Project Development in the Solar Industry: 1st Edition (Hardback) book cover

Project Development in the Solar Industry

1st Edition

Edited by Albie Fong, Jesse Tippett

CRC Press

250 pages

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Hardback: 9780415621083
pub: 2012-12-05
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Description

This book provides an extensive overview of utility scale solar project development and the various tasks required to bring large solar power plants from plans to realities. The various topics have been organized and presented in a way to clearly define important development fundamentals including basic business and legal considerations. The reader is also guided through the more complex aspects of renewable energy development such as how to choose the ideal project site. Further, while the book is appropriate for a cover to cover read-through it is also designed to be an excellent go-to reference, a HANDBOOK FOR RENEWABLE ENERGY DEVELOPMENT.

Edited by: Albie Fong and Jesse Tippett

with contributions from: Arturo Alvarez, Jeffery Atkin, William DuFour III, Perry Fontana, William Hugron, Jason Keller, Tyler M. Kropf, Michael Mendelsohn, Brett Prior, Scott Reynolds, Pilar Rodriguez-Ibáñez, Katherine Ryzhaya Poster and Alfonso Tovar

ELECTRONIC ENHANCEMENTS

The book’s companion website http://www.solarbookteam.com provides contact information for all authors to the book and access to the key resources highlighted in the text. This tailored media platform provides supplemental and exclusive information that is up-to-date with the present state of the solar industry.

