BrightSource Energy Inc. of Oakland scored another big deal Wednesday in California, announcing a 20-year contract to supply Southern California Edison with enough solar energy from remote desert generating plants to power 845,000 homes.
The agreement for 1,300 megawatts of renewable energy is believed to be the biggest-ever contract for so-called solar-thermal power, which uses heat from the sun to create steam to spin electric turbines.
The deal calls for seven plants to be built in far-flung areas of southeastern California over the next seven years. If approved by regulators, the first 100-megawatt facility would be built in the Mojave Desert near the San Bernardino County community of Ivanpah, near the Nevada border. The plant could be operational by 2013.
"We do see solar as the large untapped resource, particularly in Southern California," said Stuart Hemphill, vice president for renewable and alternative power at Edison, which is headquartered in Rosemead along with its parent company, Edison International.
Wednesday's agreement is the second major contract announced by BrightSource in California. Last year, the company signed a deal with Pacific Gas & Electric Co. to supply the San Francisco-based utility with up to 900 megawatts of solar-thermal power.
At full build-out, the Ivanpah location will total 400 megawatts -- 300 of those for PG&E, the remainder for Edison. The construction of the site is expected to generate around 950 jobs, BrightSource spokesman Keely Wachs said.
The company's latest deal is welcome news for the renewable energy sector, which has been squeezed by the credit crunch. Solar and wind companies around the country are cutting jobs and delaying projects for lack of financing.
"It's nice to see a major utility and a major project developer move forward," said Nathaniel Bullard, a solar energy analyst with New Energy Finance in Alexandria, Va. "Development is not dead."
Privately held BrightSource has raised more than $160 million from equity investors, including VantagePoint Venture Partners, Draper Fisher Jurvetson and Google.org. The solar company's power plants will cost billions of dollars to develop, although BrightSource wouldn't say exactly how much to keep competitors in the dark.
But with its projects still in the permitting stages and the first PG&E plant not slated to come online for a couple of years, the company has time to wait for the financing climate to improve before it needs big bucks to ramp up construction.
"We think the markets will be somewhat stable at that point," said John Woolard, chief executive of BrightSource.
The U.S. economic crisis hasn't slowed the efforts of the state's large investor-owned utilities to boost their use of renewable energy. State law requires Edison, PG&E and San Diego Gas & Electric Co. to procure 20% of their electricity from clean sources by the end of 2010. That figure is set to rise to 33% by 2020.
Edison, which generates 16% of its power from renewable sources, has been one of the most active in pursuing clean alternatives to fossil fuels. The company is already the nation's largest buyer of solar power. It is seeking state approval to build one of the world's biggest rooftop solar photovoltaic projects, which would cover industrial rooftops with nearly 2 square miles of panels.
Edison wouldn't say what it's paying BrightSource for the solar-thermal power: The California Public Utilities Commission allows the company to keep that a secret. What the utility will say is that electricity from the first Ivanpah plant will be priced below a state benchmark known as the Market Price Referent. That figure approximates what a similar contract for power from a conventional natural gas-fired plant would cost. It's just over 12.5 cents a kilowatt-hour in this case.
Renewable-energy analysts have high hopes for solar-thermal power, which some believe will generate electricity as cheaply as dirty coal within 15 years. But the technology is loathed by some environmentalists. Solar thermal plants require vast tracts of land as well as precious water for generating steam and cooling the turbines. Costly transmission lines are needed to transport the power long distances to where it's used. With dozens of solar, wind and geothermal projects planned for California's deserts, some fear that this unique habitat will be destroyed.
Woolard said that the Ivanpah plants were being constructed near existing transmission lines and that his company's design required much less water than solar thermal plants planned by competitors.