Financing woes shrink Ausra's big solar plans

Updated at 10:00 a.m. PT with comments from Ausra providing more detail on its strategy.

Because of a lack of financing, solar-technology company Ausra has dropped plans to make massive solar-thermal power plants in favor of smaller, cheaper units.

Ausra President and CEO Bob Fishman told different news outlets this week that the company has been forced to change its business strategy in response to the credit crisis. The company is also laying off staff as part of the reorganization, according to reports.

Ausra's pilot solar-thermal power plant in Australia.

(Credit: Ausra)

The change is a clear sign of how the credit crisis and the current structure of government incentives are hurting the business for large-scale renewable-energy projects.

Backed by top-flight Silicon Valley venture capital firms, Ausra has designed equipment for concentrating solar-power plants. Specially shaped glass plates reflect light to create heat. The heat makes steam, which then drives a turbine to make electricity.

Several new companies have formed with different designs for concentrating solar power, or solar-thermal energy, with an eye toward building power plants in the southwest. California utility Pacific Gas & Electric has contracted with Ausra and others to buy electricity from these planned projects through a contract called a power purchase agreement (PPA).

But Fishman said the financing simply isn't there for solar-power plants that rival the size of coal or natural-gas plants.

"What a lot of people thought when they went out and signed 500- or 900-megawatt power purchase agreements was that it was easy to go from a 1-megawatt demo plant to a 900-megawatt project,'' Fishman told the San Jose Mercury News. "That's simply not reality. The finance market will not support it."

Instead, the company intends to make and run small to midsize power-generating facilities--on the order of 50 megawatts, he said. The company will also emphasize its business of licensing its technology to other project developers and utilities.

Ausra vice president of communications Katherine Potter said that the company still thinks that the business for large-scale solar power is viable. But the company is adjusting to the market conditions by focusing on equipment sales.

The company could, for example, sell a solar field as part of an existing coal or natural gas power generation facility. The solar power delivers electricity at peak times during the day, offsetting a utility's carbon emissions.

Financially, it's easier to do because utilities can deploy Ausra's equipment in six to 18 months, Potter said. By contrast, Ausra's deal to provide 177 megawatts worth of solar power to PG&E will take a few years just to get through the permitting process, she said.

Investors and solar executives say that, even with strong demand, a lack of money to finance projects means that other solar start-ups will either shift strategies, scale back plans, or go out of business.

Renewable-energy investments get a 30 percent federal tax credit. The recession means that fewer corporations expect to have a tax bill to offset, which means that there's a dearth of "tax equity" available to invest, according to financiers.

Last week, PG&E CEO Peter Darbee said the California utility will invest in solar-power generation directly because of the tax equity problem. By building and operating its own solar-power generation facilities, rather than working with a project developer, PG&E can benefit from the tax credit.

Solar power is one of the most heavily invested areas within clean tech, making it a crowded field. Because financiers are being particularly conservative, new technologies will likely have trouble being deployed at a large scale this year.

"I think it's going to be a brutal, brutal year for solar, and a lot of companies will go out of business," said Andrew Beebe, the CEO of Suntech Energy Solutions, which develops solar-power facilities for corporations and utilities. "A lot of mistakes were made. Now is the time of reckoning, and it's going to be ugly."

[Bill_I]

Putting a solar plant on the roof of an existing generating station might be a good idea. The grid connections are in place, and solar would boost capacity on hot days when air conditioner load is highest.

[mlamonica]

Yes, and combining solar with fossil fuel generation cuts down on cost a lot since they both generate steam. So in theory, a utility can use the same turbine for both solar and national gas/coal.

