Updated at 12:05 p.m. PT with additional details from a conference call with reporters, and correction added on the shape of eSolar's mirrors.
Power plant operator NRG Energy on Monday announced a deal with start-up eSolar to build 11 solar power plants in the Southwest U.S.
The agreement will lead to 500 megawatts' worth of solar energy production at peak capacity, enough to power 400,000 homes, according to the companies. The first plant is expected to be operating in 2011. The size of a traditional natural gas or coal power plant is roughly between 500 to 800 megawatts.
As part of the deal, NRG Energy will invest $10 million in eSolar, which counts Google.org as one of its investors. The money will give NRG Energy an equity stake in eSolar and rights to develop three projects that eSolar has already negotiated, including a 245-megawatt power purchase agreement with Southern California Edison.
eSolar is one of several energy technology start-ups pursuing concentrating solar power, where lenses and mirrors concentrate sunlight to make heat. The heat creates steam that turns a turbine.
The company's technology uses an array of computer-controlled flat mirrors, called heliostats, on a supporting structure that concentrates the light onto a tower, where the steam is made. eSolar's plants are designed to be constructed relatively quickly, according to the company.
Earlier this month, BrightSource Energy signed a deal to provide 1,300 megawatts' worth of solar electricity to Southern California Edison over the next several years. BrightSource, too, uses a concentrating solar and tower design.
"eSolar's breakthrough modular power plants use more software and less steel to allow solar energy to be competitive with fossil fuels for the first time ever," said eSolar CEO Bill Gross in a statement. Gross is the founder of tech incubator Idealab.
The projects will be the first solar power-generating facilities for NRG Energy, which operates natural gas, oil, nuclear, and coal power plants, primarily in the U.S.
eSolar's power plants uses prefabricated material to create 46 megawatt facilities, which can be placed on one quarter of a square mile. NRG intends to build projects that use two of these modular components at a time.
Because eSolar's technology is relatively efficient with space, solar power plants can be built by converting existing land, such as farms, Gross said. eSolar has already purchased three locations, which don't require construction of new transmission lines.
"When you look at other types of solar thermal technologies where you have to build in larger chunks--like 300 megawatts as initial size--it requires you to locate a lot greater distance from load centers and there are much higher transmission connection costs," said Michael Liebelson, chief development officer low carbon technology at NRG Energy.
NRG Energy said solar thermal technology offers advantages over solar photovoltaic panels in these desert locations. The company intends to use storage, which will allow the facility to generate electricity even when the sun is not out. And the eSolar's plants use significantly less land per megawatt, Liebelson said.
The company intends to finance construction of the facilities by taking advantage of a 30 percent tax credit for renewable energy investments. It is also exploring loan guarantees from the Department of Energy, NRG's own capital, and outside investors, Liebelson said.