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Market Snapshot

Submitted by admin on Monday, 9 August 2010No Comment

1281394831 18 Market Snapshot

* Falling PV panel costs hurt solar thermal technology

* High costs for solar thermal raise financing concerns

* Environmental concerns also seen hindering deployment

NEW YORK (Reuters) – Solar thermal power could beclose to a breakthrough in the U.S. market, but only ifdevelopers can shave costs to beat back competition fromphotovoltaic (PV) solar systems, and attract the huge sumsneeded to finance the renewable energy plants.

while the new technology has been touted as a solutiontoward moving the United States away from its dependence onfossil fuels, it has so far stumbled because of the high pricetag for the massive plants.

Solar thermal companies like Brightsource and eSolar, bothof which count search giant Google Inc among theirinvestors, and Spain’s Abengoa Solar, have technologythat concentrates the sun’s rays to heat water into steam anddrive a generator.

Traditional PV modules made by companies like first Solar and Suntech directly convert sunlight intoelectricity, and make up the largest chunk of the solarmarket.

Backers of solar thermal have said it would claim thelion’s share of large-scale projects in the United States, buta sharp drop in PV panel prices has drawn much of the market’s interest to that technology.

“With panel prices coming down so much for solar PV, solarthermal does not look as cost-competitive anymore,” Wedbushanalyst Christine Hersey said.

Solar thermal is economical only on a large scale, liftingtotal project costs into hundreds of millions of dollars, whilePV systems can be built piecemeal in smaller steps that areeasier to finance.

“It does not make sense to do a (thermal) plant that isless than 100 megawatt (MW),” Cowen & Co analyst Rob Stonesaid. “That is because of the cost of the steam plant that goeswith it.”

PV, however, can be used for a wide range of applications,from very large to very small.

“In terms of ubiquity, PV is ultimately going to be themost widely deployed technology just because it’s going to showup ranging in size from 500 MW projects all the way down tosolar cells on the roof of a hybrid vehicle,” Stone said.

one megawatt (1 million watts) is enough to power about 800U.S. homes.

the International Energy Agency predicts that severalhundred gigawatts of solar thermal power will be built by themiddle of the century. A gigawatt is 1 billion watts.

Spain is currently the global leader in thermal solardevelopment, with hundreds of megawatts slated forconstruction.

China is likely to move quickly into the field and isexpected to launch a tender for project in the coming weeks,and a European consortium has announced plans to build amassive project in the Sahara Desert.

the U.S. utility market for solar is also expected to growsharply over the next few years, but that will be possible onlywith government support, which solar thermal companies havebeen lobbying for.

BrightSource recently won $1.37 billion in federal loanguarantees, while Abengoa got $1.85 billion in conditional loanguarantees.

“The loan to Solana (a 280-megawatt plant in Arizona) isreally an investment in America’s environmental future becausethat loan will be repaid,” Fred Morse, a senior adviser toAbengoa, said on a recent conference call.

Morse said those government guarantees were crucial to movethe nearly 30 thermal solar projects sought by companies intooperation.

“Billion-dollar projects cannot be financed today bycommercial banks,” he said.

With investment hard to come by, solar thermal technologyhas been losing ground.

“PV has been increasing and solar thermal has been dipping,as a percentage of the projects being bid, in the last coupleof years,” Cowen’s Stone said.


even as the technology grapples with high costs andfinancing worries, there are other concerns as well. To makesteam, solar thermal technology uses a lot of water, which cancause problems in areas where the resource is scarce.

“A lot of times, you are putting these solar thermal unitsin the middle of deserts where water is already a rarecommodity,” Simmons & Co analyst Burt Chao said.

BrightSource, for instance, is using its federal loanguarantee for three utility-scale solar thermal plants in theMojave Desert in southeastern California.

“For technologies where they want to use water, trying toget a project like that approved in the Mojave Desert can bevery, very difficult,” Wedbush analyst Hersey said. (Reporting by Adveith Nair and Matt Daily, editing by MatthewLewis)

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