With recent scale-up in both photovoltaic and concentrated thermal facilities, solar energy is nearing cost parity with wind and even some fossil generation sources. And with development models...
Solar Hype and Hope
Utility-scale projects suffer growing pains.
Ridgecrest in California’s Mojave Desert. The project reportedly was canceled after concerns were raised about its effect on habitat critical to endangered desert tortoises and other threatened species.
• Southern California Edison in December 2010 canceled a 20-year, 663.5-MW power purchase agreement (PPA) it had signed with a parabolic-dish project that began development in 2005, also in the Mojave Desert. Soon thereafter, the project’s developer, Stirling Energy Systems, sold the project to K Road Power, which abandoned the parabolic-dish technology for most of the project, in favor of PV panels. The change in plans negates a key license the project received from the California Public Utilities Commission, and in effect sends the project back to the drawing board.
• Last June, the developer of a hybrid solar and biomass project planned for Fresno County, Calif., withdrew its license application, citing “issues regarding project economics and biomass supply amongst other things.” The project had a 107-MW, 20-year PPA with PG&E.
• Developer Starwood Energy Group in late 2009 canceled a PPA with Arizona Public Service for a 290-MW solar thermal project after Lockheed Martin withdrew as the general contractor, citing “unexpectedly high supply base costs,” as well as the overall size and risk profile of the project.
Several other projects have fallen under the crosshairs of environmental advocates and Native American groups. Most recently, in December 2010 petitioners led by the La Cuna de Aztlan Sacred Sites Protection Circle sued the Department of the Interior, alleging Interior’s Bureau of Land Management violated several federal statutes when granting permits to build projects on public lands that contain burial grounds and cultural relics. The lawsuit challenges permits for BrightSource’s Ivanpah, Tessera’s Imperial Valley, Solar Millennium’s Blythe, NextEra’s Genesis and Chevron’s Lucerne Valley sites.
Whether such setbacks are merely part of the technology’s growing pains, or whether they reveal fundamental flaws, might determine whether the current vision for utility-scale solar can succeed.
To the degree solar projects fail because their owners can’t access financial markets, utilities might bring a compelling solution. Utility backing can reduce financing costs and provide a more solid economic foundation than many independent developers can deliver. Further, utilities can help projects overcome the regulatory, technical and operational challenges that any new technology is bound to encounter in its journey to maturity.
And make no mistake, solar technology remains immature. The first wave of utility-scale projects—and project failures—revealed some of the pitfalls. But project sponsors will continue running into problems, and utilities and regulators can expect tough questions from investors and ratepayers when the bills come due for fixing those problems.
From a policy perspective, bringing solar into the mainstream serves customers’ interests, because it adds technology options to the fuel-diversity menu. And from a business perspective, solar power clearly is emerging as a viable generation investment.
Utilities have a natural and essential role to play in realizing solar energy’s vast potential, and making it work as part of a safe, reliable and affordable power system.
In the printed version of the February 2011 article, “ Capacity Contest ” (p.25),