It's a big deal not just because of its size, but because it's the first time that a Chinese company has planned to build solar thermal power, which focuses the sun's rays on enclosed water with mirrors, using the resulting steam to drive generators. The name of eSolar's partner is a mouthful: China Shandong Penglai Electric Power Equipment Manufacturing Co.
The lack of a large deal in solar thermal to date in China had been puzzling. In the right climates, solar thermal should be able to generate power for under 10 cents per kilowatt hour, which is far cheaper than solar panels.
Solar thermal is generally regarded as a good technology for huge plants of the sort China needs to feed its growing energy needs, but to date the country had stuck with plans for huge fields of solar panels, like the equally sized deal First Solar landed back in September.
ESolar's luck may have something to do with its business plan. While competitors like Brightsource and Solel plan to build and sometimes even finance their own solar thermal plants, eSolar is planning to license much of its technology, much of which is software that helps mirrors achieve pinpoint accuracy.
The company has also designed its technology around modularity. For most solar thermal plants, bigger is better, but eSolar's basic plant design produces only 46 megawatts -- a useful figure in the U.S., where anything larger needs to be permitted. For a new partner like China Shandong, that design also gives the chance to build a test unit before going ahead with the full plan.
In total, the deal is worth $5 billion, so if it proceeds as planned eSolar will almost certainly win its way into a relatively small circle of cleantech companies that's profitable. The deal's location could also give eSolar a speed advantage over its peers who only have projects overseas -- Tom Friedman's latest column has eSolar saying that China completed its review and approval of the project much more quickly than the U.S.
We've covered eSolar before. Almost a year ago, I called the company the "dark horse" of solar thermal. Around the same time, I ran an interview with CEO Bill Gross in which he talked about competition, financing, and the founding of the company.