BrightSource's Ivanpah, the world's largest CSP tower plant

"China is definitely learning from the US experience with renewables," said BrightSource SVP of Government Affairs Joe Desmond, fresh from the US-China Renewables Energy Industries Forum, the bilateral engagement framework where the countries learn from each other's experience. 

China is working to establish a national CSP tariff policy in the same way that it encouraged PV investment, Desmond said.

A key discussion topic at the Obama Administration’s first high level trade mission to China in April was how to finance clean energy projects, and in particular, CSP.

Chinese officials wanted to understand how the DOE loan guarantee program has enabled innovative technologies like CSP at scale, according to Deputy Energy Secretary Elizabeth Sherwood-Randall who led the mission.

"Many of the technologies financed by LPO, as well as the important insights learned in constructing, commissioning and operating them can be useful to emerging international markets such as China," she said in a statement on her return.

“The audience was especially interested in how the US government supports the development of clean energy technology not only at the research and development stages, but also in financing large-scale deployment. The Chinese members of the audience from banks and industry also wanted insight into how our endeavors encouraged greater private sector involvement.”

BrightSource’s 392 MW Ivanpah power tower is the largest CSP tower in the world. Ivanpah was one of just five CSP projects constructed with the support of this kind of effective renewable policy; some $5.84 billion in DOE loan guarantees and a 30% Investment Tax Credit (ITC).

The LPO financing helped finance the construction of Abengoa’s 280 MW Solana plant in Arizona, the first CSP plant with thermal energy storage in the US, and SolarReserve’s 110 MW Crescent Dunes CSP project in Nevada, the world’s largest CSP power tower with thermal energy storage.

With uncertainty in the US over the future direction of incentive policies, BrightSource is leveraging its experience at Ivanpah to adapt its business model to new markets.

Forging links with China

China is considered by many as a difficult market to enter.

"We have clients in the environmental business; that's a tough business, because it is the government buying a lot of that. Setting up a solar farm might be very difficult," said attorney Dan Harris of China-based Harris/Moure, who expedites contracts in China for foreign companies like BrightSource.

Harris believes joint ventures, while rare, are the most viable way for foreign firms to enter the Chinese market.

In a joint venture with Shanghai Electric Group under an MOU signed in November of 2014, BrightSource is now in the development phase of the first two of what will be six 135 MW tower with storage plants, comprising the Qinghai Delingha Solar Thermal Power Generation Project.

The majority owner is Huanghe Hydropower Development Co, a subsidiary of the China Power In-vestment Corporation (CPI) which is one of the five largest state-owned electricity producers in China.

The Qinghai project is now moving steadily through China’s very thorough permitting process, which follows a similar process to large infrastructure project elsewhere in the world, Desmond said.

He is familiar with extremely rigorous environmental permitting, not only in trying to permit Ivanpah's successors within the US, but also as a former California Energy Commission (CEC) commissioner.

"The feasibility study report was approved by technical experts in March. The pilot project status was established with the National Energy Administration (NEA) in April. This month, Huanghe received the project filing approval document from the local government."

Innovative ownership in Israel

BrightSource has also just broken ground on the first project it signed outside the US; the 121 MW Ashalim Solar Thermal Power Station that closed financing last year with partners Alstom and the Noy Infrastructure fund.

"They've completed the clearance of all the unexploded ordnance and are now in the earthworks phase," said Desmond.

The state of Israel will take ownership under a Build, Operate, Transfer (BOT) arrangement. After 25 years, the state takes over the project. This arrangement is more commonly used for steady revenue-producing infrastructure like toll roads.

BrightSource’s price per kilowatt for power is about 20 cents per kWh, higher than the current market price for electricity, but the state is looking to benefit ultimately.

"The state does not pay anything for the takeover upon the expiration of the 25 years. This is the deal," said attorney Uri Noy at EBN Law, which set up the arrangement in Israel.

Noy said Israel understands CSP as having the staying power needed in BOT infrastructure.

"The government definitely sees CSP as a 25-plus-year technology, and rightfully so. Look at the CSP in California; built in the late 80's and early 90's and performing better than ever."

The use of a BOT structure in other countries would depend on the “type of investment behavior the government wishes to incentivize for large infrastructure projects,” Desmond said.
While Desmond was circumspect on whether a BOT model would be used in China, Kevin Smith, CEO of competitor SolarReserve, believed BOT would work there.

"When the power offtaker provides the financing for, and takes ownership of the project, then yes, that is a likely structure in China," Smith said.