Cogentrix: Solar Thermal Tech a Tough Sell, CPV Finds Takers

Cogentrix became the first developer to be offered a federal loan guarantee to build a type of solar power plant that marries features of the conventional photovoltaic technology with concentrating solar thermal, which uses mirrors to concentrate the light, heat up fluid and generate steam for electricity production. The U.S. Department of Energy announced the conditional commitment of the $90.6 million loan guarantee earlier this week, and Cogentrix expects to close that loan guarantee – along with the actual loan from the Federal Financing Bank -- in about two months, said Jef Freeman, Jr., vice president of development at Cogentrix.

The company’s contractor, Mortensen Construction, already has started work at the 225-acre project site in south central Colorado, Freeman said. The goal is to complete the $140-$150 million, 30-MW Alamosa Solar Generating Project by the second quarter of 2012 to start delivering electricity to Xcel Energy, he added. Alamosa will use Amonix’s concentrating photovoltaic (CPV) panels, which will be mounted on dual-axis trackers to follow the sun’s movement.

CPV isn’t much proven in the field either. As a hybrid of PV and solar thermal, CPV uses mirrors to concentrate and direct the sunlight at solar cells. The concentration technology makes it possible to use less solar cell material and cut cost in the process, but unlike regular solar panels, CPV panels work best only in places with cloudless sky. Prices for conventional solar panels have fallen more than 50 percent in recent years thanks to their wide deployment worldwide. As a result, skepticism has bubbled up to question whether CPV or concentrating solar thermal can compete in large-scale projects built to serve utilities.

So far, the largest operating CPV project in the country is a 2-MW field in Arizona that uses CPV panels from Amonix. Both Chevron and SolFocus all have installed 1-MW projects.

“You’ve got the aggregation of the mega modules that can be fairly quickly erected and mounted, so overall construction time and expense will be minimized,” Freeman said about the CPV technology. “You also can get higher output from a smaller use of land.”

While Cogentrix hasn’t given up on developing solar thermal power projects, it’s less bullish about solar thermal technology than it does about PV or CPV. The company bought two solar thermal power plants called SEGS1 and SEGS2, which collectively have 43 MW of generation capacity, in 2009 to gain experience operating solar power plants and figure out how to develop projects and sell the electricity produced to utilities.

Solar Trust of America, a solar thermal power plant developer, recently announced a joint venture with solarHybrid to pursue PV projects in North America. Solar Reserve, another solar thermal project developer, formed a joint venture with GCL Solar Energy to develop PV power plants.

“One or two years ago, there was a lot of activity and interest in concentrating solar thermal, and it hasn’t proven itself yet to meet the expectation,” Freeman said. “You are talking about not only the cost of the solar field for the production of energy but also taking that energy into a relatively conventional power generating blocks. You add those expenses together and the combination makes it challenging when you go up against PV.”

For solar thermal power plant projects to be attractive, developers will have to add energy storage or position their projects as a complementary, fuel-saving technology for existing natural gas power plants or industrial operations that require high volumes of steam, said Ted Sullivan, a senior analyst with Lux Research.

Cogentrix is among less than two dozen companies that moved fast enough to cinch a loan guarantee offer. The day the DOE announced the Cogentrix loan guarantee, it also said it had put some other loan guarantee applications on hold because those applicants weren’t likely to complete the application process and start construction by Sept. 30 this year, which the loan guarantee program sunsets. In a blog post, the loan guarantee program chief Jonathan Silver said the DOE had notified both the companies that wouldn’t make the deadline as well as those who could still do it. Overall, the DOE has offered and finalized 19 loan guarantees in this program, and those projects account for about two-thirds of the total projects to be awarded before Sept. 30.

While the DOE didn’t disclose which companies will no longer compete for the loan guarantees, a few of companies have announced their status in the application process. Tenaska said Thursday its applications for two loan guarantees fell into the “on-hold” bucket. Tenaska has proposed to build a 130-MW and a 150-MW project in California and sell the electricity to San Diego Gas & Electric. First Solar, meanwhile, said that it’s still in the running for loan guarantees for three of its projects. The company already has received a loan guarantee commitment of $978 million for a 290-MW Agua Caliente project in Arizona. Company executives expect to finalize the loan guarantee later this quarter or early third quarter.

The DOE has so far offered or finalized loan guarantees for three solar thermal power plants, two photovoltaic (PV) power plants that use conventional solar panels and one concentrating photovoltaic (CPV) power plant that Cogentrix is developing in Colorado.