2 Giant Solar Thermal Projects by Tessera,NTR in USA run into financial trouble even before start of construction

14 Dec, 2010 by
Concentrated Solar Thermal,USA

I have questioned the viability of Solar Thermal Technology given the sharp reduction in costs and technological improvements in Solar PV Technology.I have listed the reasons for Solar Thermal Technology to be uneconomic and probably a waste of money and time particulary for multi billion projects like the Desertec Project.

1) High Costs – Desertec will apparently cost Euro 3.5/watt with another Euro  50c/watt cost for High Voltage Transmission.However these costs are too high  as Solar PV already costs Euro 3.5/watt and even on a conservative basis will have its costs reduced by 5% in the next 10 years making it attain half the cost of Solar Thermal Technology by 2020

2) Political Problems – The Desertec Initiative requires unprecedented coordination between more than 40  countries in Europe and MENA.A Number of countries in MENA like Algeria,Morocco,Egypt etc are politically and socially volatile.There are already concerns being raised on the next phase of European Colonialism through this Energy Project.Some of the countries have disputed political boundaries.There are also no simple solutions to sharing of the costs and benefits.

3) Future Technology has a high probability of making CSP Obsolete – Solar Energy has become a Hotbed of Innovation with daily news of some new breakthrough in materials and process in PV Technology.Oerlikon has come out with a radial new a-Si Technology while CIGs player are touting increased efficiencies.Chinese Solar Companies have captured large chunks of the Solar Market through low cost leadership while number of Global Heavyweights like Posco,Samsung,Hyundai,Sharp,GE,TSMC promise to further decrease these costs.To bet Euro 400 Billion on a Technology that has a high probability of becoming obsolete is too risky.

4) Water Issue – Solar Thermal Plants use lots of Water which is Major Problem in Desert Areas.Using non-water cooling raises the cost of CSP projects too much.While using SeaWater has been proposed it remains to be seen if it possible to implement this solution as this would imply building Plants very near the Coastline

5) Energy Dependence – Currently Europe finds itself hostage to periodic Russian Gas Stoppages as it depends massively on imports of Oil and Gas.However this Project will replace one form of Energy Dependence to Another.Note using distributed PV note only cuts down on Transmission costs,it entirely eliminates the Energy Security Issue.

6) Ecological and Cultural Issues – The Usage of Massive Arrays of Mirrors is noted to heavily impact the Desert  Wildlife endangering the endangered species.California has already seen a massive fight on this issue with Project Developers curtailing the size of their Plants and spending money to move the wildlife.Don’t think this would receive too much attention in the African countries.They are also cultural issues with some of these Muslim countries might have in Exporting so much Energy to Christian Countries.

7) Terrorist Attacks and Rogue Regimes – The Transmission Lines become a prime Terrorist Target which would increase the cost of the Project as Multiple Lines are constructed.There is also the danger that a rogue regime takes control of the North African countries.This would create a situation akin to War over the  Suez Canal by Britain with Egypt.Any sort of Multilateral would impinge on the Sovereignty of the countries creating another problem.

8 ) White Elephant being Built to be Juiced by Companies – Their are  allegations that Desertec is nothing but a monstrous White Elephant being built by the Companies to juice European Taxpayers of Hundred of Billions of Euros.Note this Project cannot be constructed without Massive Subsides by European Countries which would have to be paid over the next 2-3 decades.It would lead to Billion Dollar Contracts for the Involved Companies and More Billions in Profits over the Lifetime of the Project.

Tessera Solar,NTR run into Financial Problems,2 Solar Thermal Projects probably going  to be shelved

Using the same logic,I had questioned the massive amount of USA taxpayer money being given as a cash grant to build almost  4-5 GW of Solar Thermal Plants in California.Most of these solar thermal projects were approved in the last 6 months of 2010 so that they could be eligible for the Treasury Cash Grant under Rule 1603.I seem to have been vindicated quite early with 2 of these giant solar thermal projects being developed by Tessera Solar have run into trouble.The CEO of the company has already left and many of the employees have been fired.Strange for a company that has won multi billion projects in hand.The parent Irish company NTR is reportedly looking to shelve the plants as it does not have enough money for 5% of the total project costs required before 2010 end.

