Green Tech

Among the Internet cognoscenti, Bill Gross is best known as the head of tech incubator Idealab. Now, as the CEO of solar start-up eSolar, he's working in renewable energy, but he's still putting his digital economy chops to work.

Two-year-old eSolar is having an opening ceremony for its pilot solar power plant in Lancaster, Calif., on Wednesday. There's a veritable glut of solar start-ups, but eSolar has already gotten further than most: it's actually producing electricity at below the price consumers pay in California.

The plant is also the first concentrating solar "power tower" in the U.S., capable of producing five megawatts, or enough power to supply about 1,500 homes or up to 4,000 during peak hours. This emerging utility-scale solar technology uses mirrors to concentrate sunlight onto a tower to make steam, which is then pushed through a turbine to make electricity. The company also has signed deals to build much larger plants in California, New Mexico, and India.

One of the tricks to getting this far, says Gross, is replacing steel with software. In one 46-megawatt eSolar plant, there are 200,000 flat mirrors, each individually controlled by a microprocessor for the optimal angle.

In an interview, Gross predicts that the "more software, less steel" trend will continue in solar, which will help get the cost of solar electricity down. And he says that because banks "are acting like mattresses" rather than lending, other concentrating solar companies will struggle to get utility-scale solar projects off the ground.

Q: Why have you been able to build a demonstration plant in a year while so many others haven't?
Gross: A few reasons. A big one is the land. By using these smaller-piece parcels of land, we don't have to wait for government permission (to use Bureau of Land Management land). We can just use private land. Not to mention we don't have to do environmental impact studies because we're not using pristine desert land, which a lot of people worried about impacting.

The second thing is everybody has to wait for build transmission lines. That could be 10 years or never. You could build a power plant and people could block you from building transmission lines to the main distribution point, so buying land specifically adjacent to transmission helps.

The biggest one, though, is the finance. Most people's projects are billion-dollar projects--they have to be billion-dollar scale before the economics work, and nobody is going to raise a billion dollars in this climate. Our projects work economically at $100 million scale. And we can pay for this plant with cash because we raised $170 million. Everybody else will be held up for years and years until banks will lend on the riskiness of a new project. For us, banks can lend against our project (for new projects) because they can see it works.

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Grand opening

At a ceremony in Southern California, eSolar will bring its five-megawatt concentrating solar plant online.

There's been a catch-22 on new solar technology--projects can't go forward because they only have a PowerPoint.

In the scheme of things, this plant is just five megawatts (about enough to power 1,500 homes). How do you scale?
Gross: A 46-megawatt plant takes one quarter mile, so to build a gigawatt in California would take 20 of those--or 5 square miles. We purchased that land for $30 million in cash, all in small quarter-mile plots, all adjacent to transmission, so we've completely eliminated the owning and permitting issue.

(Project development companies like) NRG will buy the project from us (for a planned installation in New Mexico) and own and operate the plant for 20 years.

So it's large scale but done in a distributed way?
Gross: Exactly. The ultimate distributed solar is to put (photovoltaic) solar panels on every rooftop. The ultimate centralized solar is get 2,000 acres of BLM land and then you have a transmission problem because you need to build a gigawatt of transmission. We're in between--we're large-scale utility but we're still distributed--distributed in small enough pieces.

Two years ago we didn't know how prescient it would be, but we looked at the entire transmission grid of California and where there was 46 megawatts of available capacity, we would go and buy a patch of land right next to that. We inverted the problem. Others said, "Let's build where the sun is best because I need to buy 2,000 acres at once to get economies of scale. And then I'll try to lobby for 10 years to get 100 miles of million-dollars-per-mile transmission built."

Now environmental groups of all things are protesting people using BLM land, and they have a point. Solar is great but you don't want to destroy the pristine desert...Our land is already being used for something (such as farming).

