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Posts Tagged ‘Southern California Edison’

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Images: BrightSource Energy

A ray of sunshine amid the economic gloom: While some solar companies struggle through the downturn, BrightSource Energy on Wednesday morning announced the world’s largest solar energy deal to date – a 20-year contract to supply utility Southern California Edison with 1,300 megawatts of greenhouse gas-free electricity.

That’s more than twice the size of the previous world’s-biggest-solar-deal, a 553-megawatt power purchase agreement in 2007 between California utility PG&E and Israel’s Solel. BrightSource itself last year inked a deal to provide PG&E (PCG) with 500-megawatts of solar electricity with an option for 400 megawatts more.

“This proves the energy industry is recognizing the role solar thermal will play as we de-carbonize our energy supply,”  BrightSource CEO John Woolard said Wednesday at a press conference.  “We believe now more than ever the time is right for large-scale solar thermal.”

solarhOakland-based BrightSource will build seven solar power plants for Southern California Edison (EIX) using its “power tower” technology. Thousands of sun-tracking mirrors called heliostats focus the sun’s rays on a water-filled boiler that sits atop a tower. The intense heat creates steam which drives a turbine to generate electricity. BrightSource has built a prototype power plant in Israel.

BrightSource has 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.

If all the solar power plants are built, BrightSource’s deal with Southern California Edison will generate enough electricity to power about 845,000 homes. The agreement is a vote of confidence in the solar industry at a time when the financial crisis has forced BrightSource rivals like OptiSolar to lay off workers while Ausra retools its strategy to focus on supplying solar thermal technology to power plant developers rather than building projects itself.

Given the economic collapse, why are these massive megawatt deals still being done? First, California utilities are under tight deadlines to ratchet up the amount of electricity they obtain from renewable sources – 20% by the end of 2010 and 33% by 2020. Second, it costs nothing to sign a contract – no money has yet changed hands, and won’t unless the plants are built and begin producing electricity.

In fact, not a kilowatt of juice has been generated from the more than 5,000 megawatts of Big Solar contracts signed over the past four years by California’s three investor owned utilities (the third being San Diego Gas & Electric (SRE) ).  Still, a long-term utility contract is key for a startup like BrightSource to obtain the billions in financing required to build large-scale solar power plants. The terms of utility contracts – such as the cost of the solar electricity produced – are closely held secrets but are worth billions, if a 2008 power purchase agreement between Spanish solar company Abengoa and utility Arizona Public Service is any guide.

A significant hurdle for BrightSource – and many other solar developers – is the expansion of the transmission grid to connect remote power plants to cities. BrightSource spokesman Keely Wachs says the company has 4,200 megawatts of solar power plant projects under development.

The Southern California Edison deal is something of a homecoming for American-Israeli solar pioneer Arnold Goldman, BrightSource’s founder and chairman. In the 1980s, during the first solar boom, his Luz International built nine solar power plants in the Mojave. Those plants, most are now operated by FPL (FPL), continue to provide electricity to Edison.

The first BrightSource solar farm for Edison is expected to go online in early 2013. It’s a 100 megawatt power plant part of BrightSource’s Ivanpah complex to be built on federal land on the California-Nevada border in the Mojave Desert. That plant is currently wending its way through a complex state and federal licensing process.

Just how complex was illustrated by a meeting Green Wombat attended Tuesday in Sacramento, where a roomful of state and federal officials spent hours discussing the environmental impact of a 750-megawatt solar power plant to be built by Phoenix’s Stirling Energy Systems for San Diego Gas & Electric that would plant 30,000 solar dishes in the desert. A second Stirling solar farm will be built for Southern California Edision. When the deals were announced in 2005, they were the world’s largest at the time.

PG&E chief executive Peter Darbee recently said his utility will begin directly investing in solar power projects. On Wednesday, Southern California Edison renewable energy executive Stuart Hemphill said Edison would consider requests from solar power developers to take ownership stakes in their projects but prefers to sign power purchase agreements.

“We do see solar as the large untapped resource, particularly in Southern California,” said Hemphill.