[Nick_the_Greek_Socrates]

We knew of the inevitable at end of 2006. (Same inevitable that occurred in 1991, thereafter SEGS-IX, the last for a decade and half).
Nevada?s solar and that 5MWe could also be the last of the IPPs, construed as the conclusive event of 2008 and the final for this millennium, the FPL?s 2010 event; the end of all.
Indubitably due to:
1.Siting of solar farms, whether on BLM?s administered land, or on a privately owned, that turned-out to be a ?Grande Fiasco?.
2.IOUs quest to develop-own-operate, right after the solar boys gets permitting, was already evident by their Renewables RFO?s platform.
3.Unless, the Private Equity Firms demand return of their initial rounds from those several solar boys, having no other alternatives, but to go trough the FSAs, the IOUs have to take over the conclusion of the permitting. (Possible, just about break-even, at best, if the solar boys obtain the permitting and EXIT; for good).
4.Thereafter, most likely by 2010, the RPS may be trashed-out and the IOUs can continue their status quo; business as usual.
5.In lieu thereof funding pilot projects, based upon several viable disruptive technology by the in-the-box out of their garages solar boys, the Rulers of the Status Quo blow it out to the Universities, the Labs, bunch of ?Proclaimed Socrates? and not limited to those non-profits 501(c)(3)??? ESQs, being some of the reasons for today?s commenced exiting with irreparable harm. (It is also believed, that Nostradamus may had some scripts about the Environs-for-profit (50?..0000(nothing) and their respective Intervenors ESQs, predicting that they have to look elsewhere for-profits in 2010, the beginning of the ?Great California Blackouts?)
6.It is also believed, that there were certain scripts by Nostradamus, mentioning about the ?Science Revolution of 2010?, which included today?s RPS and short lived tech?s modeling, which are to be just on paper, like his scripts, not limited to Governmental Agencies consolidation, which can not foster the implementation of the Science Revolution, due to outcome of the predicted then final 2010 financial crash.
7.The Stimulus Plan will not prolong the inevitable exiting of Renewable and Alternative energy?s IPPs; long gone by 2010 (Read the small print, as well as in-between), unless the Obama?s Administration, Legislature, Congress and the House, not limited to the DOE?s Dr. Chu presiding, come-up with a drastic changes in the Bill, fostering comfort zone (Near-zero Risk Factor) to those major Fund of Funds/Hedge Funds and some of the SRI?s bailed-out Wall Streeters, for the real rounds; construction of Renewable/Alternative energy?s electric power generating facilities.
8.The Era of the Hybrids. To alleviate black-outs in California (identical to the 2001, if not more severe, ask CA ISO for 2010 Modeling ) and other Western States, the IOUs will be scrambling for these 50MWe Peakers, particularly if the RPS is to remain, instead of trashed-out, praying for the ?150MWe Super Peakers?, consisting of about 20% of total nameplate worth of Renewables, integrated with at least 40% recovered energy, in synergy with the residual 40% by the old mighty natural gas-fired.

Adios Solares Muchachos.
May be, may be not, we see you in Baja California, Mexico. No solar-thermal there.
No Renewables, nor CSP?s solar-thermal, nor Fresnel,?s factory, nor Power Towers, nor PV/CPV there either. Just Super Hybrid Complexes (diesel-fired with seawater desals and with plenty of red tomatoes in the Super Greenhouses; you got to eat vegetables, do you? It is good for your health.

[swati]

I read with interest your article and the last quote on this being a brutal year for solar companies is a surprise. Were you/ Mr Beebe referring only to the US market or the global one ? We in India see it as a saviour for our power problems . The big issue here is getting large tracts of land since it is estimated that each MW requires atleast 12 acres of land. If there is some way that requirement is halved, we expect exponential growth here. I would've thought concentrated solar power would be a great option for land starved, sunny areas ..was i wrong ?

[matthewbulat]

Solar Thermal and Coal Thermal generating plant do work together. Ausra technology is used at Liddel Power plant in NSW Australia. There is new project to extend the solar thermal section.
This type of activity can be applied to other coal and gas thermal electricity generation plants.
Outback mining industry is interested in Ausra as its electricity is cheaper than diesel generators. Solar thermal can work with storage to extend its operational hours.
Once set up solar thermal is cheaper to run compared to gas or coal.