Brightsource Energy: Full steam ahead

America’s leading concentrated solar power developer is unwavering in its mission to realize its 11GW concentrated solar power ambition.

By Dan McCue, US correspondent

As projects go, it was a relatively straightforward undertaking that took place in California’s Mojave Desert on a chilly morning just over a year ago.

Relying on a specialized cart and crane, a construction crew lifted a pair of pre-assembled heliostats onto waiting pylons and then manually made minor adjustments to ensure that this key element of the project’s CSP technology was secure and left, for now, in the horizontal “safe mode” position.

True, the contractors still have 173,498 more of these mirror-assemblies to install, but with that day’s work, Brightsource Energy’s high profile, well-financed and controversial Ivanpah project crossed the Rubicon from being a grand and delayed vision to a project on the move. And that progress signalled good things to come for the US CSP industry.

Not that Brightsource can tell you that themselves right now.

“As you may know, we’ve filed an S-1 with the SEC and as a result, we’re in a ‘quiet period’ until a potential IPO,” said spokeswoman Kristin Hunter. “We’re very limited on what we can discuss publicly.”

Of course, it’s well known Ivanpah has faced some tough-sledding in the past year.

Legal disputes

Environmentalists – including the regional Western Watersheds Project, which sued the US Interior Department over the project - assailed the 3,600-acre project an unwarranted and unnecessary threat to the desert tortoise, a species that spends most of its life in underground burrows and is listed as threatened in US.

Initially, Brightsource said it believed only a few dozen tortoises lived on the land they were developing, but biologists later estimated that as many as 162 adults and more than 600 juveniles might actually dwell there.

That conclusion led federal officials to stop construction last April to reevaluate the impacts of the 370 MW project. In June, the US Fish and Wildlife Service said construction could proceed and that the project would not jeopardize the continued existence of the tortoise.

Brightsource has committed to spend about $45 million on mitigating the risk to tortoises. That sum will cover the salaries of 40 full-time biologists, the purchase of 7,00 acres of conservation habitat, and medical tests and care, among other measures, according to the San Jose Mercury News, a daily California newspaper.

A second lawsuit was filed by La Cuna de Aztlan Sacred Sites Protection Circle, a Native American cultural protection group, that claims the project’s permitting violates the National Historic Preservation Ac and the Native American Graves Protection and Repatriation Act as well as federal land management rules.

On Monday, 14, November 2011, US District Judge Dolly M. Gee dismissed several of the claims made by the plaintiffs, but upheld others, and has given them until 29 November 2011 to file an amended complaint.

But such controversies haven’t stopped the federal government and several high profile corporate investors, including Internet search giant Google Inc., from pouring billions of dollars into Ivanpah.

The US Dept. of Energy, for example, gave Brightsource US$1.6 billion in federal loan guarantees, while NRG Energy alone invested $300 million and Google invested $168 million. In addition two California utilities, the Pacific Gas & Electric Company and Southern California Edison, have signed long-term contracts to purchase the electricity.

Earlier this year, Brightsource and other CSP project developers in California received an additional boost when Gov. jerry Brown approved a statewide renewable portfolio standard requiring all private and municipal electric utilities to source at least one-third of their power from renewable energy generators by 2020 in a bid to cut greenhouse gas emissions to 1990 levels by the end of the decade. The RPS goes on to call for an 80 percent decrease in those emissions by 2050.

In response, California’s utilities have been sought out partnerships with utility-scale renewable energy developers as a means of complying with the new standards. This in turn, has brought more private investment to the table, say observers.

Long, loud, and legal

“When it comes to investment in the renewable energy sector, there are certain absolutes that drive activity, and the most basic is policy stability,” said Kirsty Hamilton, an associate fellow with the Energy, Environment and Development Programme at London’s Chatham House.

“I’ve spoken to many in the banking and equity investment sector who describe the desirable policy characteristics as “loud, long and legal”. “Loud” meaning they positively effect the bottom line of projects,  “Legal” meaning they were legally based, so that you build confidence, and “Long” meaning they reflected the duration of projects,” Hamilton said, speaking generally on the renewable investment environment.

“Germany’s Deutsche Bank AG uses TLC, meaning transparency, longevity and certainty to describe the same basic concept, and the bottom line of it is, does the package add up to something that will make a bankable project?”

“As the financiers say, ‘If the project is bankable, the money will flow,” she added.

Cracking open new markets

If Ivanpah was all there was to the Brightsource story, it would be, well, some story; but the company hasn’t flagged in its commitment to growing the CSP sector in California, and all signs are that it is only getting rolling.

Earlier this month, Brightsource’s Coalinga solar-to-steam EOR contract, for the Chevron Corp., began generating steam for the first time, and on schedule. The 29 MWth facility covering 65 acres consists of 3,822 heliostats and a 327-foot tower.

To secure the contract, worth US$27.7 million, Brightsource participated in and won a competitive bid process. The purpose of the project is to demonstrate how CSP can enhance oil recovery at the heavy oil Coalinga field in Kern County, Calif.

“Solar thermal EOR represents a significant growth opportunity”, said Hunter. According to BCC Research, the global market for EOR technologies was $4.7 billion in 2009 and is expected to grow at a 5-year compound annual growth rate of 28% to $16.3 billion in 2014.

According to a recent report by SBI, conventional oil recovery methods are only able to extract about 10% - 30% of the potential oil from any given reservoir, leaving nearly 70% - 90% of the reservoir’s oil in the ground.

In its IPO filing, Brightsource told federal regulators: “We expect to leverage the performance of the Coalinga Solar-to-Steam for EOR project to establish additional relationships for thermal EOR and other solar-to-steam applications.”

Brightsource has filed applications for the certification of two additional projects with the California Energy Commission. In August, the company announced its intention to develop two 250 solar plaints on 10,100 acres in California’s Inyo County. If approved, the two CSP facilities will be completed in 2015, the company said.

In October, Brightsource unveiled plans to develop three 250 MW solar power plants on 5,750 acres in Riverside County, California.  The company said if approved, the project should be generating enough electricity to power 300,000 homes by 2016.

The question on everybody’s lips is: how will these latter two projects be funded now that the federal loan guarantee program that gave such a boost to Ivanpah has fallen by the wayside?

“We plan to secure commercial financing and to attract project equity investors. Both plants qualify for the federal Investment Tax Credit (ITC). As the Rio Mesa and Hidden Hills projects get closer to construction, we will have a better sense of the financing,” said Hunter.

For now, the future looks promising. With 110,000 acres of development site portfolio under its control in Californian and the US Southwest with the potential to accommodate approximately 11 GW of installed capacity, the US’ CSP future.

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