Edison Renewables Deal May Foster New Industry

By Published On: August 5, 2005

An unprecedented 20-year, 850 MW power plant contract is expected to be inked any day between Southern California Edison and an Arizona renewables developer. The deal would result in construction of the world’s first commercial solar dish power plant at a cost potentially as low as 6.5 cents/kWh. It could pave the way for a new solar electric industry-not dependent on photovoltaic panels. Edison and developer Stirling Energy Systems have reached “an agreement on terms” but are still working through the final details of the solar thermal project, said Gil Alexander, Edison spokesperson. It would be the largest centralized solar installation in the world, he added. “This will help Edison reach the 20 percent renewables portfolio standard and is a very good step forward,” said Shannon Eddy, California Public Utilities Commission energy efficiency and renewables adviser. “This project would not happen without the renewables portfolio standard being in place,” added Matt Freedman, The Utility Reform Network attorney. Under the agreement, Stirling of Phoenix is expected to install 20,000 to 34,000 solar “dish Stirling” units over five to eight square miles of land in the Southern California desert. The installation is expected to produce 500 MW to 850 MW of electricity when the sun shines. It’s called “dish Stirling” because the solar dishes concentrate energy to the Stirling piston engine. The project will be the world’s first commercial application of the technology, which has been used primarily in distributed energy settings, most of them demonstration projects. The massive deployment of the units in a centralized setting will enable Stirling Energy to set up an automated production line that will lower the price of the technology by two-thirds or more, proponents say. “There’s a large market” for dishes with California’s renewables portfolio standard, said Chuck Andraka, Sandia National Laboratory project leader for dish Stirling programs. The technology is expected to be highlighted August 8 when President Bush signs the recently passed federal energy policy bill at the national lab. Andraka and others at Sandia believe that the technology-along with solar troughs and solar towers that store the sun’s power for use at night-will make the Mojave Desert and other areas of the Southwest “the Saudi Arabia” of solar energy. “I am very encouraged by what I’ve seen and am cautiously optimistic,” said John Galloway, the Union for Concerned Scientists’ clean energy director. The contract would benefit ratepayers, added Galloway, who sits on the closed-door committee reviewing the project. Solar dishes use a bank of mirrors to focus the sun’s energy on a closed loop of hydrogen gas. As it heats up and expands, the gas drives a piston engine that produces electricity. The gas is cooled back down after it leaves the cylinders and is recycled in an endless loop as long as the sun is shining. The first-time commercial use of the technology, however, raises concerns among some environmentalists about whether it really will produce the promised energy and whether it will be more expensive than anticipated. There are also concerns about whether Edison will hold up this project as its poster child and fail to move ahead with additional green power deals. The price of the proposal was not released, but Stirling offered to install its technology to help replace power from Edison’s coal-fired Mohave plant at 6.5 cents/kWh. If this deal comes in at 7 to 7.5 cents/kWh, it’s still good value for ratepayers, Galloway said. “It sends a signal to developers to bring their costs down.” The project with Edison is likely to qualify for new federal investment tax credits offered for renewable energy projects under that legislation. Sandia’s Andraka said that to reach 6 cents/kWh, Stirling will have to bring down the installed cost of individual 25 kW units from around $6/watt or $7/watt to between $1/watt and $2/watt. “One dollar is the stretch goal,” he said. Even at that rate, for Stirling to recoup its investment, the utility will have to buy the totality of the project’s electricity output, he said. However, this may be easier than with wind power projects, which often produce more power at night, when it is not needed. Last year, Edison caused a stir when it sought approval for a 5 MW centralized solar facility by TrueSolar at a cost of 44 cents/kWh. That project was expected to be subsidized by a significant amount of public-goods funds. The California Public Utilities Commission approved the deal but later reversed course and rejected it behind closed doors (<i>Circuit</i>, May 21, 2004). The California Energy Commission, at the same time, said it did not qualify for existing subsidies. Freedman touted the development because it would not tap into any public-goods funds. The project does not qualify for those supplemental energy payments, however, because they’re limited to projects that are part of a renewables portfolio standard solicitation. In this case, Edison’s solar-thermal proposal is part of its interim renewables request for offers initiated in the fall of 2003-when the CPUC was developing ground rules for the state renewables portfolio standard program, that requires utilities power supplies to be one-fifith green. The utility asked for an extension of its interim solicitation authority so it could work out contract specifics with Stirling. Edison’s authority ended in March 2005 because it took virtually no action following the announcement of its interim bidding two years ago. The CPUC got fed up and set a cutoff date. Also expected to be included in Edison’s request for CPUC approval is a wind contract, the details of which were not revealed. This is Edison’s second extension request, according to Terrie Prosper, CPUC spokesperson. Not granting an extension would require Edison and Stirling to go back to square one and recommence negotiations, according to Galloway. The utility would also have to file for approval via a more involved application. If the CPUC gives Edison the green light, it plans to seek approval for the proposal through an advice letter by the end of August. Prosper said the contract could be voted on in the fall of this year. If an extension were denied, the CPUC would allow an expedited application process, she added. The CPUC approved a number of Edison’s proposed wind contracts under its interim solicitation July 21. TURN’s Freedman notes that Edison is ready to release another solicitation for renewable power later this year and that the latest project will advance the utility’s renewables portfolio from 18 percent to 21 percent. He added, however, that some of the existing renewable power contracts may not be renewed when they expire, which highlights the need for long-term agreements. <i>William J. Kelly also contributed to this report.</i>

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