04.21.08 | 6:45 PM Rising oil prices lift all alt-energy boats.
For proof, look no further than the fat $130 million investment scooped up by eSolar, a company whose basic solar power strategy -- using sunlight-reflecting mirrors to generate steam -- was all but abandoned in the 1980s, and has recently recently caught investors' attention again.
The money, from Google's philanthropic arm, Google.org, and venture capital firms Idealab and Oak Investment Partners, will go towards the construction of eSolar's first functioning solar power plant.
"ESolar's long term is to become a viable replacement for all fossil fuel," said Robert Rogan, a Cal Tech Ph.D. and eSolar's executive vice president for corporate development. "The reason Google invested in us is that they saw the potential of this technology to beat the cost of using coal."
The company's core technology is an implementation of concentrating solar power, which uses mirrors to turn liquid into steam that drives standard electricity-generating turbines. CSP, also sometimes called solar thermal, is considered a promising replacement for fossil fuel power plants, particularly the coal plants that generate more than half of U.S. electricity. It's been around for decades, last seeing popularity in the early 1980s, when oil hit an inflation-adjusted price of $82 per barrel. Higher oil prices make fossil fuel plants more costly, making it easier for alternative technologies to compete. (Oil is currently trading for more than $115 a barrel, its highest level ever.)
Google's green-energy plan goes by the formula-like name RE<C, which sets out the goal of the company's operation -- to find renewable energy sources that reliably generate electricity more cheaply than burning coal. In modern times, that's been impossible, with fossil fuel plants able to generate power for a few cents a kilowatt-hour while solar energy from photovoltaics has cost upwards of $0.25 per kwh.
But times are changing as coal and natural gas plants have gotten more expensive to build. That's happening for a variety of reasons: Banks are including the risks of climate change legislation in their pricing for power plant loans, the raw construction materials used in power plants have become more expensive, and natural gas and coal prices have gone up alongside the skyrocketing price of oil. Within this changing marketplace, wind power has been growing phenomenally fast, but is too intermittent to power the whole grid. As a result, many clean-energy advocates are turning to solar thermal power plants as the solution du jour.
"There's hope and optimism but a little bit of skepticism as well," said Ryan Wiser, a renewable energy analyst at Lawrence Berkeley Labs. "No one knows whether the technologies are really cost competitive with other energy alternatives."
That hasn't stopped Abu Dhabi's clean-tech fund, Masdar, from funding a $1.2 billion solar thermal company called Torresol. Another competitor in the market, Ausra, has received more than $40 million from blue-chip venture capitalists. Yet another player, Abengoa, recently signed a $4 billion deal with Arizona Public Utilities, and Brightsource recently landed a 900-megawatt deal with the California utility PG&E. Stirling Energy Systems, a company that has adapted the Stirling Engine, a 200-year-old invention, for concentrated solar power, even pulled in a $100 million investment.
For its part, eSolar has a gigawatt of electricity production capacity planned.
In the near term, these deals are being driven by southwestern states' laws, which have built solar requirements into their renewable energy dictums. Nevada, Arizona, New Mexico and Colorado all require between 15 and 20 percent of their power to come from solar sources.
In the medium term, any sort of system that puts a price on emitting carbon dioxide -- either a carbon tax or a cap-and-trade framework -- would help these companies because it would penalize fossil fuels and aid cleaner technologies.
Long-term, though, the vision of truly cost-competitive solar energy is what drives all the competitors in the space.
"Once cost parity is reached, we'll see a flowering of solar power," said Rogan. "It's a question of time and place and technology. Right now, that perfect storm is developing."
But with more than a dozen competitors crowding into concentrated solar power, picking a winner looks extremely difficult.
"You have this diversity of designs ... but until we have more plants that are actually built, it's going to be hard to know which design will come out on top," said Wiser.
ESolar claims that its method for tracking the sun uses superior algorithms to focus its mirrors. Further, the company argues that its modular manufacturing processes, which allows it to build relatively small power plants ranging from 33 to over 500 megawatts, gives it time-to-market and cost-efficiency advantages over its competitors.
"If everyone else is building Cray supercomputers, we're building blade servers," Rogan said, coining an info-tech analogy. "If you took all the subsidies away, we believe that we're half the price of other solar technology."
Ausra's CEO Bob Fishman, however, who was formerly a natural gas executive with big utility Calpine, disputed eSolar's "smaller is better" assertion.
"I've looked at it, and I can tell you right now, there's a direct correlation between size and cost. If they want to build 30 megawatt plants, they can have at it," Fishman said. "Why do you think people build big coal-powered power plants and not small ones?"
Both eSolar and Ausra are planning to have demonstration plants up and running later this year. Several other plants from competitors are planning to come online within the next five years. Soon, some of these companies' claims will be subject to rigorous scrutiny by analysts like Wiser. But for now, hard data is hard to come by.
"We've been tracking the CSP market to some extent," Wiser said. "But we haven't done any analytic studies like we have for photovoltaics."
That means that pesky problems, like transmitting the power from the world's deserts to cities where it's needed and finding ways to store the energy for nighttime usage, remain subject to competing claims.
But while the different solar power plant companies have different approaches, they all agree that deploying any renewable technology is better than building more coal plants.
"The world needs all of these solutions," said Rogan. "One power plant is not going to solve the emissions problems of the world."
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