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csi-report

The other day I ran into Danny Kennedy, president of solar installation company Sungevity, on the playground as we were picking up our kids at Malcolm X Elementary (we live in Berkeley). I had spent the week chronicling layoffs at various solar and wind companies so it was with a bit of trepidation that Green Wombat asked Danny how business was going at at Sungevity.  “Great,” he replied as I quizzed him about the impact of the recession. “We’re as busy as ever.”

Apparently so. A report released Wednesday by the California Public Utilities Commission shows that residential and commercial rooftop solar installations in the Golden State more than doubled in 2008 from the previous year to 158 megawatts. What’s more, a record-breaking number of applications to participate in California’s $3 billion solar rebate program were filed in December as the drumbeat of bad economic news grew deafening and the state’s unemployment rate hit 9%.

Are Californians being crazily contrarian? While one would think that a $30,000 solar array would be one of those luxuries most people would put on the back burner in bad times, there are some solid economic reasons for the surge. First, rebates for solar systems under the California Solar Initiative get less lucrative in 2009 as incentives fall as the amount of installed solar rises.  Then in October Congress lifted the $2,000 cap on the federal tax credit on solar arrays, allowing homeowners and businesses to take a 30% tax credit on systems installed after Dec. 31.  Add in the state rebate and the cost of a solar system in California suddenly fell by half.

“The surge in applications occurring in the fourth quarter of 2008 is particularly noteworthy given the slowdown in the economy that occurred during the same time period,” the report’s authors noted. “In addition to environmental benefits such as cutting greenhouse gas emissions and other pollutants, it appears that solar energy is benefiting California by serving as an economic bright spot in the economy.”

And therein lies some lessons as the U.S. Congress debates how to promote green jobs. Two years into the California Solar Initiative, the taxpayers’ investment of $775 million in solar rebates has yielded $5 billion in private investment in solar projects and rapidly expanded the state’s renewable energy industry, according to the report. That’s helped create strong solar companies like solar cell maker SunPower (SPWRA) and markets for thin-film solar companies such as First Solar (FSLR). The decade-long program is on track to achieve its target of 3,000 megawatts of rooftop solar and in the first two years of the program more solar has been installed in California than in the previous 25 years.

While California regulators expect the pace to continue in 2009, the big unknown is how many homeowners and business owners will drop out of the program and cancel their applications if the economy continues to deteriorate rapidly this year. The current dropout rate is 15%, according to the report.

“We are hopeful that many of those pending projects will move forward,” Molly Tirpak Sterkel, who oversees the California Solar Initiative for the utilities commission, told Green Wombat. “We’re also cognizant of the economy and economic forces that may pose a threat to those installations.”

Demand for solar is far stronger in Northern California than in sunny SoCal. Northern California utility PG&E’s (PCG) customers have installed more than twice the megawatts of solar than Southern California Edison (EIX) customers. And the report notes that while applications for commercial arrays in PG&E’s territory rose 71% between April and December 2008, they fell 23% in Southern California Edison’s area. San Diego Gas & Electric (SRE), which covers a much smaller service area, saw applications triple for residential solar arrays.

Sterkel says it is unclear why Northern Californians are going solar at a much faster rate than their southern counterpart, but it may be due to differences in electricity pricing and more mature solar markets in regions like the San Francisco Bay Area. “There’s just that many more solar companies with experience, installations and sales channels, ” she says.

Solar panels seem to be sprouting from Bay Area rooftops like California poppies after a late winter rain. In Berkeley, the city has launched a program that pays for residential and business solar arrays upfront and let owners pay the cost back over 20 years through an annual assessment on their property taxes.

Which also may explain why I seem to be seeing more of those Sungevity signs around town.

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first-solar-11

With Big Solar thermal power plants bogged down in bureaucracy and facing environmental and financial hurdles, utilities are turning to smaller-scale thin-film solar stations that can be built in a matter of months.

In late December, PG&E (PCG), for instance, signed a 20-year contract for electricity generated  from a 10-megawatt thin-film solar power plant in Nevada owned by energy giant Sempra (SRE) that was officially dedicated on Thursday. The solar farm was built by First Solar (FSLR) in a scant six months. Meanwhile, the utility’s nearly two gigawatts worth of deals with solar thermal power companies won’t start producing power for another two years at the earliest. (Southern California Edison (EIX) and San Diego Gas & Electric signed agreements with solar dish developer Stirling Energy Systems for 1.75 gigawatts in 2005 and those projects are just now beginning to move through the regulatory approval process.) And the financial crisis has made it more difficult for solar thermal developers to obtain the billions of dollars needed to finance the construction of a massive megawatt power plant.

