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.
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Near Granada, Spain, more than 28,000 metric tons of salt is now coursing through pipes at the Andasol 1 power plant. That salt will be used to solve a pressing if obvious problem for solar power: What do you do when the sun is not shining and at night?
The answer: store sunlight as heat energy for such a rainy day.
Part of a so-called parabolic trough solar-thermal power plant, the salts will soon help the facility light up the night—literally. Because most salts only melt at high temperatures (table salt, for example, melts at around 1472 degrees Fahrenheit, or 800 degrees Celsius) and do not turn to vapor until they get considerably hotter—they can be used to store a lot of the sun's energy as heat. Simply use the sunlight to heat up the salts and put those molten salts in proximity to water via a heat exchanger. Hot steam can then be made to turn turbines without losing too much of the original absorbed solar energy.
The salts—a mixture of sodium and potassium nitrate, otherwise used as fertilizers—allow enough of the sun's heat to be stored that the power plant can pump out electricity for nearly eight hours after the sun starts to set. "It's enough for 7.5 hours to produce energy with full capacity of 50 megawatts," says Sven Moormann, a spokesman for Solar Millennium, AG, the German solar company that developed the Andasol plant. "The hours of production are nearly double [those of a solar-thermal] power plant without storage and we have the possibility to plan our electricity production."
Using mirrors to concentrate the sun's energy is an old trick—the ancient Chinese and Greeks both used it to start fires—and modern power plants employing it might provide a significant source of renewable energy without any greenhouse gas emissions.
That is a step forward in its own right, but such power plants are limited to generating energy only when there is sunshine. So engineers have tried a number of different technologies to store the sun's energy so that such power plants can be more broadly employed. They have tried batteries but too much of the energy that goes in is not returned, and they tend to be too expensive, according to an analysis from the National Renewable Energy Laboratory (NREL) in Golden, Colo. Compressing air or pumping water uphill are more promising, but the opportunities to do that are limited by the number of caverns and the availability of water and reservoirs.
Melting salts at temperatures above 435 degrees Fahrenheit (224 degrees Celsius), however, can deliver back as much as 93 percent of the energy, plus the salts are ubiquitous because of their application asfertilizers.
"There's a term called round-trip efficiency. Basically, it's a measure of how much electricity is produced if the thermal energy that's generated is first stored and then used compared to just directly taking the energy. That number is around 93 percent," explains NREL senior engineer Greg Glatzmaier. "[For] things like compressed air and mechanical type storage, there's more significant losses," an average of at least 20 percent over all the various technologies.
The Andasol 1 power plant, which cost around $380 million (300 million euros) to build, is the first to actually use the technology, so it remains to be seen how it will work in commercial practice. But U.S. government laboratories—NREL as well as Sandia National Laboratory in Albuquerque, N.M.—have already proved the technology can work in demonstration projects that employed it, like the Solar Two power tower outside Barstow, Calif.
Solar Millennium is so confident the technology will work that a twin solar-thermal power plant (Andasol 2) is already near completion. "It will start operations at the beginning of summer—May or June," Moormann says.
And Arizona Public Service Co. (APS) has contracted with Abengoa Solar to build a 280-megawatt solar thermal power plant—dubbed Solana or "sunny place"—70 miles (110 kilometers) southwest of Phoenix on nearly 2,000 acres (800 hectares) of land. "One of the great things about molten salt technology is that you can get more out of the pure solar resources, more energy out of the same facility," says Barbara Lockwood, manager for renewable energy at APS. "It's an alternative that provides us with additional green energy," as much as 1,680 megawatt-hours when cloudy or after sunset.
But that extra energy comes at a cost. First, the power plant has to be enlarged so that it is both generating its full electrical capacity as well as heating up the salts. In the case of Andasol 1 that meant covering 126 acres (50 hectares) with long rows of troughs and pipe. And then there is the additional expense of the molten salt storage tanks, according to Moormann.
All told, that means thermal energy storage at Andasol 1 or power plants like it costs roughly $50 per kilowatt-hour to install, according to NREL's Glatzmaier. But it doesn't add much to the cost of the resulting electricity because it allows the turbines to be generating for longer periods and those costs can be spread out over more hours of electricity production. Electricity from a solar-thermal power plant costs roughly 13 cents a kilowatt-hour, according to Glatzmaier, both with and without molten salt storage systems.
That price is still nearly twice as much as electricity from a coal-fired power plant—the current cheapest generation option if environmental costs are not taken into account. But Arizona's APS and others can then use solar energy to meet the maximum electricity demand later in the day. "Our peak demand [for electricity] is later in the evening, once solar production is trailing off," Lockwood says. That's "the reason we went that direction and are so interested in storage technology."
As efficient as solar-thermal power plants using parabolic troughs with molten salt storage systems like Andasol 1 or Solana are, they don't capture as much of the sun's heat as is possible. Above 750 degrees F (400 degrees C), the synthetic oils used to capture the sun's heat in the troughs begin to break down, but the molten salts can take in much more heat than that.
To allow the salts to get hotter, some companies, such as SolarReserve in Santa Monica, Calif., are developing so-called power towers—vast fields of mirrors that concentrate sunlight onto a central tower. Because of the centralized design such a structure can operate at much higher temperatures—up to 1,000 degrees F (535 degrees C)—and use molten salts directly as the fluid transferring heat in the power plant. "We are heating the salts to more than 1,000 degrees F and that results in the same inlet conditions that utilities see today on a coal-fired or nuclear power plant," says Terry Murphy, SolarReserve's president.
But such a power plant—and Murphy says the company has some 50 such projects in the pipeline and expects at least one (in the U.S. or Spain) to be operating by 2013—would cost as much as $800 million for a 200-megawatt power tower. "The first molten salt power tower built is going to be a real trial," says Thomas Mancini, manager of Sandia's Concentrating Solar Power Program. "It's going to take someone progressive enough to finance it or take a little more risk."
So researchers are also looking into salts that could be used instead of the oil in parabolic trough power plants, such as those that melt at lower temperatures and therefore would not freeze as readily during cold nights, according to Hank Price, a vice president for technology development at Abengoa Solar.
Solar Millennium is working on such a salt, according to Moormann, and Sandia has developed small quantities of a new mixture of salts, including calcium nitrate and lithium nitrate, that melt below 212 degrees F (100 degrees C). "With the lithium nitrate, it's as expensive as all the other constituents combined. Though still a lot cheaper than organic heat-transfer oils," says chemical engineer Bob Bradshaw at Sandia in California, who is leading the research. "You don't get something for nothing."
And long-term research projects are looking at other thermal storage technologies, such as storing heat in sand or creating single-tank molten salt storage. "The main goal is to find a storage technology that may reduce the actual capital cost" of adding it to a power plant, says Phil Smithers, technical services leader for renewable energy at APS, which is researching those technologies under a U.S. Department of Energy grant.
Ultimately, it will come down to how much value policymakers and consumers put on electricity that is renewable and emissions-free. "If we start valuing carbon and force a coal plant to go carbon-free via sequestrationthen we're at or over 10 cents per kilowatt-hour from coal," Mancini says. "Any of these technologies can get to that same 10 cents level with [molten salt] storage. Then the market will make the call."
And should Andasol 1 spring a leak or otherwise fail to deliver as expected, the damage would not be confined to a pile of salt fertilizer on the ground—it could be a setback for the entire effort to store solar energy. "We had to build the first [commercial] plant [with molten salt storage] and that's what Andasol is," Mancini says, in order to prove the technology. "It doesn't have to be perfect, but they've got to make it work."