Table of Contents

Acknowledgments

List of figures

List of tables

This book and electronic enhancements

About the authors

1 Why renewable energy?

1.1 “WHY NOT” Solar Energy

2 Technology basics

2.1 Solar Photovoltaics

2.1.1 The photoelectric effect

2.2 Solar Thermal

2.2.1 The Rankine cycle

2.3 Parabolic Trough Systems

2.4 Power Towers, Dish Solar Thermal Systems and Solar Water Heating

3 Development: Project permitting

3.1 The Development and Permitting Landscape

3.2 The Development Process – An Overview

3.3 The Evolution of Permitting

3.4 Permitting a Utility-Scale Solar Generation Facility

3.5 The Role of the Non-Governmental Organization

3.6 Some Parting Thoughts

4 Development: Land

4.1 Brief Outline of Land Use and Energy Consumption

4.2 Solar Math, Energy Consumption and the Land Perspective

4.3 Preparation Prior to Search

4.3.1 Land size

4.3.2 State-County-Region

4.3.3 Utility provider

4.3.4 Project size

4.3.5 Distance to interconnection and proximity to substation

4.3.6 Topography

4.3.7 Water requirements

4.3.8 Solar radiation

4.4 Using Technology in Site Selection Process

4.5 BLM Land Overview

4.5.1 BLM vs. Private land

4.6 Williamson Act

4.7 Leasing, Purchasing and Options

4.8 Contracts

4.9 Pricing

4.10 Conclusion

5 Development: Transmission

5.1 Locating Transmission Lines

5.2 Identifying the Lines and Nomenclature

5.3 Historic Interconnection Application and Study Process

5.4 The Updated Interconnection Application Process

5.4.1 Fast track

5.4.2 Independent study

5.4.3 Cluster study

5.5 Land Requirements for Interconnection

5.6 Interconnection Cost Estimates

5.7 APS transmission Case Study: Transmission

5.8 Transmission Case Study: NV Energy Transmission

Delivery Preferences and Implications

5.9 California Interconnection Process – 5 MW Facility Placed

Onto Pacific Gas & Electric Network

5.9.1 Application processing

5.9.2 The technical scoping meeting

5.9.3 Technical studies

5.9.4 Interconnection agreement

5.9.5 Project implementation

6 Development: Energy off-take and power purchase agreements

6.1 The PPA and its importance to finance and valuation

6.2 Basic structure of a PPA

6.3 Key terms of the PPA

6.4 Financing Considerations of the PPA

6.5 PPA Variables greatly affecting the cash flow and value of the project

6.6 Buyer and Seller Key Commitments under a PPA

6.7 Obtaining a PPA

6.8 Utility Concerns in PPAs

6.9 Keys to PPA Award

6.10 Finding the best utility for a PPA

6.11 Project maturity and PPA Award

6.12 The broken U.S. PPA market and keys to improving it

7 Development: Renewable energy credits

7.1 Renewable Energy Credits

7.1.1 Tradable instruments

7.1.2 Regional markets (U.S.)

7.1.3 Commercial and regulatory risks

7.2 Carbon Markets and Cap-and-Trade Programs

7.2.1 Tradable instruments

7.2.2 Regional markets

8 Development: Development tools

8.1 Uses and application of geographic information software tools: Wetland databases

8.2 Biological geography databases and basis database navigation

8.3 Flora resource information databases

8.4 Renewable energy resource information: Solar radiation data

8.5 Geographic soil data

8.6 Transmission route and information databases

9 Development: Design considerations of photovoltaic systems

9.1 Overview of Design Considerations

9.2 Solar Resource

9.2.1 Direction or angle of incidence

9.2.2 Atmospheric disturbance or clearness index

9.2.3 Inter-annual variability

9.3 Project Requirements

9.3.1 Photovoltaic module

9.3.2 Photovoltaic inverter

9.3.3 Module mounting structure

9.4 Photovoltaic system design

9.4.1 Operating voltage

9.4.2 Temperature

9.4.3 String sizing

9.4.4 Combiner box

9.4.5 DC wiring

9.4.6 DC to AC conversion

9.4.7 AC field

9.4.8 System modeling

10 Business: Legal considerations of solar development

10.1 Entering into business negotiations

10.1.1 Confidentiality agreements

10.1.2 Term sheets

10.2 Business/Deal Structuring Decisions

10.2.1 Choice of entity

10.2.2 A holding company versus a project company

10.2.3 Where to form your business

10.2.4 Steps to create an LLC in delaware

10.2.5 Joint ventures

10.2.6 Acquiring a project in development

10.3 Project Development Considerations

10.3.1 Site control

10.3.2 Power purchase agreements

10.4 Construction Documents

10.5 Conclusion

11 Business: Finance

11.1 Forms of Investment

11.2 Financial Structure

11.3 Capital Requirements

11.4 Sources of Capital

11.5 Development Risks

11.5.1 Risk mitigation techniques and policies

11.6 Policy Impact on Asset Financing

11.6.1 U.S. policy to induce renewable energy finance

11.7 Path Forward: Securitization?

12 Business: Insurance and risk management

12.1 Risk Analysis

12.2 Project Risk

12.2.1 Risk mitigation

12.2.2 Anticipated insurance coverage’s

12.3 Conclusion

13 Renewable energy and Mexico – an emerging market with promise

13.1 The Law on the Use of Renewable Energy and Energy Transition Funding (LAERFTE)

The policy for the development of renewable energy

13.2 Current overview of renewable energy in Mexico: Progress on the introduction of wind and solar energy in the Mexican market

13.2.1 Wind energy

13.2.2 Solar energy

13.3 Conclusions

14 Market study: Current state of the US solar market

14.1 Solar Projects in Operation

14.1.1 Solar projects by technology

14.1.2 Solar projects in operation by state

14.1.3 Leading solar developer for completed solar projects

14.1.4 Leading debt providers for completed solar projects

14.1.5 Leading tax equity providers for completed solar projects

14.1.6 Leading direct equity providers for completed solar projects

14.2 Bottom-Up View of the US Utility-Scale Solar Market, 2012–2015

14.2.1 Solar projects under development or construction

14.2.2 Crystalline silicon and thin film PV

14.2.3 CSP

14.2.4 CPV

14.2.5 Solar projects by state

14.2.6 Leading solar developer

14.2.7 Leading debt providers

14.2.8 Leading tax equity providers

14.2.9 Leading direct equity providers

14.3 Top-Down View of the US Utility-Scale Solar Market, 2012–2015

14.3.1 Total US electricity demand and supply growth

14.3.2 RPS requirements by state

14.4 Key Trends in the US Utility-Scale Solar Market

14.4.1 End of the section 1603 cash grant program

14.4.2 IPPs moving from natural gas and wind to solar

14.4.3 Once the RPS requirements are met, then what? or – can solar compete with natural gas plants?

References

Index

About the Editors

EDITORS

ALBIE FONG

Albie is currently a Senior Manager of Project Execution with Talesun Solar where he works to deploy Talesun manufactured photovoltaic modules into commercial and utility scale projects. Technical evaluation of solar equipment, EPC management, and creation of strategic partnerships are other aspects of his role. Before his time with Talesun, Albie started the North American operations of Albiasa Solar in late 2008 and has held positions of both Chief Project Engineer and Managing Director of the company. During his tenure at Albiasa, Albie has been involved directly in many levels of the solar value chain for both utility scale PV & CSP projects: engineering, energy modeling, project permitting, manufacturing supply chain management, product marketing, and financing. Prior to his solar career, Albie worked in San Diego with OptiSwitch Technology Corporation, a group focused on the engineering of high power semiconductor switches with applications in the defense and biofuel industries. A native of the California Bay Area, Albie obtained his B.S. in electrical engineering from the University of California, San Diego with a concentration in financial investment. Traveling, snorkeling, and baseball have been activities Albie enjoys when not otherwise engaged saving the world with green energy.