Solar thermal power plants typically use miles of mirrors to heat a fluid to create steam which drives an electricity-generating turbine. Photovoltaic (or PV) solar farms essentially take solar panels similar to those found on residential rooftops and mount them on the ground in huge arrays. (Thin-film solar panels are made by depositing layers of photovoltaic materials on glass or flexible materials.)

“In terms of construction, photovoltaic tends to have a much faster development and construction track,” Roy Kuga, PG&E’s vice president for energy supply, told Green Wombat. “There is a segment of mid-sized projects – in the two to 20 megawatt size – where PV shows a distinct advantage in that market. There’s a huge potential for the PV market to expand.”

That’s good news for companies like First Solar – the Tempe, Ariz.-based company backed by the Walton family that is often called the Google of solar for its stock price and market prowess – and SunPower (SPWRA), the Silicon Valley solar cell maker that’s moved into the power plant-building business.

The speed at which the Sempra-First Solar project went online owes much to the fact that it was built on the site of an existing fossil fuel power plant. “It was already permitted for power generation, transmission existed and it did not have to go through the laborious California permitting process,” says Reese Tisdale, a solar analyst with Emerging Energy Research. “As such, First Solar was able to essentially plug and play.”

Nathaniel Bullard, a solar analyst with New Energy Finance, says he expects utilities increasingly to bet on smaller-scale photovoltaic farms to help meet state mandates to obtain a growing percentage of their electricity from renewable sources. Just this week, PG&E CEO Peter Darbee said his utility plans to invest in solar power plant projects rather than just buy the power they produce.

“I think a utility could easily integrate, technically and financially, 100 megawatts of PV,” Bullard says.  If something is falling behind on your big solar thermal projects, you can plug in PV. I think you’ll see more of this with California utilities and I expect to see it more in Florida and North Carolina. It’s a great runaround to issues of siting and transmission.”

That’s because in California photovoltaic power plants do not need approval from the California Energy Commission. And smaller-scale plants take up far less land and can be built close to existing transmission lines. Most large solar thermal power plants typically are planned for the Mojave Desert and require the construction of expensive power lines to connect them to the grid.

The modular nature of PV solar farms means they can begin generating electricity as each segment is completed while a solar thermal plant only goes online once the entire project is finished.

“Certainly there is a sweet spot in which the project is large enough to gain advantages of scale,” says Tisdale. “Also, these small-to-mid-size systems can be spread about a transmission network, instead of at one site.”

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photos: Energy Conversion Devices

As Detroit automakers shutter SUV and truck factories, the decades-long de-industrialization of the Midwest continues apace. But amid the idled assembly lines, a new wave of manufacturing has taken root as solar energy companies set up shop in the heartland.

Just in the past week, First Solar (FSLR) announced an expansion of its Ohio plant that makes thin-film solar panels. German company Flabeg will break ground on a factory outside Pittsburgh that will manufacture parabolic solar mirrors for large-scale solar power plants planned for the Southwest. Thin-film solar company Energy Conversion Devices (ENER), meanwhile, operates three factories in Michigan and is currently doubling the production capacity of one of its plants.

In fact, nearly all the United States’ current solar manufacturing capacity is in the Midwest, save for Silicon Valley company Ausra’s factory in Las Vegas. (Thin-film startup Nanosolar is building a factory in San Jose, Calif.)

“Our processes really require high productivity, so what makes it competitive here in the Midwest is that we have a great labor force that is eager to work and well-trained already,” ECD chief executive Mark Morelli told Green Wombat on Monday.

For instance, when appliance maker Electrolux shut down its Greenville, Mich., factory it left 2,700 workers unemployed in the same town where ECD is expanding its thin-film factory (see photos). The company also has recruited top executives from the ever-shrinking auto industry.

“We do a test of the available labor pool and hire the cream of the crop,” Morelli says.

Just as important are a plethora of state tax breaks and grants to retrain industrial workers for the green tech economy.

