With Proven History, Solar Parabolic
Technology Attracts Investors
Aug 29, 2007 - California Energy
Markets - energycentral.com
The once-dormant solar-parabolic industry
has shown robust signs of life, with investment banks
underwriting solar-power plants and utilities signing
Wells Fargo, JPMorgan Capital and Northern
Trust announced last Thursday that they made an equity
investment in Nevada Solar One, a 64 MW parabolic
trough plant in Boulder City, Nev. The plant, developed
by Acciona, a Spanish energy company, will have the
first leveraged lease-structured financing arrangement
for a concentrating solar plant in the United States.
"Historically one of the biggest challenges focusing
on solar has been financing," said Barry Neal, environmental
finance director for Wells Fargo. But solar-parabolic
thermal parabolic trough technology "has been around
for decades." The ability of investors to evaluate
a renewable-energy project "with years of operational
history of the same technology is critical in the
evaluation process," he said.
Under the terms of the
deal, Wells Fargo, Northern Trust and JPMorgan (the
lead equity investor) essentially own the facility
and lease it to Acciona. Debt partners in the deal
include Banco Santander, BBVA of Spain and CAIXA of
Portugal. Neal would not say how much of the $266
million plant represents debt versus equity.
now has more than 350 MW of solar-parabolic projects
operating in the Mojave Desert, under a contract with
Southern California Edison. Most of the plants were
built in the 1980s and early 1990s.
of a surge has erupted for solar-parabolic deals.
Nevada Solar One began operating in June, and Pacific
Gas & Electric announced a 553 MW solar-parabolic
deal with Israeli firm Solel. PG&E is also separately
negotiating a 500 MW parabolic deal with BrightSource
Energy. The BrightSource contract is "being finalized
as we speak," Keely Wachs, PG&E's environmental communications
director, said Thursday.
Parabolic trough "is a proven
technology," Wachs said, and the Solel deal "is cost-effective,
it correlates well with our peak demand, and it connects
with our distribution system."
Last September, Arizona
Public Service completed the first solar-trough project
in the United States in more than 20 years, the 1
MW Saguaro plant. "The infrastructure needed to be
jump-started again," said APS spokesman Steven Gotfried.
"As every state continues to put in renewable portfolio
standards, the demand for renewable energy is going
Gotfried noted the solar-trough technology
offers economies of scale and appears to be more financially
viable than photovoltaic systems. Neal agreed that
attracting institutional financing may still present
a hurdle for photovoltaics, which tend to be smaller
than thermal plants. But "one of the ways you can
mitigate that," he said, "is to aggregate multiple
Some PV projects are attracting commercial
investment. SunPower Corp., a San Jose-based company
with shares traded on Nasdaq, obtained financing for
its photovoltaic project at Nellis Air Force Base
in Nevada from MM Renewable Ventures. The 25 MW system
will be the largest PV system in the United States,
according to SunPower. It is scheduled for completion
by year's end.
Gary Wayne, director of strategic projects
at SunPower, said that European banks started backing
renewable projects before their American competitors.
U.S. commercial banks and investment banks, however,
are willing to back solar projects if the developer
can point to a track record of projects with predictable
and reliable power production.
In addition to Wells
Fargo and JPMorgan, Goldman Sachs and Credit Suisse
are among the investment banks that have shown willingness
to lend money for renewable-energy projects.
is actually getting pretty mainstream," said Wayne.
In 2005, Wells Fargo announced a $1 billion lending
and finance investment goal for environmentally beneficial
businesses. The company has invested more than $200
million in six wind projects (in Minnesota, Texas
and Maine) and surpassed $1 billion in loans for Leadership
in Energy and Environmental Design certified buildings.
"We have a mandate to pursue opportunities in the
renewable energy market," Neal said, and solar thermal
has growth potential. "It reminds me a bit of where
the wind-energy industry was five or six years ago."
In addition to offering commercial proof, commercial
solar-thermal plants offer tax advantages: mainly
a 30 percent investment tax credit. The credit differs
from a production tax credit offered to wind projects,
and is based on the number of MWhs of electricity
Parabolic troughs, which operate at around
30 percent efficiency, are supposedly less efficient
than newer solar-thermal technologies, such as the
Stirling dish. Edison and San Diego Gas & Electric
both have contracts for 500 MW and 300 MW, respectively,
with Stirling Energy Systems for dish power plants.
But the projects are not commercially proven. State
energy officials have also questioned if the new technology
will come in at cost. Stirling did not return a phone
call seeking comment. But with solar thermal, "I don't
think there's a rush for one technology over another,"
said Gary Ackerman of the Western Power Trading Forum,
whose group represents independent power developers
and financiers, including large banks [Chris Raphael
and John Edwards].