Green Wombat

Tech giants back green investment tax credit

Twice now the renewable energy industry has narrowly lost votes in Congress to extend an investment tax credit crucial to jump-starting the market for large-scale projects like solar power plants. In December, Big Oil outmaneuvered green energy advocates and their Congressional supporters by claiming that rescinding huge tax breaks for the fossil fuel industry to pay for renewables would cost consumers at the pump. A more recent attempt to revive the tax credit also failed.

Now the American Council on Renewable Energy is bringing out its big green guns. Representatives from Silicon Valley tech giants, Wall Street investment banks and utilities signed a letter sent to the congressional leadership late Wednesday urging the long-term extension of the 30 percent investment tax credit as well as the production tax credit for the electricity produced by solar, wind, geothermal and other renewable energy systems. Among the signers urging action by March 1 are executives from Google (GOOG), Hewlett-Packard (HPQ), Applied Materials (AMAT), Credit Suisse (CS), Wells Fargo (WFC), venture capitalists Kleiner Perkins Caufield & Byers and utility San Diego Gas & Electric, a subsidiary of energy giant Sempra (SRE).

Interestingly, the phrases “climate change” and “global warming” never appear in the letter. In a savvy move, the council has forsaken doom and gloom for a purely economic message: American jobs, competitiveness and innovation are at stake, the signers argue, and the tax incentive will spark a green tech boom at relatively little cost to the taxpayers. It’s a Silicon Valley mindset and its no surprise that while the signers represent companies from all over the United States, most hail from California.

The tax credits expire at the end of 2008 and proponents argue that a five-to-eight year extension is needed to create a stable investment climate, given that it can take three to five years for a large solar power plant to be permitted and built.

“The United States is in a historic position to lead in innovation and competitiveness in the renewable energy sector,” wrote the council’s three co-chairs, which include Dan Reicher, Google.org’s director of climate and energy initiatives. “As with all energy markets and in plans for growth in any businesses, certainty and continuity in public policy provides the confidence needed for stability in investments. We must ensure we are not creating an environment for boom and bust cycles in renewable energy and that we are not tying the hands of business owners in the sector looking to scale their technologies to meet demand and price points.”

Without an extension of the tax credits, the council warns that renewable energy projects in the pipeline that would produce 42 gigawatts of greenhouse-gas free electricity — enough to power tens of millions of homes — could grind to a halt, giving competitors in Europe and Asia the upper hand when it comes to green tech innovation.

Texas: Red state, green frontier

For a state steeped in the mythology of Big Oil, Big Coal (plants) and well, big everything, Texas does not necessarily come to mind when you think of Big Green.

It’s a reputation somewhat undeserved, given the Texas-sized wind farms sprawling across the hundreds of thousands of acres of the state’s ranch lands. Now there are signs that California’s solar boom is spreading eastward. One leading indicator: Silicon Valley solar power plant startup Ausra is opening an outpost in the Lone Star State and hiring an executive to “lead the development of stand-alone solar thermal power projects in Texas using Ausra’s proprietary Compact Linear Fresnel reflector technology and the sale of solar field to utility scale customers,” according to a job description posted last week at the Berkeley Institute of the Environment at the University of California, Berkeley.

Like a growing number of states, Texas has a so-called renewable energy portfolio standard that mandates a certain portion of its electricity supply come from green sources. (Unlike most other states that require utilities to obtain a set percentage of electricity from renewable sources, Texas sets a total green energy target and ups the ante every two years. For instance, the 2009 target of 3,272 megawatts rises to 5,880 megawatts in 2011. Texas utilities are allocated a share of those megawatts based on their sales.)

But if you want to sell solar to Texans you have to be in Texas. That’s because when it comes to electricity, Texas is literally a country onto itself: the Texas power grid is not connected to the rest of the country (except for some outbound transmission lines) and all renewable energy must be generated within the state. (Unlike, say, California, which can buy electricity produced by solar power plants in neighboring Nevada or Arizona.)

“Texas is another California-sized market that’s growing rapidly and seeking clean options in the portfolio,” Ausra executive vice president John O’Donnell tells Green Wombat. “While solar resources are somewhat lower than the Mojave, west Texas is a very good solar region and we see major opportunities going forward.”

O’Donnell wouldn’t reveal details about Ausra’s Texas plans (though the job posting says Ausra aims to build 1-to-2 gigawatts worth of solar power plants a year). But Texas clearly is in the market for green energy. Utility TXU’s (TXU) cancellation of several massive megawatt coal-fired plants (and Wall Street’s growing aversion to such projects) along with the ratcheting up of renewable energy mandates means the state will increasingly be looking to solar and wind to fill the void.

