BrightSource Energy signs whopper solar contract with PG&E

BrightSource Energy will build 500 megawatts' worth of solar thermal power plants for Pacific Gas & Electric, with an option for PG&E to orger another 400 megawatts of plants built. With that option added in, it would be the biggest solar thermal contract to date.

PG&E is required by California to obtain 20 per cent of its power from renewable sources -- not including conventional hydroelectric power -- by 2010. The utility already has enough under contract terms to hit that mark, but it is now signing contracts for the decade beyond the 2010 deadline.

Solar thermal plants sprang up in California in the late 80s and early 90s, but conventional electricity dropped in price and the state eliminated some tax breaks for solar electricity providers. The combination drove some solar power providers out of business.

'Luz' was one such company -- it was tinkering with a flat mirror/water tower system. Lucky for them, the Luz management team didn't stray too far and came together again to form BrightSource, now part of this solar thermal contract with PG&E.

Under the deal, BrightSource, based in Oakland, will build a 100-megawatt solar plant in Ivanpah, California, that will start operating in 2011. The company will then build a 200-megawatt solar plant the year after that, and another one a year after that, says BrightSource CEO John Woolard. While the first two plants will go up in Ivanpah, the remaining power plants will be built in nearby Broadwell, California.

Solar thermal is considered by many to be one of the most promising forms of renewable energy. In solar thermal plants, arrays of mirrors collect heat from the sun and then focus that heat onto a chamber or tube filled with liquid. The liquid is used to create steam, which then turns a turbine. Excess heat captured by the mirrors can also be stored in molten salt, so that these plants can produce electricity after the sun goes down. Plants are expected to go up in the southwestern US, Spain, Abu Dhabi and North Africa in the next few years.

Some have even predicted that large industrial conglomerates may build and make their own solar thermal plants. Currently, while investors fund these projects, solar thermal plants provide power over the grid to the public at large.

BrightSource has taken some of the expense out of solar thermal power plants through the design of its components -- it employs flat mirrors, rather than more expensive curved mirrors, to capture heat. The heated liquid is contained in a large tower, called a heliostat, rather than in a tube like in many other plants.

This configuration allows BrightSource to exploit more efficiently the heat that's gathered by the mirrors, according to the company. Additionally, the liquid used in its system is water rather than oil, a switch that also improves thermal efficiency. Overall construction costs are also lower than conventional thermal systems, or so the company claims.

The size of the power plants helps to reduce costs as well: the more mirrors and other equipment a company can install in a single location, the lower the power costs. Now, the largest plants can produce between 300 and 400 megawatts, and larger ones are expected in the future.

"Our target is to be cost competitive with fossil fuels" for power generation, says Woolard of BrightSource. But the plants aren't cheap. Woolard says they'll likely cost $2 billion to $3 billion (£1-1.5 billion) in the aggregate.

One cloud on the horizon? Tax benefits. Right now, California exempts solar thermal power providers from real estate taxes, which would cost these companies millions. But the exemption ends in 2009. There is a bill is winding its way through the state senate that would extend it to 2016, but that isn't even the only hitch.

A bigger problem revolves around the possible elimination of federal tax incentives for renewable energy, which are slated to expire this year.

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