Although 70 percent of ECD’s flexible solar laminate panels are sold to European customers, Morelli anticipates the U.S. market will take off, with domestic manufacturers garnering a competitive advantage.

That all depends on whether Congress extends a crucial investment tax credit that expires this year and the policies of the next administration in Washington. Even so, demand for solar cells is expected to spike, especially given the recent unveiling of Big Solar projects by California utilities. Southern California Edison (EIX), for instance, is installing 250-megawatts’ worth of solar panels on commercial rooftops while PG&E (PCG) this month announced contracts to buy 800 megawatts of electricity from two photovoltaic power plants, including 500-megawatt thin-film solar farm being built by OptiSolar.

“As utilities begin to embrace distributed power generation, these type of things play into our natural advantage,” says Morelli, referring to his company’s lightweight solar panels that are especially suited for large rooftop arrays.

Of course, a handful of solar factories are not going to revive the Midwest’s industrial fortunes. (First Solar, for instance, operates factories in Germany and Malaysia, and Morelli doesn’t rule out locating manufacturing overseas.) But imagine a national policy that promotes the wide adoption of solar and the expansion of manufacturing in the rustbelt states becomes increasingly attractive. Shipping solar panels and mirror arrays from halfway around the world starts to make much less environmental and financial sense.

ECD’s proximity to the auto industry has already paid off. After installing solar arrays on two of General Motors (GM)’s California facilities, it won a contract in July to build a 12-megawatt rooftop array – the world’s largest by orders of magnitude – at a GM assembly plant in Spain.

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T. Boone Pickens and Texas may be the kings of Big Wind but California is catching up, buying gigawatts of green electricity from turbines planted on the windswept flatlands of … Oregon.

On Monday, Southern California Edison became the latest Golden State utility to look north, announcing a 20-year contract to buy a whopping 909 megawatts from Caithness Energy’s Shepherd’s Flat project. The 303-turbine wind farm will span two Oregon counties and 30 square miles when it goes online between 2011 and 2012. PG&E (PCG), meanwhile, signed a deal in July for 240 megawatts of wind power from Horizon Wind Energy’s turbine ranch in the same area. That’s on top of 85 megawatts it agreed to buy last year from PPM Energy (now called Iberdrola Renewables) in a neighboring county that’s part of a turbine tier of counties on Oregon’s northern border.  Earlier this month the Los Angeles Department of Water and Power approved a 72-megawatt contract with Willow Creek Energy for wind power from the same area in Oregon.

So why ship electricity a thousand miles down the West Coast when California already plans to add gigawatts of in-state wind energy?  In a word, transmission.

“The beauty of this particular project is that it is already fully permitted and has transmission already available,”  Stuart Hemphill, Southern California Edison’s (EIX) vice president for renewable and alternative power, told Green Wombat.

“Oregon has a terrific wind resource,” he adds. “It far exceeds that in California.”

In December 2006 the utility signed an agreement to purchase 1,500 megawatts from a giant wind farm to be built by a subsidiary of Australia’s Allco Financial Group in Southern California’s Tehachapi region. But the project is dependent on the construction of new transmission lines – often an environmentally contentious and drawn-out process in California.

“It is expected to go online in 2010,” says Hemphill of the wind farm. “We’re just getting the transmission project up and running. The first three segments have been approved and we’re doing the building now.”

With California’s investor-owned utilities facing a 2010 deadline to obtain 20% of their electricity from renewable sources, expect the Oregon green rush to continue.

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photo: Southern California Edison

When Southern California Edison unveiled plans to install 250 megawatts’ worth of solar panels on warehouse roofs back in March, it was hailed as a ground-breaking move. In one fell swoop, the giant utility would cut the cost of photovoltaic power, expand the solar market and kick-start efforts to transform untold acres of sun-baked commercial roof space into mini-power plants.

There’s just one problem: the solar industry is fighting the billion-dollar plan. In briefs filed with the California Public Utilities Commission, solar companies, industry trade groups and consumer advocates argue that allowing a utility to own and operate such massive green megawattage will crowd out competitors who can’t hope to compete with a project financed by Edison’s ratepayers.  (In California, shareholders of investor-owned utilities are guaranteed a rate of return for approved projects, while utility customers bear a portion of the costs in the form of higher rates.)

