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New rays of hope for solar power’s future

High cost of fossil fuel and advanced technology improve this energy source’s prospects.

(Page 2 of 3)

“You could supply the entire US with the sun power here in a little piece of the Southwest,” says Dan Kabel as he strolls beneath a row of trough-shaped mirrors. Mr. Kabel is chief executive of Acciona Solar Power, which owns the $266 million Nevada Solar One project. “As fossil fuel costs rise, this plant is unaffected. “If America doesn’t do this, if we don’t install many more of these clean solar-power systems, we’ll just end up seeing a lot more fossil-fuel plants instead.”

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Still, the cost of power remains critical. Commercial CSP systems emerged in the late 1990s, only to be squashed by falling natural gas prices.

Today, as natural gas prices rise along with concerns about carbon emissions and global warming, the stable, predictable costs of carbon-free solar thermal is increasingly comforting to utilities.

“What’s different now from the ’80s and ’90s is that we have much higher natural gas prices than back then,” Mehos says. “I don’t think people foresee a serious drop in natural gas prices now. Even if they fell 30 percent, CSP would look attractive.”

The importance of tax credits
Concentrating solar technology produces electricity for about 17 cents per kilowatt hour (kWh), Mehos estimates. But subsidies remain critical to solar thermal development in both the US and Spain, two global hotbeds of CSP development. With the federal investment tax credit, or ITC, costs drop to about 15 cents per kWh – low enough to compete with natural gas.

A key feature of solar thermal is its potential to use heat-storage technology to generate power after the sun sets. Nevada Solar One is considering adding a molten-salt or similar system to allow it to supply power for several hours after sundown.

With such storage systems, solar thermal becomes even more attractive to utilities, experts say. Arizona Public Service is contracting with Abengoa to build a 280-megawatt solar thermal plant near Phoenix that will cost more than $1 billion and have molten-salt heat storage.
“Arizona Public Service really does want to put this [solar thermal] plant in because in the future this really could replace natural gas,” says Reese Tisdale, an analyst at Emerging Energy Research, a market-research firm in Boston. “They’re the first to say that once this plant is installed, the fuel is free.”

So far, US development of solar thermal is dominated by a handful of big overseas companies, including Abengoa and Acciona (Spain), as well as Solel Solar Systems (Israel), Solar Millenium (Germany), and Ausra (Australia), now headquartered in Palo Alto, Calif.