On the technology side, how much more productive or efficient is this solar tower than existing solar trough technology?
Gross: It is a little more productive than solar troughs. Solar troughs run at between 27 percent and 30 percent efficiency, and we are at 34 percent efficiency. But the real thing is we're half the cost. It's not the efficiency that we're much better at, it's the price--that's really the breakthrough. The reason we're so much less cost is that we use hundreds of thousands of small flat mirrors, instead of long, long rows of huge curved mirrors. The troughs use a mirror that is 5 meters wide by 100 meters long. They pay the same price as we do for the mirror--it's the same high-quality Belgian or German suppliers--but that's only 10 percent of the cost.

The main cost of the solar thermal plant besides the mirror is the steel and the actuator (for controlling mirrors)--that's 90 percent of the cost...The steel (is needed) to hold the mirror in shape without distorting, to stay in a perfect parabola. Because we use a one-square-meter mirror, we use half the steel. Imagine if you take a piece of flat glass and put a tripod behind it, it'll stay flat. But you need far more steel to bend glass against its will.

So why haven't other solar companies broken up their mirrored troughs into smaller bits?
Gross: The problem is historically it's been a software control problem to track hundreds of thousands of small things. The benefit of one big row is you only need 20 motors to turn troughs--all pointing at the sun--and software control is trivial. We have 24,000 individual mirrors, all pointing in slightly different directions to point at one spot. We're basically making a dynamic parabola in software where they are making a static parabola in steel.

In the last decade, there's been a 1,000-fold increase in computational power, so now we can put a $2 microprocessor in every mirror and it costs almost nothing--almost one and half percent of the (material) cost. So every mirror that is tracking the sun during the day has its own computer. And the computational power of a microprocessor today is mind-boggling. It's a 16-bit microprocessor with eight I/O ports. It's like an IBM AT (PC) in every mirror--that was a $5,000 computer in 1985. This completely wouldn't be possible without Moore's Law.

It's interesting that you've come from the computer world into solar. Will there be other stories like eSolar to come?
Gross: I definitely think so. eSolar has been grown right in the same building as other Idealab companies with all the benefits of IT they had--it uses all the servers built for Internet companies with all the experience and hardening capabilities. And it even uses many of software developers from prior years that we've hired back from places like Yahoo.

If anything, we're more a software company than a solar company. Of course we're a solar company, but software is 50 people out of the whole company. There are 135 people--100 are in engineering, 35 are out running power plants, so half the (engineering people) are in the software group, which is an amazing percentage for a solar company.

The reason that this going to happen more is that, of course, every commodity in the world is going up over time. There will be blips like we're having now, but in general, the cost of things that require natural resources will go up. The only thing going down is computation power. Everything else behaves on a different law--one of scarcity.

Computing costs are going down. If you want to crack a problem where cost is the issue, you gotta bet on the thing going down in price and include more of that. Less steel, more software--that is the right trade you want to make. I think that's going to be used more and more.

Are you optimistic on solar and green tech in general?
Gross: I'm wildly optimistic about it, and we only have this momentary setback due to the recession and the banking industry. But this is going to be a 100-year-long build-out to replicate what we built out with coal and natural gas in the last century. The only way it's going to happen is if you actually lower the price--it's not going to happen through altruism. If you can beat natural gas and coal, then you'll have access to huge, huge markets. If you don't, then you'll be limited to the subsidized market. (eSolar's projects benefit from a 30 percent federal tax credit).

How did you start getting into energy after working in the Internet?
Gross: I have been interested in energy all my life, ever since I was a teenager. I worked on energy projects back in 1973 during the first energy crisis, called Solar Devices, a mail-order business I ran as a teenager. I think I got into Caltech because of that business--I wrote about it in my application. But then OPEC came along, formed, and colluded to drive down the price of oil so that at end of the '70s, nobody was interested in renewable energy anymore. So I had a 20-year hiatus in software and Internet companies and had a string of successes that enabled me to have the capital to come back to my true love in 2000. And of course, by 2000 people were talking about energy issues, maybe running out of energy. That's when we did the research that led to this crop of solar companies (covering different solar markets such as rooftop solar and off-grid solar) over the last nine years.