The five-year plan “would establish SCE as the monopoly developer of commercial-scale distributed solar in its service territory,” wrote Arno Harris, CEO of Recurrent Energy, a San Francisco company that sells solar electricity to commercial customers. “This would irreparably impair the development of a competitive solar industry.”

Southern California Edison (EIX) is the first utility in the United States to propose such a “distributed generation” scheme and the dispute is being watched closely as a test case for the viability of producing renewable electicity from hundreds of millions of square feet of commercial rooftops. Such systems can be plugged directly into existing transmission lines and tend to generate the most solar power when electricity demand spikes – typically on summer afternoons when people crank their air conditioners. Having such green energy on tap would save utilities from having to build expensive and planet-warming fossil fuel-powered “peaker plants” that sit idle except when demand suddenly rises.

Even critics hail Edison’s move as “bold” and “visionary” and no one disputes that in California the development of big rooftop solar has lagged. For instance, the state’s $3.3 billion “million solar roofs” initiative is designed to put smaller-scale solar panels on homes and businesses and provides generous rebates for systems under 1 megawatt. At the other end of the scale, the state’s big utilities have been signing contracts to buy electricity from solar thermal power plants to be built in the desert. Left out of the subsidy game are incentives for the 1-to-2 megawatt arrays well-suited for commercial buildings.

Southern California Edison says it’s filling that gap and will energize the solar industry, not crush it. The utility plans to lease 65 million square feet of commercial rooftop space in the “Inland Empire” region of Southern California for solar arrays that would generate enough electricity to power 162,000 homes.

“SCE’s financial stability and business reputation will increase the probability that 250 MW of solar PV systems will be available to meet the state’s solar rooftop goals over the next five years,” the utility’s attorneys wrote in a brief filed with the utilities commission, which must approve the program. “In so doing, a solar PV program can improve efficiencies … to reduce costs and jump start the competitiveness of solar PV for widespread application on California roofs.”

There’s no doubt the program will be a boon for solar module makers. For instance, thin-film solar cell company First Solar (FSLR) is supplying 33,000 panels for the program’s first project, a 600,000-square-foot roof array in the inland city of Fontana. However, Southern California Edison intends to contract for union labor to install the solar systems and tap its own capital and a rate hike to finance the project. That won’t leave many opportunities for solar installers and financiers like SunPower (SPWR), SunEdison and MMA Renewable Ventures (MMA).

“Even though this program is kind of taking bread out of our own mouth, the demand for solar will keep going up,” says Mark McLanahan, senior vice president of corporate development at MMA Renewable Ventures, a San Francisco firm that finances commercial solar arrays.

“What they have announced is extremely visionary,” McLanahan tells Green Wombat. “It’s game changing and opens up whole new realms of what solar can do. That’s exciting.”  On the other hand, he says, “It’s certainly possible that a young, growing industry that is pretty fragmented could be hurt by this rather than helped.”

A solution advanced by some solar industry critics is for Southern California Edison to open up the entire program to competitive bidding, not just the procurement of solar panels. The utility vehemently opposes the idea, arguing it would work against the economies of scale it says it can bring to the program.

Whether regulators will approve Southern California Edison’s request for a rate hike to pay for the initiative – and at electricity rates that are significantly higher than those set for other solar programs – remains to be seen. The commission’s own ratepayer advocate has questioned whether utility customers will get their money’s worth.

The utilities commission is unlikely to issue a final decision until next year. In the meantime, you can bet the state’s other big utilities – PG&E (PCG) and San Diego Gas & Electric (SRE) – and solar companies will be watching to see whether the sky’s the limit for big rooftop solar or whether a ceiling is about to be placed on the industry’s ambitions.

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When it comes to solar companies, First Solar is the Google of renewable energy. The Tempe, Ariz.-based solar cell maker backed by the Wal-Mart (WMT)’s Walton family has seen its stock skyrocket over the past year, hitting a high of $317 on May 14. (It was trading at $275 Friday.) Now First Solar, which makes “thin film” solar modules, is getting into the utility business, winning approval Thursday from California regulators to build the state’s first thin-film photovoltaic solar power plant. The 7.5 megawatt project – expandable to 21 megawatts – will sell electricity to Southern California Edison (EIX) under a 20-year contract.