JESSE TIPPETT

Jesse is a business development professional currently with Aries Power & Industrial where he works with their international team to develop renewable energy and provide engineering design and construction services to projects. Prior to joining Aries Jesse focused on technology bankability, project acquisitions and the development and energy marketing aspects of renewable energy projects with GCL Solar Energy and Albiasa Corporation.

Jesse became involved in renewable energy during his undergraduate studies at Worcester Polytechnic Institute, where he graduated with a B.S. in mechanical engineering and concentrations in Aerospace and Spanish. While studying he completed an award winning renewable energy project in Namibia, Africa with the R3E that implemented recyclable materials into low cost housing to decrease energy usage. Jesse has an MBA from the University of New Haven. Aside from contributing to the solar energy field, Jesse has worked in the aerospace industry with UTC’s Sikorsky Aircraft and completed a research project at NASA’s Glenn Research center. When not working, Jesse enjoys reading non-fiction, family time with his lovely wife and two beautiful children, adventure, traveling, surfing, and any combination of the aforementioned.

WITH CONTRIBUTIONS FROM:

ARTURO ALVAREZ

Arturo Alvarez currently serves as a project manager for Sisener Engineering in Phoenix, Arizona. In his current position Arturo is primarily responsible for the coordination of engineering documentation and main point of contact for ongoing projects that range from construction to advanced levels of development. Previously Arturo served as Albiasa Corporation’s Project Development Manager. In this role, Arturo was primarily responsible for pre-development efforts and preliminary engineering for Albiasa’s various CSP and PV projects. Additionally Arturo led all North American, Chinese, and Middle Eastern suppliers sourcing and supply chain management for the Albiasa parabolic trough for utility scale systems. Furthermore Arturo was a liaison between Albiasa’s Spain based engineers and the local regulations and procedures. Arturo’s key involvement in the renewable industry include innovative solutions for the adaptation of alternative fuel and the viability of biogas projects for disadvantaged communities in South America in 2007. This successful project addressed the lack of fossil fuels and took advantage of the available resources while educating the public about the biogas. Other involvements include the de optimization of distributed energy systems using solar PV. Arturo graduated from Santa Clara University with a Mechanical Engineering degree. He was an active member of the American Society of Mechanical Engineers and involved in ASME design projects.

JEFFERY ATKIN

Jeffery R. Atkin is a partner with Foley & Lardner LLP where he is chair of the Solar Energy Team and a member of the Energy Industry Team. His areas of practice cover a broad range of business and financial matters, including renewable energy, project finance, private placements, mergers and acquisitions, joint ventures, real estate development and equipment procurement and leasing.

Jeff’s experience in renewable energy and project finance includes representing developers, investors, lenders and landowners in the construction, development, acquisition and financing of renewable energy generation facilities including: wind, solar, hydro, geothermal and biomass facilities. He is a frequent speaker and author on all types of renewable energy development.

Jeff received his J.D., magna cum laude from Brigham Young University, where he was a member of the Brigham Young University Law Review. He received his B.A., summa cum laude, from Southern Utah University.

When not working, Jeff enjoys just about any event that will be getting him outside in the sun – from golfing to surfing to digging weeds.

WILLIAM DUFOUR III

William D. (Bill) DuFour III is an associate with Foley & Lardner LLP and a member of the firm’s Transactional & Securities Practice and the Energy Industry Team. His areas of practice cover a broad range of business and financial matters, including renewable energy, project finance, mergers and acquisitions (domestic and foreign) and general corporate matters. In particular, Bill has extensive experience in wind and solar project development, as well as acquisitions and financings of such projects.

Bill earned his law degree from The George Washington University Law School (J.D., cum laude), where he was a Thurgood Marshall Scholar. He holds a master’s degree in education from Loyola Marymount University (M.A., summa cum laude) and a bachelor’s degree in economics and political science from the University of Southern California (B.A., cum laude).

