First solar-geo plant blooms in Nevada's high desert

Drive west on US Route 50 through a stretch of Nevada highway known as "The Loneliest Road in America" and you'll eventually find yourself in the rural county of Churchill. Once a solitary leg in the Pony Express route, irrigation transformed swaths of Churchill's high desert areas into thriving agricultural communities more than a century ago. Fast forward to today and Churchill finds itself playing host to yet another interesting dichotomy -- a first-of-its-kind power plant that generates electricity by harvesting renewable resources from both earth and sky. %Gallery-159924%

It all started with the development of Enel Green Power's 33-megawatt Stillwater geothermal plant in 2009. The technology works by drilling wells to access hot water trapped underground and converts the resulting heat energy into electricity. The successful launch of a geothermal facility is usually reason enough to celebrate, given the high cost and upfront risk that comes with drilling and developing the resource. The region, however, also happens to have an abundance of one more renewable asset: good, old-fashioned sunlight. Northern Nevada's annual average of more than 300 days of sunny weather already helped Churchill score a major coup in 1996 when it landed the Navy's Top Gun fighter pilot program. Traces of the Navy Fighter Weapons School -- now located at Fallon Naval Air Station just 15 miles away from Enel's Stillwater facility -- can easily be seen via jet trails that paint the skies above the plant like white streaks on blue canvas.

With a steady supply of sunshine and more than 100 acres of land at its disposal, Enel decided to conduct an experiment. It installed a cluster of 89,000 solar panels across the Stillwater facility's dry landscape. The result is what both the Italian company and the US Department of Energy call the first hybrid solar-geothermal plant of its kind in the world. The solar facility, which was formally inaugurated in May, now adds 26 megawatts of peak energy to the facility -- enough to power 16,000 homes prior to factoring in the geothermal plant's output. For an industry still struggling to secure a foothold against cheaper, conventional sources of energy, such as natural gas, proponents say the creation of out-of-the-box projects such as the Stillwater hybrid plant are crucial in moving renewable energy development forward.

"One of the main challenges is making renewable energy really sustainable and this plant is a great example of a perfect and symbiotic combination of two complementing energy sources that people can rely on daily," said Peter Krause, segment manager of Siemens' Industry Automation Division. "Without projects showing that something like this works, I don't think we can get the traction we need in the industry -- or the true reach that renewable energy could have in the future."

An electric combination?

The concept for a solar-geo plant has been percolating for some time, said Francesco Venturini, CEO of Enel Green Power's North America operations.

"The idea has been out there for a while," Venturini said. "Other companies have tried to do it in a smaller size but (we're) the only ones to be able to do it in this scale."

The logic behind combining solar and geothermal power makes sense when one thinks about the strengths and weaknesses of both technologies. In the last few years, solar power has grown by leaps and bounds, thanks to a quick development turnaround, relatively low upfront risk for investors and a sharp drop in the price of solar panels. In 2011, for example, new solar capacity worldwide grew by 54 percent to 28 gigawatts, according to data from Bloomberg New Energy Finance. Utilities also like solar because it delivers the most electricity during hours of peak energy demand. Given how power companies have to operate 24 hours a day, however, they also require a constant and stable energy source.

"If there's cloud cover solar panels don't work as efficiently," said Michael Yackira, CEO of major Nevada utility NV Energy. "Of course, when it's dark, there's no solar at all."

This is where having a geothermal component comes into play. High upfront development costs and the risk of multimillion-dollar losses from a project that does not pan out have caused geothermal to lose ground to solar and wind power. If a project is successful in finding a viable underground resource that can produce the necessary megawatts, however, geothermal becomes the more ideal resource.

"Geothermal isn't as dependent on Mother Nature as wind and solar so it's on all the time," Yackira said. "It also has a lower price, which is great for our customers. We would love to have as much geothermal power as we can get."

Although combining an intermittent power source such as solar or wind with a 24/7, or "baseload," source isn't necessarily new, the DOE says that the Stillwater facility is the first to use renewable sources for both. Typically, baseload capacity is provided through conventional sources such as coal and natural gas. As the race for developing renewable energy technology heats up worldwide, however, projects such as Stillwater are no longer a convenience but a necessity, said US Energy Secretary Steven Chu.

"As the first of its kind in the world, this project demonstrates how we can tap renewable energy sources to provide clean power ... and deploy every available source of American energy," Chu said. "The facility is expanding domestic renewable energy sources and helping ... build the infrastructure we need to stay competitive in the global race for clean energy technologies."

The DOE also has another reason for touting the project. The Stillwater plant received $40 million from the federal government's American Recovery and Reinvestment Act -- the same program that was put through the wringer last year following the Solyndra debacle. After receiving a $535 million loan guarantee through the Recovery Act in 2009, Fremont, California-based Solyndra filed for bankruptcy two years later.

