Green Energy Reporter

In these economic times that’s the first question a potential funder is likely to ask a green developer.  There was a time when strategic acreage and bullish statistics on future electricity demand could help carry a project, but that is no longer the case. There is appetite for clean energy, undoubtebly, but its measured, and cautious. Against this backdrop of tight credit and negative economic growth, projects need  a PPA for them to have any chance of getting financing.

That’s one of the key takeaways from the BrightSource announcement. Yesterday,  Google-backed BrightSource Energy rolled out a major 1,300 MW utility-scale solar project, to be built in the  California/Nevada Mojave desert, that will use the company’s “power tower” technology.  From a technical standpoint the project is impressive, but also impressive is the  20-year PPA BrightSource signed with Southern California Edison. That contract is an insurance policy that secures the project with a long-term revenue stream and offers project fiance banks a solid repayment plan.

The Green Wombat’s Todd Woody concurs: 

“A long-term utility contract is key for a startup like BrightSource to
obtain the billions in financing required to build large-scale solar
power plants. The terms of utility contracts – such as the cost of the
solar electricity produced – are closely held secrets but are worth
billions.”

Ausra, another utility-scale solar developer, recently announced a scaleback, saying it was only going ahead with projects locked in PPAs, which are  its 177 MW Carrizo Energy
Solar Farm on California’s central coast and another one in Arizona. Those without an offtake agreement — the merchant route is not option these days– the Palo Alto company  is putting on hold. 

The BrightSource announcement says a lot about the polar realities of the cleantech market: tight liquidity but deep political backing.  President Barack Obama is about to sign an unprecedented stimulus that assures tens of billions of  dollars in new funding for the sector .

Again, Todd Woody at the Green Wombat:

“Given the economic collapse, why are these massive megawatt deals still
being done? First, California utilities are under tight deadlines to
ratchet up the amount of electricity they obtain from renewable sources
- 20% by the end of 2010 and 33% by 2020.”

But despite this unprecedented goodwill, these days, in this financial reality, a solid PPA  is the clincher for any project to take off.

World’s biggest solar deal for Google-backed startup (Green Wombat via Fortune)