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Trimming Costs
Although large-scale solar projects typically cost hundreds of millions of dollars, developers may be able to recoup some of the front-end costs associated with such projects through a sale-leaseback arrangement, in which the developer would sell the project to an independent power producer and then lease the project back from the company, Liden said. The developer could use the proceeds from the sale to complete the project.
A 30% tax credit for investment in solar power created through the Energy Policy Act of 2005 has been instrumental in facilitating large-scale solar projects, developers say.
State renewable energy mandates also have helped the solar industry's cause. In California, state law requires state-regulated utilities to use renewables for at least 20% of their retail power by 2017. State regulators have accelerated the deadline to 2010.
Obstacles remain for solar developers looking to generate solar power more cheaply, however. Gaps in the nation's transmission infrastructure remain a challenge for developers of large-scale renewable energy projects, Stirling's Liden said.
Need for Transmission
Adequate transmission is key to completing large-scale solar projects, Liden said, and the process of building and permitting transmission lines can be costly for developers.
Transmission access "becomes the long pole in the tent in terms of the deployment of these projects," Liden said.
Stirling's San Diego project will require state regulatory approval for a 500-kilovolt transmission line across the Imperial Valley, while the second phase of the Edison project will require a 170-kv upgrade to an existing transmission line.
PNM Resources Inc. utility Public Service Company of New Mexico issued a request for proposals for renewable energy two years ago, but the company could not find any solar projects that fit its needs, said Evelin Wheeler, the utility's director of strategy, planning and analytics.
The utility is monitoring the development of the Stirling projects and waiting to see whether Stirling's technology is viable before investing in such a project, Wheeler said. The lack of transmission lines in remote areas, where many solar projects are built, is also a concern, she said.
Meanwhile, PNM is in the early stages of considering a consortium with other utilities to develop a large-scale solar project, Wheeler said.
"What it really comes down to is how we can appropriately share all of these risk factors," she said.
The expiration in 2009 of the Energy Policy Act tax credit creates uncertainty for large-scale solar developers, whose projects can take several years to complete.
"It really needs to be expanding to 2012 or 2015 to give (developers) a long lead time," Liden said.
Developers of concentrating solar power projects must build on a large scale to keep costs down, but de
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