Thursday, December 9, 2010

Is Tessera Solar Sinking?

Amidst concerns that Tessera Solar's industrial power plant will be under water if built on the proposed 1,525-acre site in Saguache County, Co., new financial reports suggest the company itself may already be sinking.

When questioned by SLVRCA members about project cancellations and prospects for funding during the Dec. 6th public hearing on its San Luis Valley permit application, Randy Etheridge from Tessera Solar North America's Houston, TX headquarters denied the company is in financial trouble.  As it turns out, we weren't  far off the mark.

Early signs include theSeptember withdrawal of Tessera's 27 Megawatt (MW) proposal in Marfa, Texas.  The San Antonio Express News reported the company was unable to obtain funding for the 800-acre project. On the heals of the Marfa cancellation, Tessera ended a joint venture with the city of Phoenix, AZ when it couldn't find a buyer for the power the 250 MW plant would produce.

SunCatcher in repair mode, Maricopa, AZ by Chuck Tidd
On Dec. 7th, Green Tech Media (GTM) released a report aptly titled, "Are Stirling Energy Systems and Tessera Solar in Trouble? offering further evidence that "Stirling Energy Systems and its development partner Tessera Solar are falling fast."

According to GTM, in the past week Stirling Energy Systems CEO, Steve Cowman and other executives resigned and Tessera Solar has laid off between 50% to 80% of its employees. The report suggested the layoffs and executive departures "could be a hint that the fundraising process is not going as planned."

On Dec. 8th the Irish Times reported that Tessera's parent company, NTR, has put Imperial Valley and Calico, two massive industrial solar projects in the California desert, on hold "until economic conditions and capital markets’ appetites for such investments improved".

In his recent publication, "Federal Government Betting on Wrong Solar Horse", energy expert Bill Powers highlights Tessera's failed deal with San Antonio as a case study in cost-based solar energy project selection.  CPS Energy, the San Antonio public utility subsequently replaced the 27 MW Tessera Power Purchase Agreement (PPA) with three 10-megawatt distributed PV projects to be built around the San Antonio area at a cost of $150 a megawatt-hour.  These smaller distributed plants also allowed the San Antonio utility to avoid substantial new transmission costs.

Furthermore, said Powers in an email to our blog administrator, “Tessera dish solar technology has always been a complex, high cost, not-ready-for-prime time DOE research project. It can not compete with simple, low cost, ready-for-prime-time distributed solar PV.”

It's not known to what extent public opposition and litigation is a factor in the Marfa, Texas and California project cancellation and delays.  Distributed generation is viewed by many as a faster and more cost-effective alternative to the massive solar industrialization of our nations intact rural agricultural and public lands.  The Tessera Solar project is strongly opposed by many Saguache County and San Luis Valley residents who are concerned about the degradation of important cultural and natural resources.  Much of the San Luis Valley was declared a National Heritage Area earlier this year. 

According to GTM,  Tessera could conceivably try to recover their losses by selling the California and Colorado projects to solar developers with money in hand if they fail to get loans and funding.

The prospects of getting a Power Purchase Agreement with Xcel for its San Luis Valley proposal before 2016 are also looking slim.  On Dec. 10th, Xcel asked state regulators to reduce its solar power purchases in the San Luis Valley.  According to the Pueblo Chieftain report, Xcel plans to limit its short-term plans to Cogentrix  Energy and Iberdrola Renewables for a total of 60 megawatts.

Coming up - new estimates from the State Assessors Office suggest the actual revenue the county can expect to receive from utility scale developments like Tessera Solar are considerably less than industry is quoting.  This will be the subject of our next blog.

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