While First Solar (FSLR) supplies solar modules to power plant builders in Europe, this is apparently the first time it has acted as a utility-scale solar developer itself. First Solar tends to keep quiet about its projects and did not return a request for comment. But a troll through the public records reveals some details of what is called the FSE Blythe project. The solar farm will be built in the Mojave Desert town of Blythe by a First Solar subsidiary, First Solar Electric. The company paid $350,000 in January for 120 acres of agricultural land in Blythe, providing a tidy profit for the seller, which had purchased the property for $60,000 in June 1999.

Approval of the contract by the California Public Utilities Commission Thursday came on the same day that SunPower (SPWR) announced a deal to build two photovoltaic power plants – a 25-megawatt one and a 10-megawatt version – in Florida for utility Florida Power & Light (FPL). PV plants are essentially supersized versions of rooftop solar panel systems found on homes and businesses. Thin-film solar prints solar cells on flexible material or glass and typically uses little or no expensive (and in short supply) polysilicon, the key material of conventional solar cells.

Most large-scale solar power plants being developed in the United States use solar thermal technology that relies on huge arrays of mirrors to heat liquids to create steam that drives electricity-generating turbines. In fact, there is a solar land rush underway in the desert Southwest as solar developers, investment banks like Goldman Sachs (GS), utilities and speculators of every stripe scramble to lock up hundreds of thousands of acres of federal land for solar power plants. (See Green Wombat’s feature story on the solar land rush in the July 21 issue of Fortune.)

PV power plants, on the other hand, have not been cost-competitive with solar thermal and have been most popular in countries like Germany, Spain and Portugal, where generous subsidies guarantee solar developers a high rate for the electricity they produce. The situation in the U.S. seems to be changing, though, judging by the deals utilties are striking with companies like First Solar and SunPower. Meanwhile, thin-film startup OptiSolar is moving to build a gigantic 550-megawatt thin-film solar power plant on California’s central coast but has yet to sign a power purchase agreement with a utility.

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Nearly three years ago, two Southern California utilities caused a stir when they announced deals to buy up to 1.75 gigawatts of electricity from massive solar farms to be built by Stirling Energy Systems of Phoenix. The company had developed a Stirling solar dish – a 38-foot-high, 40-foot-wide mirrored structure that looks like a big shiny satellite receiver. The dish focuses the sun’s rays on a Stirling engine, heating hydrogen gas to drive pistons that generate electricity.

Plans called for as many as 70,000 solar dishes to carpet the desert. For Southern California Edison (EIX) and San Diego Gas & Electric (SRE) – both facing a state mandate to obtain 20 percent of their electricity from renewable sources by 2010 – it was a big gamble. As the years ticked by and Stirling tinkered with its technology, competitors like Ausra, BrightSource Energy and Solel came out of stealth mode and stole the limelight, signing deals with PG&E (PCG) and filing applications with California regulators to build solar power plants. By the time I visited Stirling’s test site in New Mexico in March 2007 for a Business 2.0 feature story, industry insiders were telling me – privately, of course – that Stirling would never make it; Stirling dishes were just too complex and too expensive to compete against more traditional solar technologies.

That may or may not end up being true, but Stirling has moved to silence the naysayers by filing a license application with the California Energy Commission for its first solar power plant – the world’s largest – a 30,000-dish, 750-megawatt project to be built 100 miles east of San Diego on 6,100 acres of federal land controlled by the U.S. Bureau of Land Management. (A energy commission licence application – an extremely detailed and expensive document; Stirling’s runs 2,600 pages – is considered a sign that a project has the wherewithal to move forward.)

The first phase of the SES Solar Two project will consist of 12,000 SunCatcher dishes generating 300 megawatts for San Diego Gas & Electric. While the Stirling solar dish is more complex and contains more moving parts than other solar thermal technologies – which use mirrors to heat liquids to generate steam to drive a standard electricity-generating turbine – or photovoltaic panels like those found on rooftops, it also offers some distinct advantages. For one thing, it’s the most efficient solar thermal technology, converting sunlight into electricity at a 31.25% rate.  Each 25-kilowatt dish is in fact a self-contained mini-power plant that can start generating electricity – and cash – as soon as it is installed. Stirling will build 1.5-megawatt clusters of 60 dishes that will begin paying for themselves as each pod goes online. A conventional solar thermal power plant, of course, must be completely built out – which can take a year or two depending on size – before generating electricity.