The Solyndra scandal is seen by those in the renewables sector as a case study for the highly politicized atmosphere surrounding their industry in the United States. Paul Thomsen, public policy manager for international geothermal developer Ormat Technologies, says he has seen the impact of politics firsthand after being named in a report by the House of Representatives' Oversight Committee. Thomsen lamented the blanket coverage that incidents such as Solyndra receive while successful projects barely get a peep. Thomsen mentioned three Ormat projects in Nevada -- McGinness Hills, Jersey Valley and Tuscarora -- that are slated to generate 121 megawatts of total power once they all come online. The projects received $350 million in partial loan guarantees from the Recovery Act.

"With the Solyndra issue, so much of the press was on the negative side of the loan guarantee program," Thomsen said. "The federal government didn't even give us money for those three projects. It only ensured that we got a lower interest rate (for our loan)."

Political football

Standing just a few feet away from the Stillwater facility's battery of solar panels, Nevada Governor Brian Sandoval is all smiles. Sandoval remembers attending the second grade in the nearby town of Fallon just 10 or so miles away. Now he's being subjected to learning of a more technical kind. This includes details about how Siemens supplied its latest photovoltaic inverters and medium voltage step-up transformers for the project. According to Krause, the PV inverters -- which convert the DC power from the PV solar modules to AC power that can be fed to the grid -- have a conversion efficiency rate in excess of 98 percent. The project was a top priority for Sandoval, who launched a big push to beef up Nevada's green sector after the housing market crash and 2008 global financial crisis brought down its four major industries -- gambling, tourism, housing and construction.

"This facility was permitted and brought into production in just six months," Sandoval said. "When people throughout the globe see what we accomplished here, they will see that our state is setting a good example."

Nevada's renewable portfolio standard target of 25 percent by 2025 has gone a long way in expanding the state's green sector in recent years. Northern Nevada, the center of the state's geothermal activity, already gets about 24 percent of its energy from renewable sources -- far above the national average of 13 percent. The Nevada legislature has also enacted several measures for fast-tracking renewable energy development in the state.

The state's push for green energy, however, also exposes some of the challenges for the sector. Efforts to boost transmission capacity and install new power lines statewide are proceeding a bit slower as environmental concerns are weighed. One is the impact of development on declining sage grouse populations. The solar-geo plant itself is near the Stillwater National Wildlife Refuge, a wetland that attracts more than 20,000 waterbirds such as black-necked stilts and long-billed dowitchers. Nearly 48 million acres of the state -- 67 percent of Nevada's land -- is also administered by the Bureau of Land Management. Many of the state's renewable resources are found within BLM land, requiring federal approval for any development.

Meanwhile, the global financial crisis of 2008 continues to cast a shadow on development as securing investment capital and financing remain difficult. For renewable startups, the impact boils down to high capital costs, which can be seen in the form of high interest rates for loans. The impact is especially being felt in the geothermal sector due to its higher upfront risk during development. Just doing exploratory drilling to verify a geothermal resource can cost up to $15 million, according to a risk mitigation report by Deloitte Development LLC. The sum is large enough to discourage potential investors who have concerns about a project failing to find sufficient geothermal resources after spending all that money.

"We're hearing from a lot of companies about how tough things are right now across the board," said Karl Gawell, executive director of the Geothermal Energy Association. "When you look at longer-term trends where you have climate change and energy security driving the market, I think people in the industry feel fairly comfortable. It's with the shorter-term trends where you see a lot more uncertainty."

Support from the federal government in the form of tax credits and loan guarantees helped lead to a boom in renewable projects in the last few years. Those programs are set to expire after 2013 and likely won't be renewed due to the political football being played in Washington, D.C., developers said.

"There might be a chance for an extension, but no one is counting on it," said Brian Fairbank, president and CEO of Vancouver-based Nevada Geothermal Power.

The renewable energy policy's murky future will likely lead to a slowdown in development in the short term. The fact that 2012 is a presidential election year in the United States makes the outlook even less clear, industry insiders say. Just as the unknown can spook the stock market, uncertainty can have a serious impact on developers with a keen eye on their bottom line. In the case of companies such as Enel, inconsistent support for the clean energy sector could mean holding back on potential projects as it balances its role as a developer with the need to maximize returns for its investors. Geothermal development would especially be affected because it presents the highest development risk compared to other sources of renewable energy.

"To be competitive, we need some support, and in the United States, the support comes and goes," Enel's Venturini said. "As developers... we need a better understanding of what the next steps are going to be and what the future is going to look like. For a project like this we invest hundreds of millions of dollars, and before you make that big an investment, you want to make sure that the return for the stakeholders is there."

This piece originally appeared in Distro Issue #47.