Note Tessera Solar was going to use the Stirling Technology from a sister company Stirling Energy Systems to build its plants of  1.3 GW capacity.However this technology is said to have drawbacks like too many moving parts and the lack of storage capacity.Note Solar Thermal Technology’s main advantage over Solar PV remains its energy storage capability.In costs Solar Thermal Technology is way more costlier at $5-6/watt compared to $3.5/watt.

NTR project delays lead to posting of €210m loss

The energy company reported recently that it lost €210.6 million in the 12 months to March 31st, its financial year, compared with a €22 million deficit in 2009.The main contributor to the losses was a €147.9 million write-down in the value of a number of the utility’s assets, including its Greenstar waste management operation, and its solar power development business, whose value it cut by €96 million.But the projects would require an investment of €2 billion and the company decided to hold off until economic conditions and capital markets’ appetites for such investments improved.Management explained to shareholders at the company’s annual general meeting (agm) in Dublin yesterday that its assets were valued according to their potential to generate revenues.

Stirling Projects Frozen Amid Turmoil: Is the End Near?

NTR–an Irish conglomerate that owns Stirling Energy Systems and Tessera Solar–has decided to hold off on the two solar thermal projects those companies have tried to develop. The two projects–in the Imperial Valley and the Mojave–would be capable of producing around 1.3 gigawatts of power. Unfortunately, the projects would also cost quite a bit of money.

The Irish Times reported that the cost of the two projects and the write-downs associated with them contributed to a 210 million Euro loss for the year.

Another Japanese Giant Mitsui gets into Solar Energy through Tunisian Hybrid Gas Solar Thermal Plant

13 Dec, 2010 by
Concentrated Solar Thermal

A Number of Japanese Companies have been entering the Solar Energy Market following in the footsteps of Japanese solar leaders like Sharp,Kyocera,Mitsubishi and others.Toshiba was a surprising entrant  into the Solar EPC market with a solar plant planned in Easter Europe.Now Mitsui Engineering and Shipping,one of Japan’s huge zaibatsus is planning a foray into the solar energy market as well.The Company is being supported in its initiative by METI which will collaborate with the Tunisian government in setting up a combined gas solar hybrid plant.A 5 MW Solar CSP plant will be set up by 2013 to demonstrate the technology.

Note Tunisia is one of the countries in North Africa which would stand to benefit if the Desertec Project comes to fruition and could potentially see many gigawatts of Solar Thermal Capacity.Note Europeans are the main forces behind the ambitious Desertec project with a few American ones like First Solar . Japan is probably trying to capture a piece of the pie by pushing one of its giant engineering conglomerates to establish a foothold in the North African Solar CSP market.

Mitsui Engineering plans Tunisia solar plant: sources

Mitsui Engineering & Shipbuilding Co plans to build a solar power plant in Tunisia, targeting a desert solar energy market dominated by European firms, two sources with direct knowledge of the matter said.

Mitsui Engineering aims to build a tower-type concentrated solar power plant (CSP) with 5 megawatts capacity in El Borma in southern Tunisia, following a feasibility study planned early next year, under a joint project of the Japanese and Tunisian governments, said the sources, who requested anonymity because Mitsui Engineering’s selection for the project has not yet been announced.

India Solar Thermal Bidding sees Massive Discounts;479 MW Projects to be constructed with 90% in Rajasthan

22 Nov, 2010 by
Concentrated Solar Thermal,Energy

India’s ambitious JNNSM Plan to build 20 GW of Solar Capacity by 2022 has seen projects being awarded for 479 MW of Solar Thermal Projects under Phase-1.The Solar Project Bidding was expected to be extremely competitive and it turned out to be exactly that with discounts of  more than 30% being offered to the base price of RS 15.31 for Solar Thermal generated Electricity.Note Rs 15.31 was determined to be a decent price on which a Solar Thermal Plant Developer could get decent returns just a year ago.This means that a 30% Discount would lead to zero or very low returns for the Solar Thermal Winners.According to news reports there are 7 winners for these Solar Thermal Plants 6 of which will come up in Rajasthan which seems to be the biggest winner of these Solar Subsidy Scheme.Andhra Pradesh is the only other state to win a Solar Thermal Project.There were about 60 applicants for the Solar Thermal Part of the Phase 1 JNNSM Bidding from which these 7 have been selected.

