Developer wants more time to save troubled Calif. project

Source: Scott Streater, E&E reporter • Posted: Tuesday, January 5, 2016

A Spanish renewable energy developer is trying to save a proposed utility-scale solar power project in California that has been in the works for nearly a decade but is threatened by the company’s pending bankruptcy.

Abengoa Solar late yesterday filed a petition with the California Energy Commission (CEC) seeking more time to transfer ownership of the proposed 500-megawatt Palen Solar Electric Generating System project to a subsidiary of San Diego-based EDF Renewable Energy Inc.

The Abengoa subsidiary developing the first 250 MW phase of the project — Palen SEGS I LLC — is requesting that the CEC grant a six-month extension to the deadline to begin construction, to June 15, 2017, from Dec. 15, 2016.

Abengoa, the troubled Seville, Spain-based renewable energy giant, is crippled with debt and is restructuring in an effort to avoid bankruptcy. Last week, Palen LLC informed the CEC that it has an agreement in place to transfer ownership of the project to EDF, whose subsidiary, Maverick Solar Enterprises LLC, will develop the project on roughly 1,900 acres of federal land in Riverside County, Calif.

But Abengoa faced a deadline yesterday to file a new plan of development with the CEC that would change the solar technology that’s proposed at the site. The new plan would also add thermal energy storage that would allow the power plant to supply electricity to the grid after dark or on cloudy days.

The CEC in September granted the company a one-year extension to begin construction of the project by December 2016, but under one condition — Abengoa had to file the new plan of development by 5 p.m. PST yesterday.

If not, the one-year extension would be rescinded and CEC’s original approval of the project in December 2010 would expire. Thus, any developer seeking to build the Palen project would have to start the regulatory permitting process over from scratch.

Palen filed the petition asking for more time to file the new development plan just a few hours before yesterday’s deadline. In it, the subsidiary says that Abengoa’s looming bankruptcy represents a circumstance “beyond the Project owner’s control” that qualifies as a condition for the CEC to grant another deadline extension.

“Since the Commission issued its Extension Order in September 2015, [Palen] has continued to work diligently to develop a modified Project description that would satisfy the Commission’s conditions by the Extension Order’s deadline of December 22, 2015,” states the petition, written by Andrew Bell, an attorney for Palen. “However, given the pre-insolvency proceedings begun by Abengoa … a Project amendment reliant on Abengoa’s solar trough technology by December 22, 2015 is no longer feasible.”

If the extension is granted, the petition states that Maverick Solar would submit a revised plan of development by June 15, 2016, which would change the proposed technology from Abengoa’s preferred solar trough to photovoltaic, which is in line with EDF’s numerous other midsize solar projects to date.

“The increased time will allow Maverick to develop and submit its own engineering and site design documents founded upon the Commission’s environmental and engineering evaluation of all previous Project proposals and alternatives,” the petition states. “Upon completion, the Project will further benefit the public by siting a utility-scale solar facility in an approved Solar Energy Zone and contributing significantly to the achievement of the renewable energy and greenhouse gas emission reduction goals of the State of California and the President’s Climate Action Plan.”

It’s not clear if the CEC will grant the latest extension request and allow the EDF subsidiary time to develop a new plan for the project without having to start the permitting process from the beginning.

Albert Lundeen, a CEC spokesman, said late yesterday that the agency needs time to review the petition request. The commission could consider the latest extension request at its Jan. 13 meeting, Lundeen said.

Sandi Briner, an EDF spokeswoman, said the company can’t say much publicly beyond the documents that have already been filed with the CEC.

Those documents include a signed declaration submitted last week to CEC from EDF’s vice president of development west, Cliff Graham, acknowledging the ownership transfer agreement and the company’s efforts to comply with state mandates.

“We’re just kind of waiting to see how things play out,” Briner said.

Reason for hope

Though Abengoa is in financial trouble, transfer of the project to EDF is a good sign for the oft-delayed project’s future.

EDF is one of the largest renewable energy developers in North America, with 6,000 MW of developed wind, solar, biomass and biogas projects. The company has developed 15 renewable energy projects in California alone, generating a combined 1,300 MW of electricity — enough to power about 390,000 homes.

Colin Smith, an analyst with Boston-based GTM Research, a solar market research firm, said in a recent interview that the project would be attractive to developers after Congress agreed to extend a 30 percent investment tax credit for solar energy in the federal spending bill.

That’s if EDF gets more time to amend the project to use its preferred photovoltaic technology, Smith said.

The Palen petition states that it worked “to transfer the Project as quickly as possible to a new owner” in an effort to save it and “provide a return on the time and money invested to date by the Project Owner and the people and State of California in the development of the Project.”

But this is not the first time the project has been in doubt.

The CEC in 2010 approved the $2 billion project, but it was abandoned in 2012 when the original project proponent, Solar Trust of America LLC, went bankrupt just months after the Bureau of Land Management had issued a final environmental impact statement for the project in May 2011.

Oakland, Calif.-based BrightSource Energy Inc. purchased the rights to the Palen project at a 2012 bankruptcy auction.

The BrightSource Energy version of the project would have reduced the overall footprint and changed the technology to a concentrating solar thermal power tower similar to the Ivanpah Solar Electric Generating System, also developed by BrightSource, in neighboring San Bernardino County. Solar Trust of America LLC had planned to use the trough technology.

Abengoa Solar announced last year that it had purchased BrightSource’s interests in the project and would become the project’s sole developer (E&ENews PM, Nov. 5, 2014).

But the project’s location — near Joshua Tree National Park and in the middle of what some conservation leaders term the Pacific Flyway, traversed by thousands of migrating birds — has been a lingering concern. That’s one reason why Abengoa wanted to revise the plan of development to incorporate solar trough technology.