Bright future expected for solar project

Kevin Rademacher

Saturday, Dec. 17, 2005 | 7:40 a.m.

A project that would be the largest solar power plant built anywhere in the world in the last 15 years is set to get under way next month in Boulder City.

The plant would take advantage of Southern Nevada's abundant sunlight and bring the state's largest electric utility into compliance with the solar power component of the state's aggressive renewable energy mandate through 2009.

North Carolina-based Solargenix Energy said this week that it will break ground in January on its 64-megawatt solar power plant, dubbed Nevada Solar One.

"It's moving forward very well," said John Myles, president and chief executive of Solargenix, which was still operating as Duke Solar when the project was first proposed in 2001.

Myles said construction would take 12 to 14 months. One megawatt is estimated to be enough power to serve about 750 homes. The plant is expected to cost more than $100 million.

In July the Nevada Commission on Economic Development approved more than $15 million in incentives for the project. The state deal includes about $6 million in sales and use tax abatement incentives for the $106 million in equipment needed to build the 350-acre project. Solargenix also received $9 million in property tax abatement through a program created by the 2003 Legislature to promote renewable energy development.

The company secured a lease with Boulder City in 2003 to build the plant in the Eldorado Valley.

Solargenix plans to use parabolic trough technology. In the system, mirrors will heat a fluid in order to generate steam that will power turbines used to generate power. Similar technology was used for nine power plants built in California between 1984 and 1990, said Hank Price, a senior engineer and solar trough project leader with the National Renewable Energy Laboratory in Golden, Colo.

The company that built the California plants, LUZ International, fell into bankruptcy when traditional energy prices dropped to a level below the cost of solar generation. The plants are located in Kramer Junction in the Mojave Desert and are expected to remain in operation for 15 years.

Price said the cost of energy remains an issue with solar development today, but energy prices are currently rising because of record high prices for natural gas, which is used not only for winter heating but also to fuel power plants that generate electricity for summer air-conditioning use.

"If energy prices stayed at this current level, this technology would make a lot of sense," said Price, who has worked with Solargenix in refining some solar collection technologies. "The problem is that because of the uncertainty, it's difficult to get investment."

Price said he had little doubt that the Boulder City project would be built.

"I don't see any reason why it's not going to happen," he said. "I have no doubts that they are serious about it, and they have a lot of knowledge."

The success of the Boulder City project, he added, could be a key factor in future developments.

"This is important in terms of how people perceive this type of project in the future," Price said.

The Solargenix project also has significant ramifications for Nevada Power Co. of Las Vegas. State laws mandate that Nevada's largest electric utilities generate an increasing percentage of their power from renewable resources, peaking at 20 percent by 2015. Nevada Power and its sister utility, Sierra Pacific Power of Reno, have failed to meet the initial standards established by the Legislature.

At least one-fourth of the renewables mandated by the Legislature must come from solar power, and the Solargenix plant would bring Nevada Power into compliance with the solar piece of the mandate through 2009.

While Nevada Power has entered into contracts with developers -- including Solargenix -- to buy renewable power generated by new projects, to date none of the planned plants have been built in Southern Nevada. A major stumbling block has been financing. Developers have complained that investors are hesitant to put up capital for a plant that will sell power to a utility -- Nevada Power -- with less than perfect credit. Nevada Power had its credit rating cut to junk status amid the fallout of the Western energy crisis and the subsequent battles over hundreds of millions of dollars with the likes of Enron Corp.

Nevada Power's financial strength, however, is improving, and utility executives and developers agree that if the Solargenix project succeeds it could open the door for further activity.

"It's a very important project," said Roberto Denis, senior vice president for generation and energy supply for Sierra Pacific Resources, parent company of Nevada Power and Sierra Pacific Power.

"It's important because of the experience to be gained by putting it in service so further projects can, in fact, be successful," he added. "It will prove to other developers and financial institutions that from a business standpoint it works here."

Rebecca Wagner, energy adviser to Gov. Kenny Guinn, agreed that Solargenix could set the stage for future renewable development.

"Everyone is quick to point fingers on why projects are not happening," she said. "We need to get the project in the ground. ... I think this has the potential to get momentum going."

Gary Bailey, Southwest region managing director for Solargenix, said the company is well aware that the eyes of the industry are on its Nevada project.

"That's good," he said. "We're excited, and we're going to move forward."

Success with the project also could serve to silence the critics of renewable power projects, Bailey said.

"It proves wrong all the things people have said negatively about renewables, especially solar, for years," he said.

Local economic development officials also are keeping a close eye on Solargenix. In giving the company tax incentives to locate their project in Southern Nevada, the state Commission on Economic Development hailed the project as the beginning of a new economic engine for Nevada.

The potential for economic impact also was noticed by former President Bill Clinton, who in October challenged local business leaders to embrace the renewable industry.

"If I were the economic development czar for America today or if I were in charge of economic planning for Las Vegas and Nevada today, I would start by making a complete and total commitment to a clean energy future because I think you can create more jobs there than anywhere else," Clinton said at the Nevada Development Authority's annual meeting.

Bailey agreed that the emergence of the project could have significant implications for the state's future.

"I don't think people locally recognize how important it is," he said.

Kevin Rademacher can be reached at 259-4069 or at kevinr@lasvegassun.com.