Markets & Finance

Thermal Solar Power Gets Hot


Technology that focuses the sun's rays to create heat—and generate electricity—is attracting growing investment by utilities

From Standard & Poor's Equity ResearchWith the arrival of summer, children can sometimes be seen playing with magnifying glasses, delighting in their seemingly magical ability to light small piles of leaves on fire. This year, a utility-size version of the same idea—concentrating the sun's rays to create intense heat—is attracting growing interest and investment from electric utilities seeking to boost their capacity to generate power from renewable energy sources.

More states are requiring utilities to supply a portion of electricity from renewables—and in some cases, solar power specifically. As a result, electric utilities in the southwestern states (where the sun is strongest) of California, Arizona, Texas, Utah, Nevada, Colorado, and New Mexico are signing agreements to buy electricity from developers of solar power stations. These collect sunlight by lenses or mirrors and focused it to create heat that can be used to generate electricity.

On a large scale, and as a means of generating power, concentrated solar heat has several advantages over its chief solar rival, photovoltaic cells (which convert sunlight directly into electricity). Power from concentrating solar heat is less variable than from photovoltaic solar (or from wind), an important consideration for a full-scale utility. Solar thermal facilities can be designed to store energy for several hours after sundown, helping a utility meet evening spikes in demand. And since solar thermal plants use the same steam turbines to generate power that other generating stations use, the plants can be hybridized to burn natural gas or other fuels during nighttime hours, to keep output constant and maximize use of the turbines.

Mojave Model

Concentrated solar power is "the fastest-growing, utility-scale renewable energy alternative after wind power," says Emerging Energy Research, a Cambridge (Mass.) consulting firm, in a December 2007 report. The study describes the technique as "well-positioned to compete against other electricity generation technologies" and estimates that $20 billion will be spent on solar thermal power projects around the world from 2008 to 2013. More than 5,000 megawatts of concentrated solar capacity are already in development in the U.S. and Spain alone, the report says.

Florida-based FPL Group (FPL) operates the world's largest concentrated solar generation station—seven interconnected facilities in the Mojave Desert, with a combined capacity of 310Mw—that was built more than two decades ago. In March, FPL applied to build a $1 billion, 250Mw concentrated solar power facility north of Los Angeles that would be operational in 2011. FPL's "established position as one of the major wind-power producers in the U.S. has given it a competitive edge in the development of, and attractive growth potential projected for, solar power," says S&P equity analyst Justin McCann.

FPL's power stations use what's called the parabolic trough design, in which a curved reflective surface focuses light on a "receiving tube" carrying synthetic oil as a heat-transfer fluid. The fluid then boils water to produce steam, which turns a conventional turbine to generate electricity.

Spanish industrial group Acciona brought its $260 million Nevada One project online in June 2007, a 64Mw trough design that Acciona says is the world's third-largest.

Slew of Developers

Other new parabolic trough facilities are in development. Spanish industrial group Abengoa is developing a 280Mw parabolic trough station near Phoenix and several others in Spain. Martifer Renewables, 80% owned by Portugal's Martifer Group, is building a 107Mw parabolic trough facility near Fresno, Calif., which it says will begin operating in 2011.

An alternative to the parabolic trough is the "power tower" design, in which a field of mirrors focuses sunlight on a central tower containing a heat transfer medium used to produce steam. This design is able to achieve much higher temperatures than the parabolic trough, though the latter converts thermal energy to electricity more efficiently, and storage is less expensive. The first commercial power tower, a 10Mw facility near Seville, Spain, was built by Abengoa and began operating in 2007.

In the U.S., BrightSource Energy, whose backers include Google (GOOG), BP (BP), Chevron (CHV), Statoil Hydro (STO), and Morgan Stanley (MS), signed a series of agreements to sell the output of a set of power towers it plans to build in the Mojave Desert. The first unit will have 100Mw of capacity and is expected to start operating in 2011. Pasadena (Calif.)-based eSolar, which also counts Google as an investor, signed an agreement in June 2008 to sell power from a 248Mw tower system it will build in southern California.

Bouncing Off a Dish

A third design type is known as the dish system. Dish generators, which look like large satellite TV dishes, concentrate the sun's rays on a focal point in front of the dish in the same way that a satellite dish reflects a TV signal to a receiver. Mounted at the focal point is either a Stirling Engine, which converts heat to mechanical energy, which then turns a turbine, or, less often, a photovoltaic panel. Stirling Engine Systems, a Phoenix outfit majority owned by Irish renewable energy developer NTR, has signed agreements to sell power from two sites in southern California with a combined capacity of 800Mw.

Other companies involved in concentrated solar power include Xcel Energy (XEL) in Minneapolis, which is seeking to build a concentrated solar plant in such states as Colorado, where state law requires the company to have 100Mw of solar generating capacity by 2020. HS Rocketdyne, a subsidiary of United Technologies (UTX), makes a molten-salt system that's used for thermal storage in concentrated solar plants.

In November 2007, the U.S. Energy Dept. announced grants worth $7.2 million to develop concentrating solar technology. Winners of grants included Pittsburgh's PPG Industries (PPG) to develop low-cost, high-performance mirrors; Alcoa (AA) to develop an aluminum reflector and supporting structure; United Technologies' Hamilton Sundstrand unit to develop molten-salt storage for power tower designs; and 3M (MMM) to develop a surface coating for parabolic troughs. In April 2008, the Energy Dept. announced another $60 million in funding available for concentrated solar projects.


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