September 15, 2008

SDG&E Likely Won’t Meet Deadline As Stirling Project Awaits OK

By Wiedemann, Liz

Stirling Energy Systems, which has applied to build a $1 billion, 750-megawatt solar power plant that could partially power San Diego Gas & Electric Co.'s proposed Sunrise Powerlink transmission line, says it has been "quietly perfecting" its technology.

But with Stirling Energy President and Chief Executive Officer Bruce Osborn claiming that no set deadline is specified in its contract with the utility, the 10-square-mile power plant likely will not arrive in time for SDG&E to meet state energy requirements.

"SDG&E has signed a contract with Stirling Energy, a solar thermal developer, to purchase the output of a 300-megawatt facility to be located in the Imperial Valley. Commercial operation of this facility must begin no later than 2010," according to an August 2006 application to the California Public Utilities Commission.

Osborn says Phoenix-based Stirling expects, but does not guarantee, that 300 megawatts of the project's 750-megawatt capacity will be online and producing energy by 2010. On June 30, Stirling applied for the California Energy Commission's consent to build the plant in Imperial Valley.

Sunrise Powerlink, a 150-mile high-voltage, electric transmission line proposed to be constructed between Imperial Valley and San Diego, is SDG&E's answer to a state mandate requiring that 20 percent of the utility's electricity come from renewable energy resources by 2010.

SDG&E has maintained that without Sunrise, it could not attain the state's renewable energy goals by the deadline.

Project Delays

Citing delays from the CPUC, SDG&E projects 2011 as the earliest completion date for the Sunrise project, says spokeswoman Jennifer Briscoe.

Regulatory approval or denial by the CPUC and federal Bureau of Land Management is expected to take about 14 months, which would allow a construction start date at the end of 2009.

Challengers of the solar plant contend that the Sunrise proposal is little more than a smoke screen.

Bill Powers, local engineering consultant and longtime Sunrise opponent, says evidence suggests that the plan to power Sunrise with solar energy by 2010 was designed to fail.

For one, the price tag doesn't add up, Powers says.

"Stirling says it can build the first 300 megawatts for $400 million, but at that rate, Stirling wouldn't make a dime," said Powers, who says a more likely estimate for the project's first phase is $1.8 billion.

Concerns have been raised about Stirling's lack of commercial- scale testing of its technology.

Only seven prototypes of the company's solar technology have been manufactured - none on a commercial scale. Osborn says it will take 12,000 dishes to produce enough power for the project's first phase near El Centro.

All Or Nothing?

Scott Logan, regulatory analyst for the Division of Ratepayer Advocates, a CPUC division, says that Stirling is the big variable in the Sunrise proposal.

"Such a large strain of megawatts is in question, and the result is either going to be 750 megawatts or none at all," Logan said.

Stirling says the modular nature of its dish technology means extreme reliability, which makes up for its lack of commercial testing.

Stirling's concept differs from traditional solar thermal in that it does not require the use of steam, thereby eliminating the need for water. Further, each solar dish is an independent power generator, meaning that if one or even a hundred dishes of a 30,000- dish plant were to stop operating, impact to the plant would be negligible.

Michael Shames, executive director of the Utility Consumers' Action Network, argues that reliability is the biggest challenge for Stirling.

"Very few engines have been designed and have succeeded on a commercial level to run nonstop in a desert location," said Shames.

He added that looking to the marketplace as an indicator is usually a good way to assess a company's value.

"One company in Ireland put $100 million into Stirling, and no one else has,"said Shames.

Osborn says Stirling would seek additional financing into next year, although he says it's not a chief concern.

Barry Butler, a materials science expert who worked several years ago for a Stirling competitor, said in written testimony to California energy regulators last year that technology like Stirling's, while promising, wouldn't likely be ready for mass rollout until 2020. In the meantime, he said, maintenance will raise Stirling's costs, while competing solar technologies become cheaper and better.

Osborn says the most important part of the project is knowing that the technology works, and manufacturing is the easy part.

"Are there challenges? Yes. Are there showstoppers? No way," said Osborn.

Copyright San Diego Business Journal Aug 4, 2008

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