BrightSource and Edison Bring Back Big Solar

Big Solar didn't stay away for very long. While the recession had a dampening effect on plans for large installations of wind, solar and other alternative energy forms, including pushing back groundbreaking on T. Boone Picken's wind farm and likely delaying the world's largest solar panel installation, solar thermal startup BrightSource Energy and the utility Southern California Edison have signed a contract for Brightsource to supply 1,300 megawatts of electricity from several huge solar plants in the Mojave Desert.

The partners claim they won't have any trouble securing financing for the project, which will sell electricity into the grid at market rates. But at the size of the plants, that financing will surely run into the billions of dollars. The lack of success others have had suggest it's not easy to come up with such amounts.

Left unspoken in the official announcements is the fact that most alternative energy developers can, in fact, score large loans, even in a recession. The difference from normal times is that it's nigh impossible to find low interest rates, and paying high ones raises the cost of large plants substantially.

For BrightSource, paying high interest is almost certainly not an option; its contract with Edison stipulates only market rates for electricity, which are around 12 cents per kilowatt hour. Solar thermal companies typically claim to be able to generate power for 8-15 cents per kWh, with the higher end of that range being well proven, and the lower end not so. Modern solar thermal technology has yet to be demonstrated at large scale, and so must temper its claims.

There are no immediate answers for how BrightSource might be able to go ahead. One possibility is that the company is still hoping rates will improve. The first solar thermal plant, of only 100 megawatts, will not be completed until 2013. Depending on how quickly BrightSource can build, it might not need to take out loans for another year or two.

Another possibility is that Brightsource is betting it can easily reach the low end of the aforementioned price range. As the company is the descendent of Luz, a company that built solar thermal plants in the 1970s, it may feel that it can quantify how much of an improvement it has made on old designs. But Luz also made big bets, a fact that was partially responsible for its bankruptcy (falling fuel costs at the time being the larger problem).

As a side note, the BrightSource announcement is taking place at the same time that an essay by Amory Lovins, chairman of the Rocky Mountain Institute, is making the rounds. Lovins' essay claims that the day of huge, centralized power plants is over, and that distributed generation will take its place, meaning not just wind and solar but also thermal generation units like fuel cells.

But renewable energy developers seem to disagree. Most solar thermal plants are intended to work at huge scales. And even solar panel installations are growing in size; centralization just makes management easier. If the current generation of companies has its way, it may not be long before huge swathes of land covered with wind, solar or other renewables is a common sight.