Germany’s Solar Millennium aims for 1,500MW US surge
Germany’s Solar Millennium is poised to reveal a multi-billion-dollar raft of solar projects to roll out a combined 1,500 megawatts (MW) of low-carbon electricity in California, Arizona and Nevada.
The proposed plants, if approved, would represent one of the biggest ever solar-power investments in the US.
Solar Millennium, which develops parabolic-trough power plants, will have to dig deep into its and other investors’ pockets. Each project has a net capacity to generate 240MW–250MW and is forecast to cost $1.1bn–$1.3bn. The development spree in three of the country’s biggest electricity-consuming regions is expected to provide a fresh investment jolt to the hard-hit solar sector.
The total cost of bringing the proposed project on line will possibly surpass a $4bn price tag, says one analyst.
A Solar Millennium executive says the final price tag for each solar site will depend on if they include thermal storage, which allows the developer to feed clean power into the grid even when the sun is not shining.
There are two projects planned in Nevada, four in California and at least one in Arizona.
One of the Nevada projects has been announced as a 250MW solar-trough plant, in partnership with Las Vegas-based NV Energy. The plant, to be built
by German engineering firm MAN Ferrostaal by 2013–2014, will host “ground-breaking” thermal-storage capabilities, the companies say.
The overall investment could eclipse the world’s biggest solar deal to date. Last month, Southern California Edison and BrightSource Energy reached agreement on contracts for 1,300MW of solar-thermal power.
Solar Millennium is in the process of securing power-purchase agreements (PPAs) for the projects, says Rainer Aringhoff, the company’s US president. Aringhoff declines to name any of the utilities the company is talking to, but says: “We see the US as a huge area for growth.”
Solar Millennium’s ambitions confirm the forecast that the US will be the solar sector’s main engine for growth.
“Thermal storage works best in areas with high concentrations of sunlight,” says Pavel Molchanov, a renewable energy analyst with Raymond James. “The US Southwest has some of the best.”
The region’s blistering sun would allow the company, which is developing new heat-trapping storage capabilities in southern Spain, to supply regional grids with low-carbon resources at times of peak demand when prices rise.
Washington has also opened the door for green-power investment. Last month Congress passed President Barack Obama’s stimulus plan that calls for a major increase in clean-power resources such as solar energy.
The German solar-power developer says it hopes to break ground by 2010 to take advantage of new incentives enshrined in the legislation. The new law also extends the sunset dates for production-tax credits for key alternative-energy industries.
Just as importantly, Congress has fattened a 10% tax credit to 30%, which means that the Renewable Energy Grant Programme will offer grants equal to 30% of project costs.
That will allow solar developers to recoup their investments and bypass a lack of investor appetite bedevilling scores of solar projects.
“But that is going to leave a large part to finance,” notes Raymond James’ Molchanov.
Solar Millennium says it is working with PPA partners from the engineering, procurement and contract side of the business to ‘owners’.
The German firm is making its move into the US at a time when the market is forecast to expand despite recent difficulties.
While final figures for 2008 are not available, thermal-solar capacity in the US stood at about 400MW in 2007. The photovoltaic segment of solar power is around 1,200MW, but it is a mere 0.2% of the country’s total 1,000 gigawatts of power.
However, scores of utilities across the US have called on the renewable-energy industry to increase the supply of wind, geothermal and solar energy.
The Arizona Public Service Company (APS) says it plans to tap into 1,600MW of renewable-energy resources to comply with new rules.
In California, where 441MW of distributed solar PV systems are currently hosted, a programme backed by Governor Arnold Schwarzenegger aims to use clean energy to help handle spikes in demand.