreaming and scheming — Nevada.

When Green Wombat’s story on the solar land rush was published in the July 21 issue of Fortune (see “The Southwest desert’s real estate boom”), solar energy developers, financiers and speculators had filed lease claims on 226,000 acres of federal land in Nevada. Today, 702,000 acres are in play, largely thanks to Goldman Sachs’ aggressive moves to lock up land. The New York investment giant has put claims on about 300,000 acres of Bureau of Land Management dirt in the Silver State – in one week alone, it filed claims on some 187,000 acres.

Given its financial firepower, Goldman’s designs on the desert have been a matter of intense interest. (The firm also has filed claims on 125,000 acres in California.) Goldman (GS) declined to discuss its solar strategy, but a review of BLM documents and interviews with green energy executives sheds some light on its power plans as the financial crisis triggers a shakeout in the solar land rush.

Over the past two years, scores of companies — from Silicon Valley startups to Chevron (CVX) to utility FPL (FPL) — have scrambled to put lease claims on the nation’s best solar real estate to build massive megawatt solar power plants. In California, where utilities face a state mandate to obtain 20% of their electricity from renewable sources by 2010 with a 33% target by 2020, claims have been filed on nearly 1 million acres. If all those solar stations were built, they would generate a staggering 60,000 megawatts of electricity, or nearly twice the power that California currently consumes.

With most of the prime solar hot spots taken in California, the action is moving to sun-drenched states like Nevada where there’s plenty of wide-open desert land. The BLM has yet to issue any leases and is currently evaluating the applications on a first come, served basis. A key consideration: whether the applicant can deploy a viable solar technology.

But with the credit crunch threatening to derail many of those projects, companies are jockeying to score the best sites - those near transmission lines and water - when the weak are weeded out by a failure to obtain financing or a proven solar technology. Some sites have two or three companies queued up in case the first company in line falters.

For its part, Goldman Sachs has brought in its Cogentrix Energy subsidiary to develop its solar projects, according to BLM records. Cogentrix is a Charlotte, N.C.-based owner and operator of coal and natural gas-fired power plants that Goldman acquired for $2.4 billion in 2003.

“Cogentrix doesn’t have a solar technology,” says Rob Morgan, executive vice president and chief development officer for Silicon Valley solar startup Ausra. He says Ausra, which is building a solar power plant for utility PG&E and itself has staked claims in Arizona and Nevada, has held discussions with Goldman about its solar technology.

Strange court decisions blocking construction of new transmission capacity (in what must be the world's most protected strip of desert) aren't helping - Big Solar project short-circuited.

The risky nature of Big Solar projects has been driven home with California regulators’ move to kill a controversial $1.3 billion transmission line that would have connected massive solar power stations in the desert to coastal cities.

“These projects are unlikely to proceed,” wrote Jean Vieth, an administrative law judge with the California Public Utilities Commission, in a ruling rejecting San Diego Gas & Electric’s Sunrise Powerlink transmission line.

Phoenix-based Stirling Energy Systems in 2005 scored a contract to provide SDG&E (SRE) with up to 900 megawatts of electricity to be generated by as many as 36,000 solar dishes. A few months later, the utility filed an application to build the Sunrise Powerlink, a new transmission line to connect the Stirling power plants and other renewable energy projects to the coast.

But the utility’s proposal to build 150-foot-high transmission towers right through wilderness areas of Anza-Borrego State Park, home to a host of protected species, triggered a long-running fight with green groups that generated an 11,000-page environmental impact report. On Halloween, Vieth issued a ruling that found that despite state mandates to cut greenhouse gas emissions, the environmental impact of the transmission project was frightening.

“The potentially high economic costs to ratepayers and the potential implications for our [greenhouse gas] policy objectives do not justify the severe environmental damage that any of the transmission proposals would cause,” concluded Vieth in a 265-page decision.

The battle isn’t over — the public utilities commission will vote in December whether to accept the judge’s ruling. They will also consider an alternative decision issued by a commissioner assigned to review the case. That decision would let SDG&E build a transmission line along a different route under certain conditions.

