Solar thermal power plants switching technology to take advantage

A free fall in prices of photovoltaic solar panels has caused several large solar generating projects in California to shift plans in ways that could eventually benefit the state's electricity consumers.

Three years ago, renewable energy developers laid plans to populate the American Southwest with massive solar thermal power plants, which concentrate the sun's rays to boil water and create steam to turn turbines that generate electricity. But as the projects went through lengthy permitting and environmental reviews, the price of photovoltaic solar panels plummeted because of a global oversupply driven by a glut of low-cost panels from China.

That made PV panels, which are common on homes and commercial roofs, increasingly attractive to project developers, banks and utilities like PG&E and Southern California Edison, which have to justify the cost of renewable energy contracts before state regulators. Several large solar projects have now announced plans to switch from solar thermal to PV.

State energy officials say the shift will not have an immediate impact on consumers, but eventually may result in lower-priced electricity than what would have come from the solar thermal plants.

"PV is very cheap right now and it's faster to put up," said Paula Mints, a solar industry analyst with Navigant Consulting. Solar thermal, she added, "takes about two years to build. With PV there's more instant gratification."

California utilities are required by state law to buy a third of their electricity from renewable sources by 2020, and the cost of that energy is a growing concern. The California Public Utilities Commission has begun to take a much closer look at the price of the long-term power contracts that utilities sign with developers, known as power purchase agreements or PPAs. Last month, the commission voted 4-1 to approve PG&E's 25-year contract with one solar thermal project only after a heated discussion about its cost. Commissioner Mike Florio voted against it.

"The PPA unnecessarily saddles ratepayers with extraordinary above-market costs -- $1.25 billion," Florio argued. "We could probably get almost 500 megawatts of renewable energy for the price we're paying for this 250 megawatts."

Last year, the California Energy Commission approved nine utility-scale solar thermal power plants in California's Mojave and Colorado deserts. So far, developers of five of the nine solar thermal projects -- Beacon, Blythe, Calico, Imperial Valley and Palen -- have announced they are switching from solar thermal to PV. And it's not just California -- similar shifts are happening in Arizona and Nevada.

"Solar Millennium responds quickly and pragmatically to market conditions, and at the moment the California market favors PV technology," CEO Christoph Wolff said in a statement. "We are taking decisive steps in the U.S. to maximize site value for our company and our shareholders."

Solar Millennium is now in the process of selling its California projects, including Blythe and Palen, to Solarhybrid, a German PV developer. Solarhybrid has said it intends to build both projects with PV, using solar panels made by First Solar, an American company based in Tempe, Ariz. Construction on Blythe is now expected to begin in 2013.

One advantage to solar thermal is that it is thought to be less "spiky." When clouds move over a PV plant, the amount of electricity produced can drop. But solar thermal plants take longer to build, and have faced opposition from environmentalists concerned about the use of water in desert environments and impacts on native plants and species.