NRG and eSolar Join a Growing List of Utility-Scale Solar Projects

Last Updated Feb 24, 2009 6:48 AM EST

Plans to create massive solar farms in southwestern states are multiplying, with companies that were tiny startups only a year or two ago promising to supply electricity for tens of thousands of homes and businesses. The latest, announced yesterday, is NRG Energy, a New Jersey-based utility, making a deal for eSolar technology to build 500 megawatts of generation in California.

The deal follows hot on the heels of one pairing Southern California Edison and BrightSource Energy, the latter of which added 1,300 megawatts of solar power to its already-planned amounts. But what do these big deals mean?

They're spurred by the need of California's utilities, the other large one being Pacific Gas & Electric, to meet state requirements requiring that 20 percent of their energy be from renewables by 2010 (the next step will likely be 33 percent by 2020). However, the utilities are being smart. For the most part, they're letting other companies do the building; instead, the utilities are only signing contracts to buy power, usually at market rates.

If they miss the 2010 deadline, then they'll be fined, but not enough to cause serious pain -- at least, not more serious pain than taking on the risk of developing unproven renewables promises.

But there's no shortage of other companies willing to take on that risk. There are 16 solar projects for which the Bureau of Land Management has received a plan of development (POD) to produce 1,000 megawatts of or more:

Bull Frog Green Energy: 5,000 megawatts (two plants at 2,500 each) of solar panels
Boulevard Associates: 4,000 megawatts (four plants at 1,000 each) of solar thermal
Iberdrola: 2,500 megawatts (two plants at 1,500 and 1,000) of solar thermal
Optisolar: 2,205 megawatts (two plants at 1,205 and 1,100) of solar panels
Ewind Farm: 1,700 megawatts of solar thermal
Stirling Energy Systems: 1,631 megawatts of solar thermal
FPL Energy: 1,200 megawatts of solar thermal
Solar Investments: 1,000 megawatts of solar thermal
Power Partners Southwest: 1,000 megawatts of solar thermal
Cogenitrix / Solar Investments: 1,000 megawatts of solar thermal

These all add up to about 21 gigawatts of energy, while all the projects on the BLM's big list total almost 49GW. Most of the projects would be located in California or nearby; for reference, the state has a total energy requirement of about 63GW in the summertime, according to the Energy Information Administration.

In short, the numbers don't add up. There are far more projects in the works than the region's energy needs, or transmission lines, can support. That doesn't mean the big announcements will stop. But unless the recession clears up enough that banks start flinging around project financing indiscriminately in the next couple years, a not-too-likely scenario, most of the announcements will remain just that. And many of the projects that are built will be smaller than initially anticipated.

On the flip side of this argument, NRG is itself a large utility (and one that has historically been a big coal-burner, as Green Wombat points out). That, by itself, would seem to give this plan more credibility than others.