SDG&E’s Big Solar Failure

SDG&E’s Big Solar Failure

Photo Courtesy Sandia National Laboratories

A solar dish project once tied closely to the SDG&E’s Sunrise Powerlink has been sold twice, sucked up tens of millions of investor dollars and been cast aside by the utility company without having turned on so much as a single light bulb in San Diego.

 

In late August 2005, San Diego Gas & Electric proposed a $1.9 billion power line to connect the region to a green future in Imperial County, the land of constant sunshine and endless renewable energy promise.

A week later, SDG&E announced what that green future would look like, unveiling a landmark deal with an upstart, unproven solar dish company that promised to turn the desert sun into a major renewable energy source for San Diegans. SDG&E told state regulators that it needed the wildly contested power line, dubbed the Sunrise Powerlink, to get all the electricity here.

The big ticket projects went hand in hand. SDG&E called the solar effort the crown jewel of its transmission line, a single source that could provide as much as 11 percent of the region’s energy.

The innovative project aimed to be one of the world’s largest solar plants. A developer would start by building 12,000 mirrored dishes in the desert near El Centro to power some 200,000 homes. SDG&E put those silvery dishes front and center in marketing materials for the transmission line.

Now, almost six years later, SDG&E has gotten approval and started construction on the power line that will net company shareholders about $1.33 billion over its 50-year life.

But the solar project once closely linked to the transmission line has been sold twice, sucked up tens of millions of investor dollars and been cast aside by SDG&E without having turned on so much as a single light bulb in San Diego.

The company used the suspect plan to help justify building a controversial power line that cuts through private property and pristine wilderness along a 117-mile swath of San Diego County’s backcountry and nearby desert. Now, that solar project is dead, as many had predicted. But the Sunrise Powerlink is alive and under construction.

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Though SDG&E has added electricity from other green sources like wind in the last five years, the utility today delivers the same amount of solar power to its customers that it did six years ago: nearly none. It fell short of a state goal for utilities to derive 20 percent of their electricity from green sources by 2010, getting 11.9 percent of its power from renewable sources last year. Of the state’s three major utilities, SDG&E was last.

Signs abounded when SDG&E signed the solar deal in 2005 that it was risky. Just before announcing it, SDG&E officials in charge of the company’s transmission planning participated in a study that reported the solar technology was too unreliable to work on a large scale like SDG&E expected.

The project called for using mirrored dishes to focus the sun’s heat on something called a Stirling engine. The heat would warm the trapped gas, making it expand and churn pistons.

But to provide as much electricity as it promised, the project’s then-developer, Phoenix-based Stirling Energy Systems, needed to build 12,000 dishes. In 2005, the company had just six working in a federal laboratory. Company officials said they were up to the task. They knew what was at stake: The country’s solar industry was watching to see if they could pull it off.

“If we for some reason were not to succeed, it’d be a pretty dramatic failure,” Robert Liden, then a Stirling official, told me in 2005. “This is a big deal for us.”

His company also struck a deal with Southern California Edison. But at least one other utility had seen the same problems with the technology that a federal assessment did.

Herb Hayden, the former solar program coordinator at Arizona Public Service, the state’s largest electric utility, had studied the solar dishes in the 1990s and concluded they weren’t yet ready for large-scale deployment. He said SDG&E would have known the project had dubious prospects but that the company faced little risk by signing the deal, which didn’t require the utility to invest any money yet gave traction to its case for the power line.

“If you look at the risk aspect of this and say, ‘What tangible consequence did SDG&E have?’” Hayden said, “the consequence is probably bad press and the need to supplement with another project. They’re not going to take down the transmission line.”

SDG&E has added new green energy contracts to replace the failed solar effort, more than 1,400 megawatts worth since April 2010. That’d be enough to power 900,000 homes. But like Stirling, there’s no guarantee that those projects will be built. And they weren’t online by 2010, when Stirling promised to start pumping electricity to San Diego.