PERRY FONTANA

Perry H. Fontana, QEP has been permitting and developing energy facilities for 35 years. As Founder, President and CEO of Fontana Energy Associates he assists clients in the licensing of both renewable and conventional generation technologies. Perry has witnessed the evolution of the permitting process both domestically and internationally and he has a solid understanding of how the environmental review process can have a fundamental impact on the viability of a project.

Perry was formerly Vice President-Projects for Ausra, Inc. where he was responsible for site acquisition and development. At Ausra he acquired sites and completed early stage development for over 2 GW of solar thermal generation. Prior to his work at Ausra he was Vice President of URS Corporation, responsible for their Electric Power Business in the western U.S. and international operations. At URS he directed the site selection and permitting for natural gas, coal, geothermal, wind, solar and gasification projects totaling over 10 GW of installed generation. He has worked in 25 countries and has served as an expert for several independent power producers, the US Department of Energy, and numerous multinational lending institutions.

When not looking for that perfect and easy-to-license project site, Perry enjoys time with his family and their two English Mastiffs.

WILLIAM HUGRON

William Hugron has been in commercial real estate for 36 years, 10 years in property management, 12 years as a Vice President in asset management for Citicorp, Cal Fed, CAL REIT, and Peregrine Real Estate Trust and the remainder of his career in commercial brokerage and consulting. He was engaged by the bankruptcy courts in implement strategies to take Common Wealth Equity Partners out of bankruptcy and turn the entire portfolio around. It eventually was renamed the Peregrine Real Estate Trust. He has completed multi land transactions consisting of infill land and land assemblage. William has completed land assemblage assignments consisting of over 6,000 acres for Victoria Homes in Victorville, Lewis Operating Company in Adelanto, and Strata Land Investors in Apple Valley. He has also represented buyer & sellers and tenant & landlords in the Victor Valley and in Southern California. Throughout his career he has been able to reposition and dispose of special assets especially while working for syndicators and financial institutions throughout the Western United States. He was also given an award one of the largest office leases in 2008 by SIOR and CoStar for a 10 year, 65,000 square foot office lease valued at $24,800,000. He is consistently one of the top producers at Ashwill Associates and was a top producer when at the Charles Dunn Company. Besides practicing commercial real estate brokerage he also engages on commercial real estate consulting. He has contributed to many trade magazine articles and has lectured and given classes on commercial real estate.

JASON KELLER

Jason has been working in commercial real estate since 2001. From 2002–2004, Jason focused on office, industrial, and retail leasing, and developed his negotiating skills while representing both Landlords and Tenants. Since 2004, Jason has been representing residential developers, solar developers & private investors in the acquisition and disposition of land, raw and entitled, located throughout Southern California.

Jason’s true expertise lies in sourcing land. Using state of the art technology, Jason will exceed client expectations, delivering the right sites at the right price. In his free time, Jason enjoys exercising and spending time with his beautiful wife and 5 children. He and his family live in Corona, California.

TYLER M. KROPF

Tyler M. Kropf is a commercial real estate broker at Ashwill Associates, Inc. where he directs land acquisition and disposition for lending institutions, public companies, private investment groups and individual owners. Early in his career his primary work was representing residential developers and merchant builders. His background in large-scale developments gave him experience to fill a more recent advisory position with utility scale solar development companies. He has been included in several professional publications to speak on the subject of land and renewable energy development. Tyler graduated from Brigham Young University with a bachelor’s degree in Facilities Management and a Minor in Business Management. Tyler is fluent in Spanish and enjoys playing tennis and living in Newport Beach, California with his wife and two daughters.

MICHAEL MENDELSOHN

Mike Mendelsohn has over 20 years of experience in various facets of the energy industry. Mike is currently a Senior Financial Analyst with the National Renewable Energy Laboratory, and specializes in financial structures and sources of capital for renewable energy projects. He also leads the development of evaluation tools to assess project cost of energy, assesses the impact of financial structure on utility-scale solar projects, and is currently evaluating the use of securitization to improve access to capital. His analyses and other products can be found at: www.financeRE.nrel.gov

Prior to joining NREL, Mike worked as a senior associate with the non-profit Western Resource Advocates, a senior consultant with Levitan and Associates, and an economist with the Massachusetts Department of Public Utilities. Mike holds a M.S. in Energy Management and Policy from the University of Pennsylvania and a B.A. in Computer Science from Ithaca College.