Updated at 6:30 a.m. PT with corrected figures for the number of mirrors.

California utility Pacific Gas & Electric on Tuesday announced a five-year program to produce 500 megawatts worth of solar energy from distributed solar panels.

Rather than build one giant solar power plant, PG&E plans to generate solar power from a collection of midsize projects, from 1 megawatt to 20 megawatts. This investment will cover half of the total target of power generation.

One megawatt is enough to power one large retail store or roughly 300 homes. A large solar installation at a single business, such as Google's rooftop array and solar carport, can be over 1 megawatt in generating capacity.

Solar photovoltaic panels will be mounted on rooftops or mounted on poles in PG&E's service area in Northern and Central California. The utility will seek to install the panels on land it already owns or near substations to avoid having to build new transmission lines, it said.

PG&E will rely on outside providers for the other 250 megawatts. If operating by 2015, the electricity will be enough to power 150,000 homes annually and account for 1.3 percent of PG&E's electrical demand.

The move is one of the largest solar-power projects to date and significant because it represents the first time in more than 10 years that PG&E has invested directly in renewable energy. Until now, it typically purchased electricity from third-party clean-energy project developers.

Many project developers and financiers are unable to take advantage of the 30 percent renewable-energy tax credit because they don't anticipate having a tax bill. Because PG&E has a "tax appetite" and can take advantage of the tax credit, the utility is investing directly in solar energy, CEO Peter Darbee said last month when he first mentioned the solar project.

California has a renewable portfolio standard that mandates that utilities get 33 percent of their electricity from renewable sources by 2020. In the past month, two other large solar projects--one with NRG Energy and one with Southern California Edison--were announced.

Because the recently passed stimulus package now allows utilities to take advantage of the 30 percent tax credit, more utilities will build and own solar facilities, said Julia Hamm, the executive director of the Solar Electric Power Association, in a statement.

Environmental advocacy group Natural Resources Defense Council lauded the PG&E plan because building distributed solar power is a relatively quick way to deploy the technology.

"PG&E's intent for development of these projects--on already developed land close to transmission and distribution--is exactly where it needs to be to reduce environmental impacts and speed development," said Sheryl Carter, Energy Program co-director at the NRDC, in a statement.

PG&E said that it submitted the plan on Tuesday to the California Public Utilities Commission and that it could be approved later this year.

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.

eSolar on Tuesday said that it will build solar thermal power plants that will make 245 megawatts of electricity for Southern California Edison.

The plants will be built in the Antelope Valley of Southern California and begin operating in 2011.

The company, created by Idealabs and funded by Google.org, makes utility-scale concentrating solar power systems with a modular design.

Software-controlled heliostats, or mirrors, reflect light onto a tower where the heat turns water to steam that turns a turbine.

The company raised $130 million in April.

California is a hotbed for utility-scale solar power because the state has relatively aggressive renewable energy targets.

The state's renewable portfolio standard mandates that utilities generate 20 percent of their electricity by 2010 and 33 percent by 2012.

In desert areas like parts of Southern California, concentrating solar thermal technology has become the preferred renewable energy source.

eSolar's technology, however, is a break with the traditional reflective trough now used in a number of power plants around the world.

eSolar says that its heliostat and thermal receiver design cuts down on costs in different areas such as using prefabricated heliostats.

Three solar-thermal companies have raised money in the past week in a sector that's showing life, despite a choppy investment environment.

Infinia on Tuesday said it has taken $7 million from Asian contract manufacturer Foxconn Technology Group, part of a total of $57 million in a Series B round first announced in February.

The company uses a dish to concentrate sunlight onto a Stirling engine, which makes electricity. It intends to sell its 3-kilowatt devices to small-scale utility plants.

