CSP Heats Up: California Approves Construction of More than 2,800 Megawatts of New Projects

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--California wants to accelerate decarbonization of its electricity supply. The state took several big steps toward that goal in recent weeks, when the California Energy Commission (CEC) approved the construction of 2,829 megawatts (MW) of concentrating solar power (CSP). And the CEC is still considering three other CSP projects totaling 1,313 MW. To qualify for federal support under the American Recovery and Reinvestment Act of 2009 (ARRA), renewable-energy projects must be approved by the end of 2010.

One project that has drawn a lot of industry and financial interest is the 370-MW Ivanpah Solar Electric Generating System, developed by privately held BrightSource Energy (Oakland, California) and approved by CEC on September 22.

Because Ivanpah will be build on about 3,600 acres of federal land near the California/Nevada border, one last agency, the U.S. Bureau of Land Management, which is part of the Department of Interior, needs to approve the project before construction can begin. BrightSource predicted a decision from BLM in the coming weeks. The company said it expects to begin construction of the project later this year, and that it will be operational by 2012.

Ivanpah will be built in the Mojave Desert using BrightSource Energy's proprietary Luz Power Tower technology. The company's experience with solar power dates back more than 20 years, when its engineers designed and built the nine-unit Solar Electric Generating Stations (SEGS) in Southern California using trough technology. BrightSource Energy said that its Luz Power Tower technology represents an evolution over the SEGS trough technology.

Ivanpah "presented us with significant environmental challenges," said Jeffrey Byron, a CEC commissioner. "However, [BrightSource Energy's] changes to the original proposal and the constructive input of a record number of participants mean the Ivanpah project will now produce renewable energy and provide needed economic activity to the region, while minimizing the impact to the desert's natural environment."

The Mojave Desert is widely regarded as having some of the best solar resources for generating electricity in the world, either via CSP or photovoltaic technology. CSP technology concentrates the sun's rays with mirror-like "heliostats" that reflect heat to boil water. The steam from the boiling water turns turbines that generate electricity. Ivanpah would use 173,500 heliostats and three 459-foot towers.

Pacific Gas & Electric Company, a unit of PG&E Corporation (NYSE:PCG) (San Francisco, California), will purchase 66% of the power produced by Ivanpah, while Southern California Edison Company, a subsidiary of Edison International (NYSE:EIX) (Rosemead, California), will purchase the other 34%.

Bechtel Group (San Francisco, California) will construct Ivanpah, which is scheduled to be built in three phases: one 120-MW phase and two 125-MW phases. BrightSource estimated that the project would create 1,000 construction jobs.

"We are very pleased that the California Energy Commission has moved the Ivanpah solar project one step closer to reality," said Bob Balgenorth, president of the State Building and Construction Trades Council of California. "These well-paying, high-skill, green jobs are exactly what California needs to jump start our economy."

Investors seem to agree that BrightSource Energy has a bright future. The company has garnered more than $300 million in investments from a variety of firms, including units of Alstom S.A. (EPA:ALO) (Levallois-Perret, France), Chevron Corporation (NYSE:CVX) (San Ramon, California), Google Incorporated (NASDAQ:GOOG) (Mountain View, California), BP plc (NYSE:BP) (London, England), the California State Teachers Retirement System (CalTRS), and several venture capital funds. In late September, the company raised $30 million from investors, which included a Russian government venture capital fund, an international venture capital fund, and two unnamed "strategic investors." The company is said to be considering an initial public offering of stock next year, which reportedly would be traded on NASDAQ.

Earlier this year, Ivanpah secured a $1.37 billion conditional loan guarantee from the U.S. Department of Energy (DoE) (Washington, D.C.) as part of the federal stimulus law.

John Bryson, former chairman, president and CEO of Edison International and president of the California Public Utilities Commission (CPUC), recently became BrightSource Energy's chairman of the board. Before joining the utility industry, Bryson co-founded the Natural Resources Defense Council (NRDC), a large environmental organization.

California, which was requiring utilities to get 20% of their electricity from renewable sources in 2010, further increased its renewable energy standard (RES) on September 23 when the state's Air Resources Board (ARB) ruled that 33% of that state's electricity must come from renewable energy sources by 2020. The ARB action was another step toward fulfilling AB 32, a state law passed in 2006 that mandated lowering California's greenhouse gas emissions to 1990 levels by 2020. A variety of state energy and environmental agencies, including the CEC, ARB, California Independent System Operator (Cal ISO) and the California Public Utilities Commission (CPUC), have been coordinating the implementation of various measures to achieve the GHG reduction level specified in AB 32.

California's 33% RES "is going to further diversify and secure our energy supply while also growing California's leading green technology market, which will lead to cost savings for consumers," ARB Chairman Mary D. Nichols said in a statement after the vote.

As part of its effort to fulfill the goals set out in AB32, the CEC has been busy reviewing a number of large CSP projects in recent weeks. In addition to Ivanpah, it licensed the 250-MW Beacon Solar Energy Project on August 25, the 250-MW Abengoa Mojave Solar Project on September 8 and the 1,000-MW Blythe Solar Power Project on September 15. At its September 29 meeting, the panel approved two additional large CSP projects: the 250-MW Genesis Solar Energy Project and the 709-MW Imperial Valley Solar Project. Three other large CSP generation projects--the 850-MW Calico Solar Project, the 500-MW Palen Solar Power Project, and the 150-MW Rice Solar Energy Project--are still being reviewed by the CEC.

The nine CSP projects total 4,142 MW of new generating capacity. If all nine are built, the CEC estimates that more than 8,000 construction jobs and more than 1,000 operational jobs would be created.

"Solar is a lot less land-intensive than wind and biofuels," BrightSource CEO John Woolard told Investors Business Daily in an interview published in August. "We use one-third to one-fourth the land that's needed for wind power, and 1/40th the land of biofuels. It has good characteristics because it is peak coincident (to energy demand). And now that we have advanced the technology to bring the cost down, it's an amazing opportunity."

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