Is this the end of Thermal Solar?

A few years ago Thermal Solar had lots of promise. Not any longer. Before you write the technology off please keep in mind that all the competitiveness is based on pure financial flows that do not take into consideration the total cost of Thermal as compared to PV. What is needed in this case is a serious and detailed cradle to grave analysis.
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The Ivanpah solar power plant stretches over more than five square miles of the Mojave Desert. Almost 350,000 mirrors the size of garage doors tilt toward the sun with an ability to energize 140,000 homes. The plant, which took almost four years and thousands of workers assembling millions of parts to complete, officially opened on Thursday, the first electric generator of its kind.

It could also be the last.

Since the project began, the price of rival technologies has plummeted, incentives have begun to disappear and the appetite among investors for mammoth solar farms has waned. Although several large, new projects have been coming online in recent months — many in the last quarter of 2013 — experts say fewer are beginning construction and not all of those under development will be completed.

“I don’t think that we’re going to see large-scale solar thermal plants popping up, five at a time, every year in the U.S. in the long-term — it’s just not the way it’s going to work,” said Matthew Feinstein, a senior analyst at Lux Research.

“Companies that are supplying these systems have questionable futures. There’s other prospects for renewables and for solar that look a lot better than this particular solution,” he said, including rooftop solar systems that are being installed one by one on businesses and homes.

Executives involved in Ivanpah — a venture among BrightSource Energy, NRG Energy and Google — 

say that once the facility proves that the technology can work, it will become easier to finance others, especially as repetition brings the cost down.

When BrightSource and other companies asked NRG to invest in a second thermal project, said David Crane, NRG’s chief, he responded: “We’ve got $300 million invested in Ivanpah — let me see that work for a few months and then we’ll decide whether we want to be involved in more.”

At the same time, BrightSource has shifted its focus, pursuing markets overseas like China, South Africa and the Middle East and designing smaller plants involving one tower rather than Ivanpah’s three.

Addressing a tent full of officials and industry executives, including those from the construction giant Bechtel, the engineering and building contractor on the project, David Ramm, BrightSource’s chief executive, acknowledged the risk at the dedication ceremony about 50 miles south of Las Vegas.

“We will have failed as a company if the last project we built was at Ivanpah,” he said. “The challenge for BrightSource going forward, and hopefully some of the partners who worked with us here, is to enable this technology commercially and in multiple locations around the world.”

It is a daunting challenge. The Ivanpah project was conceived in the early days of the Obama administration, when dreams of creating a thriving renewable energy industry were backed by the federal government’s financial support. Ivanpah received a $1.6 billion federal loan guarantee, without which it would not have gone forward, the developers said.

Ernest Moniz, the energy secretary, toured a tower and said the plant was an example of how the loan program — which set off a political maelstrom after the prominent failure of one of its borrowers, the solar panel maker Solyndra — was supposed to work.

“Our job is to kick-start the demonstration of these different technologies to have them available to the private sector,” he told reporters, standing on a tower platform, soaring above a dry lake bed, two huge boilers atop the other towers glowing in the distance like something out of a clean-tech version of “The Lord of the Rings.”

But he acknowledged that solar thermal technology only worked at large scale and in certain locations.

The loan program that financed Ivanpah has now ended, and the underlying economics shifted during its construction as the price of conventional solar panels dropped. It’s a familiar story in government-sponsored energy projects, going back to efforts to make gasoline from coal in the late 1970s, which were doomed by the retreat of oil prices.

And as federal support has waned, so, too, has demand for similar large-scale projects. What’s more, an important tax credit worth 30 percent of the cost is set to decline after 2016.

“There have been some big changes in both the market and policy dynamics since we made our investment that, I think, on balance, are not terribly positive for BrightSource,” said Dan Reicher, executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford. Mr. Reicher oversaw an early investment in BrightSource in 2008 when he was director of climate and energy initiatives at Google. (The company went on to invest $168 million in Ivanpah.)

“Clean tech investing is way off,” he said.

Still, experts say, BrightSource’s solar thermal technology — which focuses sunlight from mirrors onto 2,200-ton boilers 339 feet in the air to make steam that drives turbines to produce electricity — may have an advantage over conventional panels, which convert sunlight directly into electricity.

The increase in renewable sources of energy, which produce intermittently, coming into the grid, has also increased the need for other services crucial to reliable operation, services that solar thermal plants could provide. Those needs include the ability to start and stop quickly, at any season or hour, when human operators give the order.

Utilities pay power plants for some of those jobs, and some conventional generating stations earn a significant income, in addition to what they receive for producing energy. Around the country, coal plants — of which there are fewer and fewer — were well suited to that work. And government regulators can simply require utilities operating on the grid to show that they have the ability to accomplish some of those jobs, which industry executives call “ancillary services.”

“In the future, there will be money to be made from technologies and systems that contribute to integrating and balancing renewables on the grid,” said Samuel Thernstrom, the executive director of the Energy Innovation Reform Project, a nonprofit in Washington that evaluates electricity policy. “That’s going to be an increasing issue as the percentage of renewables on the grid increases.”

Ivanpah could stabilize voltage but has little storage, though it does have natural gas backup. At the dedication, Mr. Ramm said that in the future, BrightSource’s boilers would use molten salt to store the heat longer. Last year, Arizona Public Service opened a solar thermal plant, Solana, that lets customers brew their morning coffee with the previous afternoon’s sunshine.

At the California Independent System Operator, the company that manages the grid on a moment-to-moment basis, Stephen Berberich, the president and chief executive, said that “on an apples-to-apples basis, it is more expensive than photovoltaic, but it has a heck of a lot more capabilities than photovoltaic does.”

Another expert, Ron Binz, an energy consultant based in Denver and the former chairman of the Colorado public service commission, said that storage would indeed be needed as intermittent renewables grew. But solar thermal plants were not the only way to meet that need, he said, and a competition would follow. “You can’t look at any element of this without looking at all the others,” he said.

(NYT Feb. 14, 2014)

As for the federal loan guarantee program, the government has already changed its approach, looking to emphasize a range of cleaner technologies, especially in fossil fuels and nuclear power.

To that end, Mr. Moniz encouraged the crowd of industry executives to pursue new projects that would qualify for the loan guarantees. “Bring them on,” he said. “We’re ready.”