Google, Chevron bet on solar energy to replace rising coal
Natural gas prices, emissions limits support case for switch
Bloomberg in San Francisco – Updated on May 24, 2008
Along a dusty two-lane highway in California’s Mojave Desert, 550,000 mirrors point skywards to make steam for electricity. Google, Chevron Corp and Goldman Sachs Group are betting this energy will become cheaper than coal.
Ausra’s 1,000-acre plant uses concentrated sunlight to generate power for as many as 112,500 homes in Southern California.
Rising natural gas prices and emissions limits may make solar thermal the fastest-growing energy source in the next 10 years, say backers including Vinod Khosla, the founder of computer maker Sun Microsystems.
Costs for the technology will fall below coal as soon as 2020, the United States government estimates.
JP Morgan Chase and Wells Fargo last year invested in the biggest solar plant built in a generation, Chevron and Google are funding research while Goldman is seeking land to lease as demand outpaces wind turbines and geothermal.
“Solar thermal can provide a substantial amount of our power, more than 50 per cent,” Mr Khosla said. “This is an industrial-strength solution.”
Developers need to overcome limited power lines and the need for energy-storage systems, while lobbying for the extension of tax credits.
“They have to prove their technology,” said Reese Tisdale, a senior analyst at consulting firm Emerging Energy Research, which estimates solar thermal will lure more than US$85 billion in investments by 2020. “There need to be some significant technology jumps.”
The Ardour Solar Energy Index, covering all forms of solar power, climbed 55 per cent in the 12 months to Thursday, outperforming an 8.5 per cent decline in the Standard & Poor’s 500 Index.
Unlike photovoltaic solar panels that convert sunlight to electricity, solar thermal focuses sunrays with mirrors to heat oil in glass pipes to about 370 degrees Celsius. The oil turns water to steam, which spins an electric turbine.
Nine solar-thermal plants built in the California desert from 1985 to 1991 still operate, with Juno Beach, FPL Group running seven.
They have combined capacity of 354 MW, enough to power 230,000 Southern California homes.
Development slowed when Congress eliminated tax credits for alternative energy in the early 1990s. Laws put in place in 2005 give solar investors a 30 per cent tax credit.
At FPL’s solar-thermal site in the Mojave, about 145km northeast of Los Angeles, sunshine beats down 340 days a year.
The parabolic reflectors have an efficiency of more than 90 per cent, compared with 80 per cent for a typical bathroom mirror.
FPL uses 15,000-litre trucks to spray water weekly to clean the surfaces, 2 metres off the ground.
“There’s always been a solar resource here,” said Harvey Stephens, a production manager and one of 100 workers at the plant. “It’s just that it hasn’t been cost-effective enough.”
At noon on a typical workday, technicians in a two-story control room monitor a dozen screens showing the heat generated by each array of mirrors.
As temperatures creep past 700 degrees, icons blink to red from green, indicating the centre is ready to feed electricity to the California grid.
Temperatures and power production drop as clouds blow across the sky. Solar-thermal companies are trying to develop backup heat storage using pressurised boiling water or molten salt that can be warmed to more than 1,000 degrees.
Solar power “fits with our peak demand very well as long as the sun is co-operating”, said Michael Yackira, the chief executive of Sierra Pacific Resources, the company that owns utilities serving Las Vegas and other Nevada cities.
“When it’s cloudy, when it’s raining, when it’s dark, it doesn’t produce power.”
A solar-thermal unit that begins operation in 2010 will produce power at 14.2 US cents a kilowatt hour, almost triple the 4.8 US cents for a plant using pulverised coal, the Energy Information Administration estimates.
Costs for solar thermal may fall as low as 3.5 US cents a kilowatt hour by 2020, according to a report commissioned by the US Department of Energy.
Meanwhile, coal expenses may rise. Congress is considering limits on carbon dioxide and other greenhouse gas emissions.
The purchase of pollution permits may be required under a measure the Senate will begin debating next month.
Ausra’s plants would produce electricity at 10 US cents a kilowatt-hour starting in 2010, and the price would fall to eight US cents a few years later as it adopts systems with fewer parts that would be less costly when widely deployed, the company said.