Mon, Jul 06, 2009
Through Abengoa Solar Inc.'s technology, long rows of mirrors are used to track the sun from east to west in order to best focus sunlight onto receiver pipes.
Business wire

Business

Politics clouds solar-power-plant hopes

By Howard Fischer
Capitol Media Services
Tucson, Arizona | Published: 08.02.2008
The future of the world's largest solar power plant, planned for the Arizona desert, could depend on whether the two presidential candidates manage to get back to Washington.
Efforts to actually get a vote on extending federal income-tax credits for renewable-energy projects have been stalled as Democratic leaders have been unable to round up the 60 votes necessary to bring the bill to the floor.
Two of the six missing votes this week were John McCain and Barack Obama. And while Obama is on record as favoring extension of the credits — a McCain aide said Thursday that he has yet to take a position — neither camp would commit to having its candidate in place to advance the measure after the Senate returns from its August recess.
That failure to act could prove fatal for the proposal by Abengoa Solar Inc. to build a 280-megawatt solar plant near Gila Bend. Kate Maracas, the company's vice president for Arizona operations, said that if the tax credits expire at the end of this year, the power plant will not be built in Arizona or, for that matter, anywhere in the United States.
And Steve Morse, Abengoa's senior adviser for U.S. operations, said that just the pure delay by Congress could kill the project. He said the rising cost of steel and other supplies will, at some point, make the power plant uneconomical.
At this point, the future of the Arizona plant, dubbed Solana, remains in doubt, especially without McCain. That's because Republicans are blocking action on any energy bills until the Democratic-controlled Senate first acts on the president's request to lift the ban on offshore drilling for oil.
But McCain, as the home-state senator for this project, might be able to convince enough GOP colleagues to break ranks to at least permit a vote on the measure. If that occurs, it stands a decent chance of approval. There were 51 votes in the 100-member Senate this week to close off debate and advance SB 3335 for floor action, even without McCain and Obama.
Hanging in the balance is a deal between Abengoa, based in Spain, and Arizona Public Service to construct a "concentrating solar power" plant, which uses the sun's heat to produce power.
That technology has promise for a place like Arizona because high heat here can reduce the power output of photovoltaic cells, which generate power directly from sunlight. This plant instead will use mirrors to concentrate sunlight to heat fluid in tubes, which, in turn, will convert water into steam to drive generators.
APS figures the plant will provide enough power for more than 60,000 homes.
State legislators voted earlier this year to extend the life of a special property-tax exemption for such power plants. But Maracas said that move, while helpful, is not enough.
"We obviously have to get financing for the project," she said.
"Without the 30 percent (federal) investment tax credit, the numbers simply don't work," Maracas continued. "So we can't get project financing.''
Maracas explained the deal with APS is that it will pay a set amount of money for every kilowatt generated.
Maracas said that without the credits, her company will not be able to produce power at a low enough cost to be able to sell to APS at the contracted rate — she would not disclose the number — and still be able to pay off construction costs and make a profit.
Morse said plans are to break ground on the project next year. But he said that doesn't mean Abengoa will wait around that long for Congress to decide whether to approve the tax-credit extension.
"Every day that the Congress doesn't extend the tax credit means the price creeps upward," Morse said.
He said the amount of steel in the plant is the equivalent of what it would take to rebuild the Golden Gate Bridge. "And steel has gone up 30 percent since that contract was signed" in February, Morse said.
Arizona's other U.S. senator, Republican Jon Kyl, voted against moving extension of the the renewable-energy credit to the floor for debate. Press aide Andrew Wilder said that is because Kyl first wants the Senate to take up broader energy policies, and the vote has nothing to do with the merits of the tax-credit extension itself.