ACME to Invest $30 Million in eSolar for 5% Stake and Technology License to Develop 500 Megawatts in India

ACME to Invest $30 Million in eSolar for 5% Stake and Technology License to Develop 500 Megawatts in India

BANGALORE, INDIA--March 12, 2009--Researched by Industrial Info Resources (Sugar Land, Texas)--ESolar (Pasadena, California), a developer of modular solar thermal power plants, recently entered into an exclusive licensing agreement with the ACME Group (Gurgaon, Haryana), a developer of innovative energy-efficient solutions, to develop up to 1,000 megawatts (MW) of solar thermal power stations in India over the next decade. ACME will invest $30 million for a 5% ownership stake in eSolar. 

ACME has been named the master licensee of eSolar's modular technology and has been granted exclusive rights to represent eSolar in the Indian market. According to the licensing agreement, ACME will be permitted to use eSolar's modular, scalable technology to develop solar thermal projects in India by itself or in collaboration with partner firms. ACME has already entered into memorandums of understanding to buy 250 MW of solar thermal power. Construction of 100 MW of solar power plants based on eSolar's technology is expected to start later this year. 

The agreement will enable the two firms to combine resources in project capabilities, technology development and component manufacture to develop and operate solar thermal power plants in India. The collaboration, which represents eSolar's first international licensing contract, is part of the firm's strategy to promote global deployment of its technology by entering into licensing agreements with local firms. ESolar is looking to license its technology in Australia, Spain and the Middle East.

The company claims to have developed an innovative technology for developing utility-scale concentrating solar power (CSP) plants ranging in capacity from 46 MW to more than 500 MW. ESolar's solution employs a field of heliostats that reflects solar heat to a thermal receiver mounted on a tower. The concentrated heat energy is used to boil water stored in the thermal receiver and produces steam. Steam is used to rotate a turbine, thereby generating power. The steam is then cooled to produce water and directed back to the thermal receiver, and the cycle continues. A 46-MW CSP unit based on the technology comprises 16 towers on which thermal receivers are mounted, a turbine and generator set and a steam condenser, spread over 160 acres of land area. 

The sun-tracking heliostat is a mass-manufactured component and is the basic building block of the solution. The company has designed heliostats for easy deployment in pre-fabricated "heliostat sticks" that can be installed faster than other CSP solutions with minimal requirement of skilled labor. Thousands of heliostats are systematically spaced in a modular field layout that is optically designed to maximize the amount of solar power harnessed. This eliminates the need for high-precision surveying and individual installation and alignment of mirrors, thereby reducing the overall cost of power generation. The technology allows for multiple units of 46 MW each to be set up for higher power generation requirements. All these factors make eSolar's solution cost-competitive with traditional power plants based on fossil fuels. Coal-based power generation costs about U.S. 6 cents per kilowatt-hour (kWh), whereas the cost of solar thermal energy ranges from U.S. 8 cents per kWh to U.S. 15 cents per kWh.

ESolar was established in 2007 by Asif Ansari and Bill Gross, founders of Idealab Incorporated (Pasadena, California), an incubator founded in 1996. Idealab founded Picasa, which was acquired by Google (NASDAQ:GOOG) (Mountain View, California) in 2004. In April 2008, eSolar raised $130 million from Idealab, Google.org, the philanthropic arm of Google, and Oak Investment Partners (Palo Alto, California). The firm is currently developing a 5-MW plant in Lancaster, California, for commercial demonstration of its technology.

In February 2009, eSolar entered into an agreement with NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey), a wholesale power generation firm, to develop solar power plants of up 500 MW in California and in the southwestern U.S. NRG Energy will invest $10 million in eSolar for an ownership stake, development rights to use eSolar's technology for three projects, and a technology license to develop, build and operate up to 11 CSP units in these regions based on eSolar's modular technology. The proposed power plants have an estimated capacity to provide 100% clean solar power to more than 400,000 homes in the region. The first of these plants, expected to come into operation in 2011, is a 245-MW project in Kern County in southern California for which eSolar had entered into a power purchase agreement last year with Edison International (NYSE:EIX) (Rosemead, California), one of the largest power distribution utilities in the state.

ESolar intends to utilize the cash inflow from its deal with ACME to fund its power development projects in the U.S. It plans to focus on developing utility-scale power plants in the U.S. while adopting the technology license route to make inroads in overseas markets. Because of the global economic recession and the credit crunch in the market, several of the firm's peers in Silicon Valley including Ausra (Mountain View) and OptiSolar (Hayward, California) are moving out of power plant construction projects and focusing on less-risky solar equipment sales. However, equipment sales are more susceptible to market fluctuations and face strong competition that drive down prices. On the other hand, despite heavy investments, successful power plant construction projects enable developers to draw a consistent stream of revenues through long-term contracts with utilities. 

Founded in 2003, the ACME Group provides energy-efficient solutions in wireless telecommunications, wastewater treatment and cold-chain storage. ACME Tele Power Limited (Gurgaon), the group's flagship company, pioneered the "Green Shelter" concept, which provides management systems for optimal power utilization and cooling facilities at telecom sites without the use of backup systems such as diesel generators. The system is known to reduce operational costs by 40% compared to conventional shelters and reduces greenhouse gas emissions by saving about 2 million kWh of power and 100 million liters of diesel oil every year. 

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.