Developer’s financial woes imperil major Calif. project

Source: Scott Streater, E&E reporter • Posted: Friday, December 18, 2015

A Spanish renewable energy developer’s pending bankruptcy has clouded the future of a controversial utility-scale solar power project on federal lands in the California desert that was once one of the Obama administration’s top-priority projects.

Abengoa Solar, in a formal petition filed this week with the California Energy Commission (CEC), announced that it has an agreement in place to transfer ownership of the Palen Solar Electric Generating System to a subsidiary of San Diego-based EDF Renewable Energy Inc.

Abengoa is in bankruptcy proceedings, and is apparently selling off assets to reduce a heavy debt load that’s crippling the renewable energy giant, according to media reports.

The agreement between EDF subsidiary Maverick Solar LLC and Abengoa was finalized this week, pending approval by a bankruptcy court, according to the Abengoa petition.

“Subject to the satisfaction of the terms of that agreement and approval by the U.S. Bankruptcy Court for the District of Delaware, Maverick will be the owner” of the project, according to the petition signed by Timothy McMahon, an Oakland, Calif.-based attorney for the Palen project. “Upon becoming the owner of [Palen], Maverick will be responsible for compliance with the conditions of certification, and agrees to comply therewith.”

But the transfer of ownership comes as project developers face a Dec. 22 deadline to file a new plan of development with the CEC that would change the solar technology that’s proposed at the site. The new plan would also address earlier concerns raised by CEC commissioners about possible impacts to migratory birds flying in and around the concentrating solar power plant.

Abengoa’s plan would replace a 750-foot-tall power tower and 85,000 heliostat mirrors that move with the sun, heat water and create steam to drive electric generators, with trough-shaped mirrors to heat a fluid-filled pipe that would heat water to produce steam.

The wildlife concerns dealt with fears that birds flying between the heliostat mirrors and the power tower could be burned, leading to significant injury or death — a phenomenon referred to as “solar flux.” The trough-shaped mirror technology would have reduced the solar flux concerns.

The company also agreed to add energy storage technology that would allow the power plant to supply electricity to the grid after dark or on cloudy days.

In exchange, the CEC extended by one year the deadline to begin construction of the first 250-megawatt phase of the solar plant to December 2016. CEC originally approved the project in 2010, kicking off a five-year deadline to begin construction.

The Bureau of Land Management suspended its review of the first phase of the project, which would cover about 1,900 acres of BLM land in Riverside County, pending the resolution of the CEC’s issues.

But no one is sure if Abengoa, or Maverick Solar, will comply with the deadline. If not, the original CEC approval of the project will expire, and any developer seeking to build it would have to start the regulatory process over from scratch.

Michael Ward, a CEC spokesman in Sacramento, said he did not know whether representatives with Abengoa or EDF had contacted the agency about its plans.

“The order is still in effect so we’re still looking at the Dec. 22 deadline for whomever to provide us with the information,” Ward said.

An EDF Renewable Energy spokeswoman did not respond to requests to comment in time for publication.

But EDF’s Vice President of Development West Cliff Graham submitted a signed declaration to CEC this week acknowledging the ownership transfer agreement and the company’s efforts to comply with state mandates.

“The Petition for Ownership Transfer will have no effect on the information or data provided in support of, nor the conditions of certification contained in, the Final Decision,” Graham wrote.

Contentious past

The Palen solar project has been dogged by financial and environmental concerns for years.

The CEC in 2010 approved the original $2 billion project, which would have produced enough electricity to power roughly 170,000 homes and businesses. But it was abandoned in 2012 when the original project proponent, Solar Trust of America LLC, went bankrupt just months after BLM had issued a final environmental impact statement (EIS) for the project in May 2011.

Oakland, Calif.-based BrightSource Energy Inc. purchased the rights to the Palen project at a 2012 bankruptcy auction. BLM in 2013 prepared a draft supplemental EIS analyzing the cumulative environmental and visual impacts of a revised proposal that would have covered the original project’s 5,200-acre, right-of-way area but disturbed about 3,700 acres — far less than Solar Trust of America’s original 2008 proposal, resulting in fewer impacts to federally protected Mojave Desert tortoises, according to BLM.

The BrightSource Energy version of the project would also have changed the technology in the original proposal to a concentrating solar thermal power tower similar to the Ivanpah Solar Electric Generating System, also developed by BrightSource, in neighboring San Bernardino County. Solar Trust of America had planned to use the trough technology.

Abengoa Solar announced last year that it had purchased BrightSource’s interests in the project and would become the project’s sole developer (E&ENews PM, Nov. 5, 2014).

But the project’s location has been a lingering concern, near Joshua Tree National Park and in the middle of what some conservation leaders term the Pacific Flyway traversed by thousands of migrating birds.

Thus, Abengoa’s announcement that it had purchased BrightSource’s interests in the project was not greeted enthusiastically by some environmental groups.

Now, the question is whether the revised development plans will be submitted on time.

Colin Smith, an analyst with Boston-based GTM Research, a solar market research firm, said it’s possible EDF could meet the deadline.

“In my mind it comes down to how much was already in discussion and how much was in the works before” the ownership transfer agreement was announced, Smith said.

Smith also said that EDF probably would revise the project to use photovoltaic solar technology instead of the trough-shaped mirror technology.