Reliance Power,Lanco and KSK Energy has won 100 MW Projects while 4 others have gotten approval for small plants.There are stringent time deadlines for all phases of the projects with PPAs to be signed in February 2011 and around 30 months to be taken to complete the plant.Note while the 100 MW Plant builders are known power utilities,the other 4 are not that well known.The smaller winners are Godavari Power,Aurum Renewables,Corporate Ispat and Megha Engineering.It remains to be seen how successful the JNNSM Solar Thermal Projects turn out to be.I am not a big fan of Solar Thermal Technology and think that the Desterec Projects is a White Elephant.However the Indian Solar Plan has placed a big emphasis on this technology.Note Areva and Siemens have already set sights on the Indian Solar Thermal Equipment Market.All of these Solar Thermal Plants will be built incidentally in Congress ruled States which is the Ruling Party of the Federal Government

Reliance Power, Lanco shortlisted for solar-thermal modules – DNA

Around 60 companies, including Lanco, KVK Energy and Reliance Power, have been shortlisted for the solar-thermal collector modules project, which is part of the government’s ambitious plan to reduce the price of solar power generation.

Solar-thermal collector-based power plants are seen as cheaper to set up, leading the Central Electricity Regulatory Commission to stipulate a lower price of Rs15.31 per unit compared with Rs17.91 promised for photovoltaic panel-based solar plants.

While Lanco Power and KVK Energy have offered a discount of Rs4.82 and Rs4.11 per unit, respectively, for 100 mw capacity in Rajasthan for solar thermal modules, another company, Megha Energy’s discount works to Rs4 per unit for a capacity of 50 mw, according to sources.

The Reliance Power-promoted Rajasthan Sun Technique has offered a discount of Rs3.34 for setting up a 100 mw solar plant.
Under Jawaharlal Nehru Solar Mission Phase-I, the discounts are much higher than anticipated by NTPC Vidyut Vyapar Nigam.

For solar thermal projects, 60 companies have bid offering a capacity of around 2,666 mw as against the required capacity of 500 mw.

The PPAs are likely to be signed by December, giving a purchase guarantee for the power produced by the plants to be set up by the bid winners, sources said.

Solar Energy in India draws another Industrial Giant as Areva looks to invest $3 Billion in Solar Thermal

13 Nov, 2010 by
Biomass Energy,Concentrated Solar Thermal,Energy,GE,Nuclear Energy

Solar Energy Future Growth has been vastly underestimated by policy makers and analysts but private companies are recognized the huge potential.India’s JNNSM Policy which is meant to jumpstart India’s Solar Energy has drawn huge interest from both domestic and foreign companies.The number of Solar Companies in India are growing at a rapid pace attracted by the huge opportunity.While starting troubles like project financing of debt etc are present,the long term growth potential of Solar Energy in India is tremendous.Global Industrial Giants like GE,Siemens have already established or in the process of investing huge sums of money to capitalize on this Green Trend.Now French Giant Areva has joined them.Note Areva is the global leader in nuclear equipment technology and is not known for its prowess in Solar and Wind Energy.However the company is making a play in Solar Thermal Technology where  it hopes to use its existing skills and knowledge.Areva had acquired US startup Ausra which had fallen on hard times earlier.However Areva has not won too many Solar Thermal Projects in the recent past.However things may change starting with India

Areva plans 1000 MW of Solar Thermal Capacity in India with an investment of $3 Billion partnering with Indian financial institutions.The Company is awaiting the award of projects under JNNSM which has a huge capacity earmarked for Solar Thermal Projects.The Company also plans to set up a Solar EPC subsidiary to construct turnkey plants for other companies.India could be the biggest growth market for Areva with its recent opening of the nuclear sector.Areva already has a 60 MW biomass capacity in India which is also set to set sharp growth.Areva hopes to gain from growth in all the 3 sectors of Nuclear,Solar and Biomass Energy  .