Utility El Paso (EE) is accepting bids to supply for 300-megawatts of green energy while Austin Energy is committed to obtaining at least 100 megawatts of solar energy under the city’s goal of going carbon neutral by 2020.

With wide open spaces and plenty of sunshine and flat land, look for other solar power plant players to beat a path to Texas in the coming months.

 

Another solar power plant play for Khosla, Idealab

A passel of high-profile tech investors  -- including Khosla Ventures, Paul Allen’s Vulcan Capital and Bill Gross' Idealab -- are backing yet another new player in the increasingly hot market for large-scale solar power, pumping $50 million into Infinia, a Kennewick, Wash., company manufacturing a Stirling solar dish.

The Stirling dish has a storied — if unfulfilled - history in the annals of solar energy. It marries a Stirling heat engine, 17th-century invention, with a mirrored dish that looks like a super-sized version of a home satellite receiver. The solar dish focuses the sun’s rays on the Stirling engine, heating a gas inside that drives pistons to generate electricity. Stirling dishes are much more efficient at converting sunlight into electricity than solar thermal technologies that use mirrors to heat liquid-filled tubes to create steam to drive electricity-generating turbines. But while solar thermal plants exist today, the Stirling solar dish has never been deployed on a large scale since work on the technology began in earnest following the oil shocks of the 1970s.

Stirling Energy Systems of Phoenix in 2005 signed contracts with utilities Southern California Edison (EIX) and San Diego Gas & Electric (SRE) to build up to build tens of thousands of Stirling dishes to produce up to 1.75 gigawatts of greenhouse gas-free electricity. Though the company operates a six dishes in a prototype power plant at Sandia National Laboratories New Mexico, it is still working to get production costs down and rivals have questioned whether Stirling Energy Systems will be able to fulfill its deals. (See Green Wombat’s 2007 Business 2.0 magazine article on Stirling Energy Systems here. )

But Infinia CEO J.D. Sitton tells Green Wombat that his company has perfected the Stirling dish to make it competitive with large-scale solar thermal as well as new photovoltaic technologies like thin-film solar. Infinia aims to deploy its Stirling dishes in smaller configurations so that solar power plants can be located near cities and at other sites that don’t require vast stretches of desert land where solar thermal plants are typically built. Each 21-foot-high, 15-foot-wide solar dish can generate 3-kilowatts (compared to 25 kilowatts for Stirling Energy Systems’ dish).

Infinia won’t itself become a solar developer but will provide its dishes to for power plants that range in size from 1 megawatt to 150 megawatts or more. In contrast, most solar thermal power plants now being planned are in the 400-500 megawatt range.

“We fly in the face of what has been the conventional wisdom in the solar thermal field that to be competitive you have to have a very large system,” says Sitton. “We can be deployed within city limits and be connected to existing transmission systems. No additional transmission capacity is required.”

“Our approach is that the winning solutions will be those that generate for most kilowatts for the least cost,” he adds. “This is a game about capital efficiency.”

That, of course, has been the mantra of leading green tech investor Vinod Khosla, who has disparaged photovolatic solar systems as too expensive to displace fossil-fuel generated power. Khosla also is backing Palo Alto solar thermal startup Ausra, which last year signed a deal to supply solar electricity to California’s largest utility, PG&E (PCG). Serial entrepreneur Bill Gross’ Idealab is funding solar thermal startup eSolar, which also is being backed by Google  (GOOG).

Infinia contends the design of its Stirling dish system makes it competitive with solar thermal technologies. First, the Stirling engine uses helium rather than hydrogen, which typically must be periodically replenished. “We have no lubrication inside the machine and it needs no maintenance,” Sitton says. “We use helium in a hermetically sealed system.”

Second, he says the Infinia dish is made of six panels of glass rather than the 76 panels on the Stirling Energy Systems dish. “That gives us lower production costs and lower capital costs,” says Sitton. “We brought in large-scale manufacturer from the beginning. It’s not like we built a prototype and now have to reduce the cost to produce it.”

The first prototype went online last October and Sitton says Infinia is building a second at Sandia. Field tests will be conducted later this year in California and Nevada. He says Infinia is currently negotiating with solar developers and full-scale production is set to begin in November. Infinia has been in business since the 198os, building Stirling engines for other applications. But the green tech boom and demands from utilities for renewable energy led the company to focus on solar.

Whether Infinia beats Stirling Energy Systems to market remains to be seen but look for the deals it signs with solar developers for a good indication of just how viable its technology is likely to be.