But the case highlights the conflicting environmental values that will dog solar power projects. In other words, just what trade-offs are we willing to make to secure a planet-friendly source of energy? In this case, the judge ruled that to avoid the environmental damage of a massive new transmission line, the preferred alternative is to build more fossil-fuel plants close to San Diego along with a smaller-scale solar power station and a huge increase in rooftop solar arrays. The judge acknowledged that such an alternative “would cause substantially more GHG emissions than the proposed project and other transmission proposals.”

The judge’s second preferred alternative was to build only renewable-energy projects near San Diego that would not require big new transmission lines. Some Sunrise Powerlink opponents argue that San Diego has enough roof space to generative massive amounts of electricity from photovoltaic solar panels. (The cost of such an undertaking was left unsaid.)

Moving down under, the SMH reports that BP are shutting their solar PV plant, citing problems with expanding the existing site, along with low economies of scale and long distances from silicon suppliers - BP shuts Sydney solar plant.

In a major blow for the state's solar industry, BP will close its Sydney solar panel factory at the end of March, leading to a loss of 200 jobs. The British energy group will shift its manufacturing operations offshore to lower costs.

"The challenge for solar power is to reduce its costs to the level at which it competes on an equal footing with conventional electricity delivered through the power grid. To do this we need to expand at scale and reduce costs,'' the global chief executive of BP Solar, Reyad Fezzani, said this morning in a statement.

"We've looked at all options in our Sydney manufacturing site and the physical location, lack of expansion potential and lease agreements just don't make it competitive,'' Mr Fezzani said, adding that the most modern solar photovoltaic manufacturing plants are up to 20 times larger than the Sydney site.

BP invests about $2.3 billion a year in alternative energy and has solar-cell plants in countries including Germany, the United States, Spain, France and India.

The closure of the plant, at Sydney Olympic Park, comes ahead of a supposed boom in renewable power - including solar, wing, biomass and other ways of generating electricity without greenhouse gas emissions - predicted by the Federal Government. According to modelling done by the Federal Treasury, the renewable energy industry is expected to expand 30 times over by the year 2050.

Despite appeals from the solar industry, the Federal Government is yet to introduce legislation to bring in a "feed-in tariff'', in which people who generate their own solar power get paid above market rates per kilowatt hour. It voted down legislation introduced into Federal Parliament by the Greens last week.

While the Federal Government may be content to slow the progress of the clean energy industry, the NSW govt is showing some spirit for a change and has introduced a feed-in tariff here - Get paid for solar power on your roof.

HOUSEHOLDERS who put solar panels on their roofs and generate power that feeds back into the electricity grid will be paid a fee, but how much will not be decided until January.

The move to introduce the "feed-in tariff" will be announced today by the NSW Minister for Environment and Climate Change, Carmel Tebbutt, at a solar power conference in Sydney.

It marks an end to the State Government's opposition to solar subsidies. The Energy Minister, Ian Macdonald, is backing it despite strong objections from one of the state's main energy retailers, Energy Australia. NSW is the last state to introduce the solar subsidy or feed-in tariff.

"We know the community want to act on climate change and this is one way the NSW Government can support people who want cleaner, greener energy," Ms Tebbutt told the Herald. "A feed-in tariff makes solar panels more affordable because people are paid for the clean electricity they produce."

But the minister and a state taskforce on the tariff, which will report in January, will face intense lobbying from the solar industry, which does not want NSW to follow the example of Victoria, South Australia and Queensland. Those states have announced only a minimal solar feed-in tariff that leaves most solar households with little or no fee after they pay their own electricity bills.

"We're pleased that NSW is looking at a feed-in tariff," said Muriel Watt, who chairs the main solar panel industry group. But Dr Watt said NSW should introduce a "gross" feed-in tariff where power companies pay households for all the electricity they generate, including their own, at a premium rate. The household would then be billed at the normal rate for their own power use. This would be an incentive to people who invest in solar panels to feed into the electricity grid.

Dr Watt said states such as Victoria paying "net" feed-in tariffs provided little incentive for households to install solar panels.