The 750-megawatt Stirling project will also use relatively little water – no small matter in the desert – compared to other solar thermal plants. According to Stirling, SES Solar Two will consume 33 acre-feet of water – to wash the dishs’ mirrors – which is equivalent to the annual water use of 33 Southern California households. In contrast, a solar power plant to be built by BrightSource Energy that is nearly half the size is projected to use 100 acre-feet of water annually while a 177-megawatt Ausra plant would use 22 acre-feet, according to the companies’ license applications.

Still, there’s some big hurdles for Stirling to overcome. While it did score a whopping $100 million in funding in April from Irish renewable energy company NTR, the company will need billions in project financing to build Solar Two. And the project’s second 450-megawatt phase is dependent on the utility completing a controversial new transmission line through the desert called the Sunrise Powerlink. Depending on how fast the project is approved, construction is expected to begin in 2009 and last more than three years.

The other big unknown is what environmental opposition may develop. Within 10 miles of the SES Solar Two site are proposals to build solar power plants on an additional 51,457 acres of BLM land. Then there are the wildlife issues. Several California-listed “species of special concern” have been found on the Stirling site, including the burrowing owl, flat-tailed horned lizard and the California horned lark.

Regardless it’s a big step forward for Stirling. As California Governor Arnold Schwarzenegger said in a statement, “This groundbreaking solar energy project is a perfect example of the clean renewable energy California can and will generate to meet our long-term energy and climate change goals.”

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eSolar, the solar energy startup founded by Idealab’s Bill Gross and backed by Google, has signed a 20-year contract to supply utility Southern California Edison with 245 megawatts of green electricity.

The solar power plant will be built in 35-megawatt modules, with the first phase set to go online in 2011. As Green Wombat reported in April, eSolar scored $130 million in funding from Google.org, Google’s (GOOG) philanthropic arm, and other investors to develop solar thermal technology that Gross claims will produce electricity as cheaply as coal-fired power plants.

Like Ausra and BrightSource Energy – which have deals with PG&E (PCG) – eSolar will use fields of mirrors to heat water to create steam that drives electricity-generating turbines. Gross says that eSolar’s software allows the company to individually control smaller sun-tracking mirrors – called heliostats – which can be cheaply manufactured and which are more efficient and take up less land than conventional mirrors. According to Gross, that means eSolar can build modular power plants near urban areas and transmission lines rather than out in the desert, lowering costs.

eSolar’s cost claims got Southern California Edison’s (EIX) attention. “It was a competitively priced proposal,” Stuart Hemphill, the utility’s VP for renewable and alternative power, told Fortune. “We found the eSolar team very competent, motivated and willing to do a deal.”

“When it comes down to different solar technologies, competitive pricing is going to be an important part of the equation,” he adds. “They do offer a unique solution.”

eSolar is keeping mum about the exact location of the power plant, only saying it will be in the Antelope Valley region of Southern California.

One potential hitch: Getting eSolar’s electricity to Southern California Edison will depend on the construction of a major new transmission line. That line, the Tehachapi Renewable Transmission Project, has been partially approved to date.

With the eSolar deal, the utility is hedging its bets. Back in 2005, Southern California Edison signed a highly publicized deal with Phoenix’s Stirling Energy Systems to buy up to 850 megawatts of solar electricity from massive solar power plants to be built in the Mojave Desert. (Around the same time, San Diego Gas & Electric (SRE) signed a power purchase agreement with Stirling for up to 900 megawatts. ) Stirling is still perfecting its technology and has yet to file a license application for its first plant. But the company received a $100 million investment earlier this year and Hemphill says Stirling is moving forward.

“We expect that Stirling will meet its contractural obligations,” he says. “Solar thermal is definitely an emerging industry. It’s too early to tell which technologies will be the winners over the long run. It’s a time to be having a portfolio of different technologies so we can figure that out.”

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