On Monday, eSolar said it has raised $130 million from Idealab and Google.org. Its solar-thermal systems, designed for utility-scale power plants, use mirrors to reflect light onto a tower that turns a turbine.

And last Thursday, Stirling Energy Systems announced a $100 million investment from renewable-energy developer and waste management company NTR.

Stirling Energy Systems makes a huge concentrator dish that generates heat to turn a Stirling engine that makes electricity. It's under contract for two power plants in the Mojave Desert that would initially generate 800 megawatts of power.

Solar-thermal technology has been around for decades, and Stirling engines date back to the 19th century. But the high cost of silicon-solar cells has made solar-concentrating systems more attractive in desert areas like the Southwest United States and Spain.

Solar power start-up eSolar has raised $130 million in funding, according to a report in The Wall Street Journal (subscription required).

The Journal says one of eSolar's investors is Google, which announced last November that it would begin investing in alternative energy companies in an effort called RE

Pasadena, Calif.-based eSolar has plans to build large solar-thermal plants using the heliostat design, which utilizes an array of flat mirrors that direct sunlight onto a water tower, turning the water inside to steam, which then turns a turbine to make electricity.

Now, the company says, it has come up with a modular design that also enables it to build mini power plants. Such plants are faster to install, smaller, and less expensive to construct than most solar power plants, the company says. eSolar adds that its modular technique can scale, creating power plants that produce anywhere from 25 megawatts of electricity to more than 500 megawatts.

Google announced on Tuesday plans to put hundreds of millions of dollars into alternative energy. The question now is whether the company is advancing the state of the art or just imitating everyone else who is dumping loads of money into the field.

The answer is some of both.

One of the first companies to get funding from Google will be eSolar, which will make solar thermal plants based on the heliostat design. In this concept, an array of flat mirrors gathers and directs sunlight onto a water tower. The water boils into steam, which turns a turbine to make electricity.

The heliostat system is superior to other solar-thermal projects because the mirrors cost less, construction is easier, and more of the heat gathered by the mirrors ultimately gets used to make electricity.

The only problem for eSolar is that it hasn't, exactly, been an innovator during the past couple of years. Oakland's BrightSource Energy has been touting the heliostat system for a while. It is currently building a prototype plant in Israel and has already cleared many of the regulatory hurdles to build a 400-megawatt station in California.

BrightSource also has experience on its side. It was founded by Arnold Goldman, who founded Luz more than 20 years ago. Luz built some of the world's largest solar-thermal plants. In fact, plants churning more than 300 megawatts of power built by Luz years ago in the Mojave are still cranking out power.

Many of the engineers who worked on the Luz projects are at BrightSource. In a recent interview, Goldman said the company's researchers have been examining the pros and cons of heliostat systems for more than a decade.

Who is at eSolar? The chairman is Bill Gross, who founded eToys, Overture Services, and Idealab. While he has created a company for residential solar energy, most of his experience is in the Internet. Other members of the executive team have experience in solar, but it doesn't appear that they have a lot of experience in building large-scale thermal plants. It is also unclear whether the company has plans for prototypes or large-scale plants under way.

It's not like eSolar can't pull this off, but it's clear that it isn't exactly doing something original. This is really more of a venture capital-type deal than a way to push the frontiers of science. And let's not forget that there are other solar-thermal companies out there, such as Ausra, that have built prototypes and signed large scale contracts already.

On the other hand, Google is putting money into Makani Power, which wants to harvest power from high-flying kites. A few companies have experimented with this, but it's in the very early research stage. Here, Google can clearly be an innovator.

Google also wants to get into advanced geothermal energy. Geothermal already exists, but it also could use a lot more research-and-development support. Alexander Karsner, the assistant secretary for energy efficiency at the Department of Energy, says geothermal cannot provide 20 percent of the United States' electricity need,s as some advocates claim.

You can look at this in two ways: geothermal doesn't have much hope, or that it's a field ripe for turning over conventional wisdom. Thus, depending on what occurs here, Google could push the state of innovation forward.