Areva has Rs 13,300-crore plans for solar energy – Rediff

Solar panelsTalks with FIs, state governments on for 1,000-Mw capacity; may also float subsidiary for solar EPC.It plans to float two subsidiaries for channelising investment to the tune of $3 billion (Rs 13,300 crore) in solar power generation.The company, which has also bid for projects under the solar mission in a tie-up with nine companies, plans to put up 250 Mw capacity at four locations. For this, it is in talks with the governments of Gujarat, Rajasthan, Madhya Pradeshand MaharashtraAt an estimated requirement of $3 million (Rs 13.4 crore) per Mw, the investment requirement for four 250 Mw units would be roughly $3 bn.On the cost economics of taking up projects outside the mission, Srivastava said the Central Electricity Regulatory Commissions rate of Rs 15.3 a unit is absolutely doable.

Today, we can localise up to 60 per cent of the plant, with 10-12 per cent unleveraged returns. We can go right up to 80 per cent localisation in a short span of time, he said.

Are the Subsidized Huge Solar Thermal Plants in California a Massive Waste of Public Money

26 Oct, 2010 by
Concentrated Solar Thermal,Solar Photovoltaic Energy,USA

California and the Federal Government have recently approved a number of big Solar Thermal Plants totaling around 2800 MW.These plants utilize Concentrated Solar Thermal (CSP) Technology and uses mirrors and towers instead of normal PV panels.The haste with which these plants are being permitted and approved is mainly due to the expiry of the Treasury Grant Scheme by end of 2010.According the the American Stimulus rules,only Green Projects which have broken ground or spent 5% of their costs would be eligible for the 30% Cash Subsidy.6 Huge Solar Thermal Plants have been approved with the biggest Blythe plant being the most recent.The capital costs for these plants are extremely high at around $5.5-6/watt which makes me question their economics.PV panels can be installed at around $3-3.5 /watt which is around 40-50% lower.Despite the higher capacity factors for Solar Thermal Plants and their ability to store energy for a short period,the cost difference is too large.

CSP Technology is fast losing ground to Solar PV technology with rapid advancements being made both by Thin Fim Technologies and rapid improvements in Crystalline Silicon Technology.By the time these plants are built in 3-4 years,expect the Solar PV costs to decline by another 30-40% making the CSP plants a total waste of public money.The rapidly falling costs of PV Technology also makes the ambitious European Destertec Plan a White Elephant which is Doomed to Fail.The Obama Administration has given billions of dollars in loans and grants to Green Companies without looking into the economics.Giving loans grants to startups like Solyndra and Abound Solar does not make much sense when established solar companies like Evergreen Solar,Energy Conversion Devices are outsourcing  green jobs to Mexico and China for lack of support.The $3 billion Blythe Plant will ge t$900 mm in government subsidies for 500 MW of capacity .300 permanent jobs would be created at a price of $3 million/job which also seems too high.Here is some more color on the economics of Solar Thermal Technogy vs Solar PV Technology

Big solar: U.S. Department of Interior approves largest CSP project to be built on public lands – PV-Tech

The U.S. Department of the Interior has approved what will be the largest solar energy project ever to be built on U.S. public lands. The Blythe Solar Power Project, which will use parabolic trough-based concentrated solar thermal technology, will produce up to 1GW of solar power once completed.The Blythe project, which is eligible to receive $1.9 billion in Department of Energy conditional loan guarantees, will be built in four 250MW sections. It is expected to create 1,066 jobs at the peak of construction and 295 permanent jobs.

Is the Humongous Solar Thermal Desertec Project a White Elephant Doomed to Fail?

