Grid-connect this: Checking Warren Buffett’s other solar plays, Topaz project update, O&M overdrive

Dec. 13, 2011 - Tom Cheyney - pvtech.org

A view of part of the then-future site of the Topaz Solar Farm, circa April 2009. (Photo by Tom Cheyney)

Much of last week’s coverage of the Warren Buffett-branded acquisition of First Solar’s Topaz Solar Farm by Berkshire Hathaway-backed MidAmerican Energy Holdings overlooked the sage multigazillionaire’s numerous indirect investments into photovoltaics. Though known for several forays into wind power, his group also holds a 9.9% interest in Chinese electric car, energy storage, and PV manufacturer BYD, a 10.5% piece of German insurer/project owner and Munich RE; and 4.6% in Korean steelmaker Posco, which has emerged as a solar project EPC firm and investor.

BYD’s solar manufacturing assets, profiled in a recent blog, have reached a gigawatt of wafer and cell production capacity and about 800MW of moduling—although the factories are, like other PV producers, running far below capacity.

More known by some for its growing portfolio of performance warranty and other (re)insurance packages for PV modules, Munich RE has become a serious player with a long-term view in the PV and CSP project spaces.

The German company’s MEAG unit recently bought a 6.7MW solar power plant in Tenerife, Canary Islands, from Banco Santander, pushing its renewables investments to nearly US$700 million in 2011. Earlier this year, it announced a partnership with KKR to buy a 49.9% stake in Grupo-T Solar, which includes a portfolio with a slew of projects in Europe. It is a member of the Desertec Initiative, which seeks to build humongous CSP networks in North Africa and elsewhere. The firm is even integrating solar power into its own facilities, as its New Jersey office will sport a 2.5MW SunPower system when the installation is completed next year.

Posco Plantec, the construction unit of the South Korean giant, has been busy building several multimegawatt-scale PV plants in Italy over the past year. It also recently won an auction bid, along with the Korea Midland unit of Korea Electric Power, to birth (design and build actually) its own billion-dollar solar baby in the US, a 300MW PV power plant in Boulder City, NV, set to be completed in 2014. Plantec also made the news with its bid to buy—and subsequent withdrawal of said bid—Norwegian polysilicon house Elkem.

While none of the aforementioned solar power sector activities show up directly in Mr. Buffett’s direct corporate investment portfolios like the Topaz project does, they collectively represent a sizeable commitment of capital destined for or already working in—as well as a de facto ringing endorsement of—that most renewable of energy spaces.

Speaking of Topaz and related topics, First Solar spokesman Alan Bernheimer told me several days ago that the status of the massive San Luis Obispo county project was “pre-Phase 1” or what he called the “site move-on stage of construction.” He said that, due to the immense scale of the project, it will be built in six or seven phases, with the first phase set to start soon and be completed in 2012 (though he could not confirm which quarter of next year). But as of last week, the construction trailers have not even been situated yet, though activities such as training and well-drilling are under way.

Given the combined scale and logistical challenges of Topaz and the nearby California Valley Solar Ranch being built by SunPower and Bechtel, anyone familiar with the highway system accessing the Carrisa Plains might raise an eyebrow at the thought of scores of heavily-laden trucks servicing the two construction sites every day for the duration of the work. California Highway 58, which crosses the area from San Luis Obispo in the west to Buttonwillow in the Central Valley to the east is an often-narrow two-lane affair, sometimes switching back and forth with hairpin turns and harrowing drop-offs.

Bernheimer acknowledged the road conditions, but explained that a traffic management plan is in place, backed by First Solar and the CVSR corporate duo, which will arrange scheduled truck convoys from the east, letting local residents know when the highway is closed to other traffic. He said the construction principals will be responsible for repairing any damage and providing regular maintenance to the roads.

The spokesman also clarified the statement that Topaz, when fully operational at its planned 550MW (AC) installed capacity, would “generate enough renewable energy to power approximately 160,000 average California homes.” The figure is based on annual power plant yield in megawatt hours and is not a peak-power generation calculation.

Although missing from First Solar’s own information materials, the amended power purchase agreement shown on Pacific Gas & Electric’s site puts Topaz’s minimum annual production average at 1,066GWh/year over the 25 years of the PPA. This roughly pencils out when using the utility company’s estimated 6.6MWh/yr calculation for residential household usage in its coverage area .

First Solar will be handling operations and maintenance of the mega power plant once it’s up and running, an activity that the company’s Ken Micaleff discussed during his presentation about SCADA’s role in O&M at the recent PV Power Plants USA conference.

The operations technology manager said that the company was monitoring 362MW (AC) of PV systems, representing 4.7 million CdTe thin-film modules, and was achieving O&M customer rates of $19.13/MWh and 99.2% system availability when the plant is operating.

The cost and availability numbers stack up quite well compared to conventional and other renewable power sources, according to Micaleff, with only geothermal coming close in terms of both metrics, and the parade of fossil fuels coming in with much higher costs (about 2X, give or take, in most cases) and lower availability figures (mostly in the 80s).

Since a few weeks have passed since his talk, more megawatts are being scrutinized in First’s network ops center in Tempe, AZ, and the cost to the customer for O&M services might have dropped a few pennies. The amount of power being monitored will jump up significantly in the next week or so, as the first blocks of PV power from the Agua Caliente plant are interconnected to the grid by Arizona Public Service.

Micaleff showed a particularly mind-blowing set of statistics for another of First Solar’s giant projects, Desert Sunlight, which at 570MW (AC) will be slightly larger than Topaz. (Note that 570MW is a bit higher than the 550MW figure cited in previous company info.)

The 4400-acre-plus site under construction in Desert Center, CA, will use more than 9 million CdTe modules (600,000 strings or so), >900 inverters, >72,500 tons of steel, and >45 miles of cables. The number of panels, strings, and steel will likely shrink as more of the more powerfully rated 87W modules are deployed; at a converted DC capacity of somewhere between 684-718MW, the amount of glass would go down by several hundred thousand units.

Prodigal CEO Mike Ahearn and the rest of the First Solar executive team probably won’t be talking about millions of modules, tons of steel, and miles of cable in the company’s 2012 guidance call tomorrow morning (Dec. 14).

Still, when you extrapolate all that weighty, numerous bill of materials data out to the gigawatt-plus of projects already in active construction under First Solar’s auspices, it’s enough to make even the most placid bean-counter’s heart all a-flutter.