Friday, March 18, 2016
Interview With Kevin Smith, SolarReserve
Story by Benjamin F. Kuo
In the quest to find a cleaner source of electricity for the world's growing energy needs, and to help tackle growing climate change issues, there has been a lot of attention on solar energy. However, solar energy—by its nature—typically has only been useful on an intermittent basis, and, without energy storage, is difficult to manage and cannot be used at night. One solar technology that can handle that need for energy storage is solar thermal. Los Angeles-based SolarReserve (www.solarreserve.com) recently put their massive, solar thermal power plant, Crescent Dunes, online in the Nevada desert—which solves the solar power energy storage issue. We spoke with Kevin Smith, the CEO of SolarReserve, about the company's technology, the challenges of billion dollar projects, and why it's looking at international markets, not the U.S., for future projects.
For those not familiar with SolarReserve, briefly talk about what you are doing, and your solar energy technology?
Kevin Smith: SolarReserve is a developer and technology provider for large scale, solar projects. We handle development activities, land issues, interconnection, power contracts, and more for both solar thermal and photovoltaic projects. We have both types of projects. On the technology side, our core is really the solar thermal energy storage technology we built out in Nevada, which is a molten salt power tower. We worked on that technology with Rocketdyne in the LA are for a number of years through a licensing agreement for the technology. We ultimately bought out that technology from Rocketdyne, and put together that full scale facility.
Talk a little bit about that plant, Crescent Dunes?
Kevin Smith: It's a 110 megawatt output facility. As I mentioned, it's a molten salt power tower, where we collect energy directly from the sun in molten salt. That tower, unlike other tower projects that exist, pumpts salt to the top of the tower, collects the sun's energy, and stores that molten salt in the ground, for generation whenever we want. We have a full ten hours of full load storage, and we have an expectation with the utility to operate from 12 noon to 12 midnight, although we've actually been able to run that facility for 24 hours. In most cases, however, we operate for 12, 14, or 16 hours a day to handle peak loads for the utility. Las Vegas is their main load center, and as you might expect, they have a much later peak load, so we typically run until midnight or so. It's the largest utility scale molten salt tower in the world. There are a few smaller projects, but those are only 1/5 or 1/6 scale, this is the first, commercial, utility-scale facility in the world.
What's the biggest challenge of a huge project like this?
Kevin Smith: There are a number of challenges. One, is taking the technology from smaller scale to a full scale facility. Then, there's arranging for financing for a billino dollar project. Those are the major challenges. In addition, it's a fairly remote location, so you have to deal with construction subcontractors and even things like housing. Tonopah is only a 2,000 person town, and the labor came from other parts of Nevada and around the region, and housing all those workers was a challenge. But I think the biggest challenge was upsizing the technology to 10x what had been built before, and getting financial backers to take on that kind of project.
How difficult it is to replicate something like Crescent Dunes on a broader scale?
Kevin Smith:It's much easier to replicate it, than build it the first time. Obviously, there have been lots of lessons learned, and many cost savings that we can realize for future projects. We have a pretty big development pipeline around the world and in the U.S., and have several thousand megawatts of projects in various stages. Some of our biggest markets outside the U.S. are Chile and South Africa. We're also looking at China, Australia, the Middle East, Mexico, and other markets. In South Africa, we were awarded a 100MW project similar to the Nevada project, and that one is fully permitted and has financing commitments, and we're in the process of coming to a financial close in the next 60 days. We've got several large power projects in Chile, and are in discussion with utilities to take the power from those projects. We've been in discussions in China for a multiple tower project, in addition to projects in Mexico and the Middle East. We're taking this technology and exporting it worldwide.
Can solar thermal technology have a major impact on the energy production in this country and the world?
Kevin Smith: Photovoltaic power has come down pretty dramatically, but, obviously, the biggest problem with PV and wind is that it is intermittent. It only generates power when the sun shines. By 3:30pm or 4pm, you are out of luck with PV. The beauty of our technology, is that it is designed to work for 24 hours a day, or exactly when you need to meet peark requirements. In Nevada, they don't need us 24 hours, but just for peak periods. California's peak market is 8 to 9 at night, which isn't even close to 3:30pm or 4pm when PV is out of juice. Even during daytime, that power is intermittent. It's very difficult to forecast and use that intermittent supply. That's our biggest advantage. That said, the low cost of PV is obviously impacting implementation of solar thermal, but I think our biggest competitor is actually conventional energy. That's what we are looking to compete again. That's because we can run just like a conventional power project, you can turn it on and off, and you can pick what hours you want it to run. Plus, you have a firm supply when it's running.
The biggest problem we have in the US, is with fracking. Natural gas is cheap. It's something like three dollars per million BTU. That's not the case in the rest of the world, where they are paying something like five times that. In those markets, we can be one of the low cost, if not the low cost supplier of reliable capability and supply. That's why we are putting in three big projects in South Africa, and we're very competitive in the Chilean market. If you're looking for 24 hour a day power and a 24 hour a day supplier in the U.S., even though we are in the early stages of implementation, we're still lower cost than a new coal or nuclear plant. The challenge though, is to get costs down to be directly competitive with natural gas here in the U.S. We easily compete in the other parts of the world, were the cost is $12-$14 per million BTU, versus only $2-$3 here. We have to get our costs down here to compete with natural gas.
Is having build out Crescent Dunes now an advantage when dealing with utilities?
Kevin Smith: Getting Crescent Dunes into operation was key for us and the technology. People can now recognize we're operating, meeting our requirements, and operating at full load. We've had dozens and dozens of utility companies and investors from other countries, who have visited our plant in Tonopah, and that was largely during construction. Now that we are in operation, people can come see that the technology is working, and we're now supplying upward of 75,000 homes in Nevada with reliable, renewable energy.
So, what's next for you?
Kevin Smith: We're continuing our expansion into the international market. We recently build a large, PV project in South Africa, and we have several projects in development which are now getting into construction. We're taking what we've done in Nevada, and using that to get our next projects up and running and into construction. We're also continuing development of our technology and bringing down the cost. The project in South Africa which is in construction is 25 percent below the capital cost of our project in Nevada, and we're looking to cut costs 30 to 40 percent with the next group.