11 Sep, 2010 by
Africa,Concentrated Solar Thermal,Europe,First Solar

White ElephantDesertec is a Euro 400 Billion Solar Thermal Project to provide  15% of Europe’s Electricity Needs by 2050 from Power generated in the Deserts of North Africa.The Desertec Industrial Initiative (DII) was launched with much fanfare by 12 European Companies in July 2009 with plans of constructing 100 GW of CSP Plants in the Sahara Desert which would be transported by High Voltage Direct Current (HVDC) Undersea Lines to Europe.What gives the Concept the Heft and Influence is the Participants are Giants of European Industry like Siemens,ABB,Deutche Bank,Munich Re,Abengoa etc.Besides a number of new Green Companies like First Solar have also joined the consortium.However  Desertec Advantages which are explained very eloquently on Desertec Website totally fail to explain how the it will compete against the rapidly falling costs of Decentralized,Distributed Photovoltaic Solar Energy.There  are number of Points which I think  makes Desertec just a Dream rather than Reality.Is the Humongous Solar Thermal Desertec Project a White Elephant Doomed to Fail?

1) High Costs – Desertec will apparently cost Euro 3.5/watt with another Euro  50c/watt cost for High Voltage Transmission.However these costs are too high  as Solar PV already costs Euro 3.5/watt and even on a conservative basis will have its costs reduced by 5% in the next 10 years making it attain half the cost of Solar Thermal Technology by 2020

2) Political Problems – The Desertec Initiative requires unprecedented coordination between more than 40  countries in Europe and MENA.A Number of countries in MENA like Algeria,Morocco,Egypt etc are politically and socially volatile.There are already concerns being raised on the next phase of European Colonialism through this Energy Project.Some of the countries have disputed political boundaries.There are also no simple solutions to sharing of the costs and benefits.

3) Future Technology has a high probability of making CSP Obsolete – Solar Energy has become a Hotbed of Innovation with daily news of some new breakthrough in materials and process in PV Technology.Oerlikon has come out with a radial new a-Si Technology while CIGs player are touting increased efficiencies.Chinese Solar Companies have captured large chunks of the Solar Market through low cost leadership while number of Global Heavyweights like Posco,Samsung,Hyundai,Sharp,GE,TSMC promise to further decrease these costs.To bet Euro 400 Billion on a Technology that has a high probability of becoming obsolete is too risky.

4) Water Issue – Solar Thermal Plants use lots of Water which is Major Problem in Desert Areas.Using non-water cooling raises the cost of CSP projects too much.While using SeaWater has been proposed it remains to be seen if it possible to implement this solution as this would imply building Plants very near the Coastline

5) Energy Dependence – Currently Europe finds itself hostage to periodic Russian Gas Stoppages as it depends massively on imports of Oil and Gas.However this Project will replace one form of Energy Dependence to Another.Note using distributed PV note only cuts down on Transmission costs,it entirely eliminates the Energy Security Issue.

6) Ecological and Cultural Issues – The Usage of Massive Arrays of Mirrors is noted to heavily impact the Desert  Wildlife endangering the endangered species.California has already seen a massive fight on this issue with Project Developers curtailing the size of their Plants and spending money to move the wildlife.Don’t think this would receive too much attention in the African countries.They are also cultural issues with some of these Muslim countries might have in Exporting so much Energy to Christian Countries.

7) Terrorist Attacks and Rogue Regimes – The Transmission Lines become a prime Terrorist Target which would increase the cost of the Project as Multiple Lines are constructed.There is also the danger that a rogue regime takes control of the North African countries.This would create a situation akin to War over the  Suez Canal by Britain with Egypt.Any sort of Multilateral would impinge on the Sovereignty of the countries creating another problem.

8 ) White Elephant being Built to be Juiced by Companies – Their are  allegations that Desertec is nothing but a monstrous White Elephant being built by the Companies to juice European Taxpayers of Hundred of Billions of Euros.Note this Project cannot be constructed without Massive Subsides by European Countries which would have to be paid over the next 2-3 decades.It would lead to Billion Dollar Contracts for the Involved Companies and More Billions in Profits over the Lifetime of the Project.

Summary

The Desertec Initiative is the Biggest Green Energy Project ever conceived with a vast scale and an ambitious vision.However Desertec falls short on many parameters which are described above for it to ever reach fruition.While small scale versions of this Concept can be implemented like that by Solar Millennium in Egypt,the massive energy framework conceived by Desertec is  not feasible.The Huge Subsidies and High Costs make it uneconomical despite its Clean Energy Promise.

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