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Archive for the ‘NRG Energy’ Category

I wrote this story for Reuters, where it first appeared on November 30, 2010.

With NRG Energy’s announcement on Tuesday that it will invest $450 million investment in a California photovoltaic project, the New Jersey-based power provider has pledged a total of $750 million for big solar plants in the past two months.

A new report from GTM Research indicates why NRG sees such sunny prospects for the solar business. According to the researchers, utilities in the United States already have signed contracts for 5,400 megawatts’ worth of photovoltaic power plants that will be built by 2014 with another 10,100 megawatts in negotiation.

The U.S. utility-scale photovoltaic market is expected to grow from $1 billion in 2010 to $8 billion by 2015, the report said.

“The global PV industry is increasingly turning its attention toward the U.S. utility PV market as a driver of global demand over the next five years,” the report’s authors wrote. “Indeed, conditions appear right to support massive growth.”

That growth is being driven by a 50 percent fall in the price of photovoltaic modules since 2009 as well as state mandates that require utilities to obtain a certain percentage of their electricity from renewable sources.

The price of natural gas, though, will play a critical role in the competitiveness of solar power plants.

While solar farms can produce electricity at near-competitive rates with natural gas-fired power plants during peak demand in some states, the plunge in natural gas prices in recent years has put more pressure on photovoltaic developers to lower costs.

“From the perspective of the U.S. utility PV market, the importance of being within competitive range of a natural gas project is nearly as valuable as becoming cheaper, the report said. “In order for the U.S. utility market to take off, the key argument to be made by developers to utilities, and by utilities to their regulators, is that PV can deliver power at a competitive rate with other peaking facilities.”

No surprise that the largest solar market remains in California, where the state’s three big investor-owned utilities hold contracts for 78 percent of the nation’s 5,400 megawatt pipeline of projects.

But there is one dark cloud that threatens to rain on this photovoltaic parade: Project financing.

As part of the federal stimulus package, the government offered renewable energy developers the option of taking cash grants to cover 30 percent of a project’s costs in lieu of an existing investment tax credit. With the cash grant program expiring at year’s end, developers will have to turn to so-called tax equity investors who take the investment tax credit in exchange for cash to finance power plant construction.

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I wrote this story for Reuters, where it first appeared on November 30, 2010.

A subsidiary of NRG Energy on Tuesday said it will invest up to $450 million in a 250-megawatt photovoltaic power plant to be built by Silicon Valley’s SunPower on the central California coast.

The New Jersey-based power provider, which operates a fleet of fossil fuel and nuclear plants, has emerged as significant investor in solar projects.

In October, NRG agreed to invest $300 million in BrightSource Energy’s 370-megawatt Ivanpah solar thermal power plant now under construction in the Mojave Desert in Southern California. The company has also struck a partnership with eSolar, a Pasadena, Calif., startup, to build solar power plants in the desert Southwest. And NRG owns a 20-megawatt photovoltaic farm in Blythe, Calif., and has other solar projects under development in Arizona, California and New Mexico.

In the deal with SunPower, NRG Solar will take ownership of the California Valley Solar Ranch in San Luis Obispo County and responsibility for financing the project. SunPower said on Tuesday that it is seeking a federal loan guarantee to build the solar farm and has received a draft term sheet from the United States Department of Energy.

SunPower, a solar power plant developer and one of the U.S.’ largest manufacturers of photovoltaic modules, will build and operate the San Luis Obispo project. The company, based in San Jose, Calif., has a 25-year contract to sell the electricity generated by California Valley Solar Ranch to utility PG&E. Construction is set to begin next year and when the project is completed in 2013 it will produce enough electricity to power about 100,000 homes, according to the company.

You can read the rest of the story here.

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