BRETT PRIOR

Brett Prior is a Senior Analyst with PHOTON Consulting. Previously, he covered the solar industry at GTM Research, the market research arm of Greentech Media. Brett has published reports on Concentrating Solar Thermal Power (CSP), Concentrating Photovoltaics (CPV), Polysilicon, and Project Finance for Renewable Energy.

An expert in utility-scale solar, he has been quoted in numerous publications including: The New York Times, Reuters, Forbes, and Bloomberg. He has also contributed articles for GE’s Ecomagination website. Brett earned an MBA with distinction from London Business School. Before graduate school, Brett served as a senior equity analyst at Bishop Street Capital Management, a mutual fund company in Hawaii. Brett holds a BA in Political Science and International Studies from Yale University, and he is a Chartered Financial Analyst (CFA).

SCOTT REYNOLDS

Scott Reynolds is a key member of Beecher Carlson’s Energy Practice. His primary responsibilities involve designing, marketing, and implementing innovative insurance programs for Energy clients, especially in the renewable and alternative energy space. In addition to managing projects and responding to the day-to-day service needs of clients, he has expertise in crafting creative solutions to business challenges.

Prior to joining Beecher Carlson, Scott was a Senior Vice President at Marsh where he led Marsh’s Alternative Energy Practice for the West Zone, U.S. Solar and Geothermal Practices and Offshore Insurance team for Chevron Corporation. Before that, Scott served as the Director of Risk Management for FPL Group, Inc., a diversified holding company that owned Florida Power & Light Company and had interests in commercial banking, real estate, cable TV and cogeneration venture. Scott has extensive experience in the field of utility risk management, both through his work at Florida Power and Light and as chairman of numerous utility industry committees. Before joining FPL Group, Inc., Scott worked for Earl V. Maynard & Company Insurance Broker, specializing in electric and gas utilities and private energy firms.

PILAR RODRIGUEZ-IBÁÑEZ

Pilar Rodriguez-Ibáñez holds a Master’s Degree in Environmental Policy from the University of Illinois at Urbana-Champaign. She is also a PhD candidate in Sustainable Development from Complutense University of Madrid, Spain. She is a former local representative in her home State of Veracruz in Mexico. Her research interests have focused on Solid Waste Policy, Environmental Taxation, and Energy Policy. Currently, she is a Graduate student in Public Policy at ITESM’s Escuela de Graduados en Administración Pública y Política Pública (EGAP) in Monterrey, Mexico. When not working Pilar enjoys spending time with her wonderful husband and two lovely boys.

KATHERINE RYZHAYA POSTER

Katherine Ryzhaya Poster is a Vice President in the Structured Transactions group at Evolution Markets. Based in the firm’s San Francisco office, Ms. Ryzhaya Poster works with wholesale market participants on all matters relating to power marketing, energy sales, contract negotiations, and policy development. Ms. Ryzhaya Poster joined Evolution from Pacific Gas and Electric Company (PG&E) where she served as Principal in the Energy Procurement Group and was responsible for leading negotiations on utility-scale renewable energy contracts. Prior to PG&E, Ms. Ryzhaya Poster worked in finance at RBC Capital Markets and at UBS. She received her MBA, with a concentration in Finance, from Duke University. In her free time, Katherine builds toy forts, puts on puppet shows and scales the hills of San Francisco with her stroller (and baby).

ALFONSO TOVAR

Alfonso Tovar is a Solar Engineer currently working with Black & Veatch, where he specializes in the assessment of established and emerging solar technologies and systems including: photovoltaic (PV) systems design, design review of utility scale and large rooftop PV systems, modeling and performance evaluation of PV systems, training on PV technologies, cost analysis of solar systems, and solar policy. Alfonso began his career as a Solar Engineer a decade ago, designing and installing small-scale off-grid PV systems for SolarQuest, a non-profit organization. He then obtained a graduate degree at the University of California, Merced, where he conducted research on micro-concentrating solar power systems using non-imaging optics. After graduation, Alfonso worked with two PV systems integrators of large commercial and utility scale photovoltaic systems before joining Black & Veatch.

Subject Categories

BISAC Subject Codes/Headings:
BUS101000
BUSINESS & ECONOMICS / Project Management
TEC031010
TECHNOLOGY & ENGINEERING / Power Resources / Alternative & Renewable
TEC031020
TECHNOLOGY & ENGINEERING / Power Resources / Electrical