An Interview With eSolar's Bill Gross

By Chris Morrison | March 31st, 2009 @ 4:40 am

Bill Gross might just be the quintessential inventor / entrepreneur. Born in the late 1950s, Gross began inventing gadgets in high school, and had founded a company by college. After graduating he started making software; among his various innovations, Gross could be called responsible for the advertising concept that has made Google so rich. In 1996, he founded Idealab, an incubator for new tech startups.

Today, Idealab houses or has investments in electric car company Aptera, concentrating solar system designer Energy Innovations, Infinia (which I just covered in Fortune Small Business), and other cleantech companies. Then there's eSolar, which Gross heads up personally. With money from Google.org and Oak Investment Partners, the company is one of only a small handful of solar startups that may be close to competing with fossil fuels on price.

The technology that eSolar uses is a form of solar thermal, in which many mirrors focus sunlight on water enclosed in a pipe or chamber, which then turns to steam, driving a turbine. For eSolar, that means 16 fields of 12,000 mirrors each focusing on "power towers", which send their steam to a central turbine, producing 46 megawatts of power. The first eSolar plant will produce steam next month and electricity in May; if all goes according to plan, partners will then begin building full-scale solar thermal plants.

BNET: What led to founding eSolar?
Gross: I was in high school during the energy crisis of 1978, reading Popular Science, loving trigonometry. So I decided to build a parabola. I took metal shop and worked on ways to make it cheaper. I decided to advertise my plans, and sold them for $4 after copying them for $1. Over the next 3 years, I sold 10,000 copies, and they paid my way through CalTech – actually, they probably got me accepted to CalTech.

Then when I graduated, the energy crisis was over. And an IBM PC had come out, so I bought one and started writing software. After 2000, I dusted off my parabola plans and saw what had happened over 20 years. I was surprised — it wasn't much at all.

BNET: You've quoted prices for electricity from eSolar plants that are lower than what competitors claim. So how do you make solar cheaper?
Gross: Mirrors are two thirds of the cost. In the early days, people built fields with 10 square meter mirrors and said hey,it's too expensive. So how do we make it cheaper? Let's make it bigger! They went to 20, 50 meters. In Spain they're over 100 square meters. And every single parabola needs to be hand-tuned.My conclusion was, you need to go smaller, not bigger. When that happens you have less up in the wind. For the same reason wind mills go high, you want to stay low.

The only problem when you get smaller is software control. We can't afford to have a human survey 24,000 locations. You couldn't have done this product 10 years ago. Even 5 years ago, what we're paying $5 for a microprocessor would have been $1,000. Our breakthrough has been to use flat mirrors and software to direct them. Now the field costs just a third of the total.

BNET: What are you projecting your costs to be?
Gross: We can build and install these plants for between $2.50 and $3 per watt. The levelized cost of energy will then depend on the sunshine. That will also vary. The combination of cost per watt to build and sunshine will yield levelized energy costs in the range of 10 cents. In some areas we can compete with natural gas with no subsidies, today. The areas that make sense are the southwest United States, western India, Australia, Mediterranean Europe / Northern Africa and the Middle East are ok. Outside of that you'll want thin-film or solar PV.

BNET: Are you concerned about competition?
Gross: The market is so large, we almost don't view anyone as competitors. It's in the hundreds of gigawatts, if not terawatts, if we can get the price right.

All of us are going at a way of getting the cost of construction and deployment low enough to compete without a subsidy. The other companies are all taking slightly different approaches. And I think solar thermal in general is the cheapest way of doing solar. It means people can get electricity with less of a rate increase. I sort of want us all to succeed, because that will convince governments that we deserve investment.

BNET: Companies hoping to build big solar thermal plants in the desert are running into political and environmental roadblocks. Is that a problem for eSolar?
Gross: Of the $130 million we raised, we spent $30 million on land. We went and bought, specifically, previously disturbed farmland near transmission. So we don't have to worry about wildlife migration patterns. We bought private land, so we don't need special permission. Our 46 megawatt plant takes up  a quarter square mile, much smaller than other power tower plants. And one other benefit of going smaller is that the towers are smaller; that's important for neighbors. If you're above 180 feet, the FAA comes into play and neighbors may complain. We stayed lower than 180, around the height transmission towers are anyway. So we can locate much closer to the city.

But [society] still can't decide that we want clean energy, but not make some other sacrifice to get it. We're building power plants with zero emissions or ill effects on the environment. Even if you don't believe in global warming, there are still bad things about coal plants. I think we need some relavitism. We should make the least impact possible, and not ruin pristine wildlife. But people have ruined pristine wildlife with coal plants that kill 10,000 people in the neighborhood yearly. I think coal plants have better lobbyists.

BNET: Financing troubles have hurt other renewables. Will solar thermal be able to buck the trend and keep growing through the recession?
Gross: About a year ago, you could build a solar plant and get money at 5-7 percent interest. As financing rates have gone up to the 12-14 percent range, every point of interest rate cuts about 5 points of gross margin for the company doing the install. If it was 6 and now it's 11, that ate your 20 percent margin. That's why for PV it's not happening. We're very lucky because of the cost of our technology. We're economic even at 12-15 percent interest. We make less profit, but at least we're still profitable. As interest rates come down, it will get better.

But not only are the interest rates high, some banks still aren't lending. They're too scared. Outside of solar, we have this building in Pasadena that eSolar is in. What if you borrowed against the building – just half? Wells Fargo won't even loan for that. The climate is so bad for borrowing money on projects, everyone is looking for loan guarantees from the Fed.

But you don't want to rely on the government. You need private capital. Unfortunately, the banks aren't acting like banks, they're acting mattresses.