Scott Anders, director of University of San Diego’s Energy Policy Initiatives Center, said he expects some new projects will succeed. One project’s failure doesn’t reflect on the others. “Individual projects have individual challenges,” Anders said.

Stirling’s project ran into several challenges, including three lawsuits filed by environmental activists and the Quechan tribe in Arizona, which delayed the effort. Jim Avery, SDG&E’s senior vice president of power supply, blames that opposition for the project’s failure. When the 2005 deal was signed, he said, Stirling was a viable entity, one that willingly invested hundreds of millions into the technology behind the Imperial County project.

“It’s unfortunate that it has been stopped by people who did not want and do not want them to be developed,” Avery said.

The project struggled to find investors. NTR plc, an Irish conglomerate, took control of it from Stirling Energy with a $100 million investment in 2008. But by late last year, the conglomerate’s chairman was blaming delays on uncertainty in financial markets and private investors’ risk tolerance — not the environmental litigation. The company sold the project in February.

One scientist who spent years working on the solar dishes says the technology would have dissuaded investors, not litigation. The dishes haven’t proven they can reliably operate for thousands of hours without breaking down, said Barry Butler, a former SAIC Inc. official who jointly studied the dishes with the U.S. Energy Department.

“The issue was never a question of whether the technology would work, but whether you could prove it in time to get investors,” Butler said. “The answer to that was always no. From day one.”

Stirling did make progress, expanding to 10 dishes at the federal laboratory and opening a 60-dish array in Arizona in 2010. Butler lauded the advancement, but said he estimates the technology still won’t be ready for large-scale projects for another decade. In the meantime, Butler said the solar industry’s reputation took a hit.

“It gave Stirling an unnecessary black eye,” he said. “Utilities say it wasn’t ready for prime time. They’ve got a tremendous PR blow for solar technologies in general.”

The project’s failure did prove correct the SDG&E opponents who accurately predicted the solar effort’s failure from its inception. They had for years called the solar project little more than a mirage being used by SDG&E to bolster its argument for building the power line.

“It is a cautionary tale about how renewable projects are often more marketing than reality,” said Michael Shames, executive director of the Utility Consumers’ Action Network, a lead Sunrise Powerlink opponent.”The bigger lesson from the Stirling debacle is to be very careful about the utilities’ justifications of large infrastructure projects (transmission and distribution) as their justifications are often exaggerated, if not outright fraudulent.”

Construction has started on the line, which the company hopes to complete by mid-2012. Opponents seeking to halt it will take their legal challenge seeking an injunction before a federal judge Tuesday.

Please contact Rob Davis directly at rob.davis@voiceofsandiego.org or 619.325.0529 and follow him on Twitter: twitter.com/robwdavis.

Voice of San Diego is a nonprofit that depends on you, our readers. Please donate to keep the service strong. Click here to find out more about our supporters and how we operate independently.


Rob Davis

Rob Davis

Rob Davis is a former senior reporter for Voice of San Diego. He is currently a freelance writer in San Diego. He can be reached at robdaviswrites@gmail.com or 619.259.0529.

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24 comments
Mark Giffin
Mark Giffin subscribermember

limitations, the Logistics of distribution, Manageability and safety are problems that have their own set of problems.

mgland
mgland

limitations, the Logistics of distribution, Manageability and safety are problems that have their own set of problems.

Vlad Kogan
Vlad Kogan subscriber

Don, thanks, very helpful!

vkogan
vkogan

Don, thanks, very helpful!

Don Wood
Don Wood subscriber

project. In this case, SDG&E is being allowed to ratebase the $3 billion cost of Sunrise (including interest payments) along with a rate of return somewhere north of 8%. Since its ratepayers are paying the full cost of the project through their energy bills, SDG&E is allowed to make a profit on other peoples money. As long as the FERC and CPUC rules stay the same as they are now, expect to see SDG&E and other utilities continue to pursue giant multibillion dollar capital projects like Sunrise.

