Bankability and U.S. Department of Energy loan guarantees are the real story behind NRG Energy’s switch from eSolar, Inc. Concentrating Solar Power (CSP) to Photovoltaic (PV) technology.
|From eSolar Sierra SunTower Project Clarified, Photo Credit: eSolar, Inc.|
Early last week, eSolar Sierra SunTower Project offline – Clarified asked the question:
Does eSolar have an official statement on the NRG Energy, Inc. (NYSE:NRG) plans to substitute 66 MW (MegaWatt) of photovoltaic (PV) solar for the prior 92 MW solar thermal contract with PG&E Corporation (NYSE:PCG) based on eSolar technology?
On Friday, the supposed answer provided and reported in “Transmission constraints derail solar project” by Todd Woody at Grist.org said:
However, when I contacted eSolar about the change, I received a joint statement from the company and NRG:
“NRG is returning the project to its originally proposed size to match the transmission capacity available to the project at this time,” it said. “Maintaining the project as previously announced would require waiting for additional interconnection studies and potential transmission upgrades that would delay the project delivery date.”
I contacted NRG Energy, Inc. in order to confirm and obtain a copy of the joint statement with eSolar.
In speaking with NRG Energy spokesperson David Knox, I learned the key reasons for the switch from eSolar CSP to PV technology were related to timing and financing:
- NRG Solar wants to meet the timelines for electricity delivery in their PPA (Power Purchase Agreement) contracts with PG&E and El Paso Electric Company (NYSE:EE).
- Construction of eSolar technology based CSP plants are contingent upon U.S. Department of Energy (DOE) loan guarantees which will place the Commercial Operation Date (COD) for two of the projects beyond the requirements in NRG Solar’s PPAs.
As a result, NRG has switched both the Alpine SunTower and the New Mexico SunTower projects to solar PV as part of a time to market strategy. Transmission constraints are a secondary consideration although it is true PV deployments can be scaled without concern for 46 MegaWatt turbine economics like eSolar.
NRG Solar will continue to develop the 276 MW Gaskell SunTower project in anticipation of U.S. Federal DOE approval of eSolar loan guarantees. Without the DOE loan guarantee, eSolar’s new technology is currently unbankable. By contrast, with a utility PPA, PV projects are bankable and can be readily financed. Given that the Sierra SunTower Project has been operational for less than a year, it’s not surprising there is insufficient data available for bankers to feel comfortable with eSolar’s CSP technology.
For the Gaskell CSP project, NRG said “the cooling technology is still being designed but the final selection will comply with CA water policy. Until we get a bit further in the design, we cannot give any realistic water to MW ratio.”
Katie Fehrenbacher at Earth2Tech asks “Is eSolar the Next Solar IPO Candidate?” No, unless the eSolar application for the U.S. Department of Energy’s Loan Guarantee Program is approved, I don’t believe there will be an eSolar IPO (Initial Public Offering). Why would investors back the solar thermal start-up company after the U.S. government refuses?
eSolar has not acknowledged or responded to my questions after the Todd Woody article at Grist. @eSolarinc is engaging on twitter not.
Good stuff here. This is an important conversation for the CSP industry. If you’re interested in learning more about a technology that is bankable, AREVA Solar CEO has answers. Check out: http://bit.ly/9MLtNn
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