Growth in the sector won't be quick. But concerns over air quality along with government mandates are giving manufacturers the certainties they need to make expensive investments, and to ultimately prosper. That's behind the recent wave of innovation and the proposed build-out of new solar systems throughout the sunny southwest.
Consider San Francisco-based Pacific Gas and Electric Company (PG&E), which is mandated by California to provide 20 percent renewable power by 2010: It's backing so-called concentrated solar plants that channel the sun into a beam by using a series of mirrors. The resulting heat can then be used in a conventional power plant.
The utility recently made a presentation to investors at Jefferies Global Clean Technology Conference in which it said that it had the internal funds to build such a commercial-scale facility itself and that by doing so, it will be able to utilize the 30-percent federal tax credit given for such investments. Its first plant will be 250 megawatts.
"Solar thermal energy is an especially attractive renewable power source because it is available when needed most in California during the peak midday summer period," says Fong Wan, vice president of energy procurement at PG&E. The utility, which is also procuring solar power from other sources, said it will continue to place capital in solar photovoltaic energy that is smaller and distributed as well as in larger, concentrated solar power, both of which will benefit from future technological price reductions.
It is too soon to determine whether smaller-scale or larger-scale projects will be the wave of the future, says Wan. While concentrated solar power is more efficient and can offer storage, it is still relatively expensive and untested. At the same time, such facilities require extremely large plots of land and, as is the case for all utility-scale projects, they are difficult to get permitted. Photovoltaic energy, by comparison, is proven, less controversial and can be easily connected to existing power lines.
The National Renewable Energy Laboratory in Golden, Colo., is working with private enterprise to install 1,000 megawatts of concentrated solar power system throughout the southwest by 2010.
The agency says that such a build-out in combination with continued research and development will drive down the price of such solar power to seven cents a kilowatt-hour, making it cost competitive with other fuel sources in the region.
Indeed, California's Mojave Desert is home to multiple efforts at commercial-scale solar power facilities. Solar One will have 500 megawatts of capacity with the option to expand to 850 megawatts. Solar Two in the Imperial Valley, meanwhile, will have 300 megawatts of capacity with the potential to go to as high 900 megawatts. Each site is fully contracted by Southern California Edison, which will begin buying power in 2010.
Right now, solar energy provides less than 1 percent of all energy needs in this country. If all goes according to plan, it could supply 2 percent of the nation's generation mix by 2025, the Bush administration once predicted. Others, though, say its potential is 10 percent of the nation's energy mix by that time.
Renewable energy developers are struggling now to raise cash. But with the assorted government incentives, they are expected to get back on track, particularly those in the solar realm. NextEra Energy Resources, for example, has filed a petition to build a 250 megawatt plant in the Mojave Desert that it says can be expanded to 850 megawatts by 2015.
Palo Alto-based Ausra also uses concentrated solar power to gather the sun's energy as heat. It recently launched such a plant in Bakersfield, Calif. It is furthermore developing storage systems, noting that its plants will gather energy during daylight hours to generate power as needed for up to 20 hours. By storing energy as heat during the day, a power plant can continue to produce electricity during dark or cloudy periods.
"This plant proves that our technology is real, it works, and it's ready to power businesses or provide process steam for industries now," says Ausra Chief Executive Bob Fishman, adding that the Bakersfield facility will be able to generate five megawatts by 2011. The solar manufacturing is also working with PG&E to ensure the construction of a 177-megawatt solar power plant in central California by 2010.
Overseas, concentrated solar power is also getting attention. In Spain, the technology will eventually generate 11 megawatts. The goal is to expand that output to 300 megawatts in the coming years. Solucar, the company building the $1.5 billion facility, says that it will effectively avoid the release of 600,000 tons of carbon dioxide emissions.
Altogether, about 50 concentrated solar plants are on the drawing board in Spain. Germany, too, is going gangbusters. Both nations lead the European pack, mainly because of favorable tax breaks and continent-wide mandates to provide 20 percent of their electricity from renewable sources by 2020.
"Concentrated solar power is at the very beginning of a big boom," says Jose Luis Garcia, at Greenpeace in Spain, in a story that appeared in the UK's Guardian. "Spain is in a good position to develop and implement the technology. We have the sun so we are in the best position to lead in this field."
The technology is still unproven. But it's a risk that some major investors are making. If solar power can be dispatched from a central location to large urban areas, it would have the potential to change the energy paradigm both in this country and around the world.