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California Bill Favors Solar Panels, Excludes Thermal Plants

Sept. 12 (Bloomberg) -- California Governor Jerry Brown is expected to sign a bill that simplifies the permitting process for solar photovoltaic projects and may prompt developers to reconsider solar-thermal plants, which aren’t included in the legislation.

According to Senate Bill 267, which Brown has until Nov. 9 to sign, photovoltaic projects will no longer be required to demonstrate adequate water supplies. Wind farms are also included in the bill.

Falling photovoltaic prices have made them less expensive than solar-thermal systems, which focus the sun’s rays to create steam that drives a turbine and generates electricity. Eliminating the paperwork will shave as much as six months from the approval process. Three California solar-thermal projects have switched to photovoltaic panels, which convert sunlight into electricity, and more may follow suit.

“There’s the potential for more of these solar thermal plants to go PV,” said Allan Marks, a project finance attorney at Milbank, Tweed, Hadley & McCloy in Los Angeles. “The operating costs of PV are less, so lenders worry less about the downside risk.”

A notable exception is BrightSource Energy Inc., which received $1.6 billion in U.S. Energy Department loan guarantees to build a 392-megawatt solar-thermal plant. When completed in 2013, it may be the world’s largest.

Intentionally Excluded

Solar-thermal plants consume more water than photovoltaic, and were intentionally left out of the legislation, said California Senator Michael Rubio, a Democrat from East Bakersfield who wrote the bill. “We wanted to start with two areas known to not use a lot of water,” he said in an interview.

The changes may prompt some developers to eschew solar-thermal projects, Rubio said. “This particular bill will be another tool to assess what’s economical for the state.”

Brown supports renewable energy in California, he said, and will likely sign the legislation, which reached his desk on Sept. 6 after passing the Assembly and Senate with veto-proof majorities. The governor’s office doesn’t comment on pending legislation, spokesman Evan Westrup said today.

Under the bill, projects that use less than 75 acre-feet of water a year, enough for about 500 homes, will qualify for the exclusion, which will eliminate about six months of paperwork, according to data compiled by Rubio’s office.

BrightSource said its Ivanpah plant will consume about 100 acre-feet of water annually. The Oakland, California-based company said April 22 it plans to raise as much as $250 million through an initial share sale to fund the construction of additional thermal plants.

Switching to Photovoltaic

Other developers are backing away from the technology, which is sometimes called concentrated solar. Germany’s Solar Millennium AG, which uses solar-thermal technology, said Aug. 18 it will use photovoltaic panels at the first 500-megawatt phase of a planned 1,000-megawatt plant near Blythe, California.

The change was largely motivated by improved lending conditions and access to cheaper photovoltaic panels, said Susanne Krebs, a spokeswoman for the Erlangen-based company.

“We can produce higher margins in the U.S. by switching to PV,” she said in a phone interview. “We may go back to concentrated solar for the second phase.”

Prices for solar cells, the main component in photovoltaic panels, have dropped 38 percent this year, according to data compiled by Bloomberg New Energy Finance.

Thermal Plants

Developers have proposed at least 40 solar-thermal plants in the U.S. with total capacity of more than 7 gigawatts, or about seven typical nuclear reactors, according to New Energy Finance.

K Road Power Holdings LLC purchased the 663.5 megawatt Calico project near Barstow, California, from NTR Plc’s Tessera Solar in December. On Feb. 16, Tessera sold its proposed 709-megawatt Imperial Valley project to AES Corp. and a partner. Both developers plan to shift from solar-thermal to photovoltaic.

“This is the kind of streamlining we need to reduce costs,” said Arno Harris, chief executive officer of San Francisco-based Recurrent Energy, a unit of Sharp Corp. that builds photovoltaic plants. He said that not documenting a project’s water resources will save as much as $50,000.

“Any permitting process the solar industry doesn’t need to go through will speed up project realization times, which is a good thing,” Krebs said.

To contact the reporter on this story: Christopher Martin in New York at

To contact the editor responsible for this story: Reed Landberg at

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