Don Wood
Don Wood

project. In this case, SDG&E is being allowed to ratebase the $3 billion cost of Sunrise (including interest payments) along with a rate of return somewhere north of 8%. Since its ratepayers are paying the full cost of the project through their energy bills, SDG&E is allowed to make a profit on other peoples money. As long as the FERC and CPUC rules stay the same as they are now, expect to see SDG&E and other utilities continue to pursue giant multibillion dollar capital projects like Sunrise.

Janet Shelton
Janet Shelton subscriber

ow and deserve more careful scrutiny.

myearth
myearth

ow and deserve more careful scrutiny.

Wayne Shipman
Wayne Shipman subscriber

Here's a thought. Why not have SDG&E do a study of installing personal solar panels with tax incentives. to all of it's customers.

BossPac
BossPac

Here's a thought. Why not have SDG&E do a study of installing personal solar panels with tax incentives. to all of it's customers.

Michael Russell
Michael Russell subscriber

Solar = 24-cents/KwH , LNG = 3-cents/Kwh , Sempra retails energy at 11-31 cents/KwH (you do the math)

philosopher3000
philosopher3000

Solar = 24-cents/KwH , LNG = 3-cents/Kwh , Sempra retails energy at 11-31 cents/KwH (you do the math)

Jim Jones
Jim Jones subscriber

This just underscores how California got where it's at. Environmentalism without critical thinking behind it. Green energy is a pipe dream at present. It's not ready for prime time,. Enjoy the cost of this failure.

Jim Jones
Jim Jones

This just underscores how California got where it's at. Environmentalism without critical thinking behind it. Green energy is a pipe dream at present. It's not ready for prime time,. Enjoy the cost of this failure.

Mark Giffin
Mark Giffin subscribermember

We want green energy or not?

mgland
mgland

We want green energy or not?

Jerry Hughes
Jerry Hughes subscriber

No surprise there. And there will be no surprise when SDGE buys dirty, Mexican energy either. You mean to tell me that no where in the country, there are no productive solar arrays working??

San Diego Hiker
San Diego Hiker

No surprise there. And there will be no surprise when SDGE buys dirty, Mexican energy either. You mean to tell me that no where in the country, there are no productive solar arrays working??

Vlad Kogan
Vlad Kogan subscriber

The critical detail that's left unexplained is why Sempra and its shareholders stood to benefit by building the Power Link. I know the profit the utility makes is somehow tied to operating costs/infrastructure, but having a bit more details would be very helpful context for this story.

vkogan
vkogan

The critical detail that's left unexplained is why Sempra and its shareholders stood to benefit by building the Power Link. I know the profit the utility makes is somehow tied to operating costs/infrastructure, but having a bit more details would be very helpful context for this story.

Robert Emery
Robert Emery subscriber

Some of these solar projects for Powerlink were never expected to reach fruition. The plans are to build solar south of the border and export to California. One utility I know of has the international agreements in place.

Robert E
Robert E

Some of these solar projects for Powerlink were never expected to reach fruition. The plans are to build solar south of the border and export to California. One utility I know of has the international agreements in place.

Robert Emery
Robert Emery subscriber

Tessera/Stirling was very closely held Dublin Ireland company not publically traded and stood to gain billions of dollars in US subsidies and low interest loans. One of the few investors got cold feet and sold his holdings. Since the company wasn't publically traded, the amount he received was below market and set a basis for valuating the company which now were below the covenants of its financial agreements.

Robert E
Robert E

Tessera/Stirling was very closely held Dublin Ireland company not publically traded and stood to gain billions of dollars in US subsidies and low interest loans. One of the few investors got cold feet and sold his holdings. Since the company wasn't publically traded, the amount he received was below market and set a basis for valuating the company which now were below the covenants of its financial agreements.