Edison cancels contract for Tessera?s Calico concentrated solar energy project

NTR’s Tessera Solar has suffered a major setback with the loss of a 663.5-megawatt power purchase agreement with utility Southern California Edison for its Calico concentrating solar power project.

The abrupt cancellation of the five-year-old contract comes just eight weeks after California and federal officials approved Calico, which they put on a fast track so Tessera could qualify for lucrative government incentives for large-scale renewable energy projects.

Neither the utility nor Tessera would comment on the reasons for scrapping the 20-year power purchase agreement, citing confidentiality provisions. Signed in August 2005, it was one of the largest contracts for electricity to be generated by a single solar thermal power plant.

Southern California Edison notified the California Public Utilities Commission in a regulatory filing on Thursday that it had terminated the power purchase agreement, or PPA, with Tessera.

“Calico Solar is a fully permitted facility, has an interconnection agreement for 850 MW, and is pursuing alternative PPAs to assure its position as a key component of California’s renewable energy future,” Janette Coates, a Tessera spokeswoman, said in an e-mail.

Tessera, however, has yet to arrange financing to build Calico in the Mojave Desert east of Los Angeles or its approved 709-megawatt Imperial Valley Solar Project near the Mexican border. The company has estimated it would cost around $4.6 billion to build the two projects, which would deploy 54,900 large solar dishes on 10,000 acres of government-owned desert land.

The solar dishes, called SunCatchers, are 40-feet tall and 38-feet wide and resemble large mirrored satellite receivers. The mirrors focus the sun on a Stirling engine filled with hydrogen gas that expands as it is heated, driving pistons to generate electricity. The technology has been proven in pilot projects but never tried on a large scale.

Tessera declined to comment on what it called speculation. A buyer would face the prospect of further environmental review if it wanted to deploy a new technology that would have different impacts on the sites’ landscape and wildlife.

Both projects come with obstacles to overcome. The Quechan Native American tribe has sued the United States Interior Department over its approval of the Imperial Valley power plant. The tribe recently won a temporarily injunction blocking construction until a judge can hear its claims that the government failed to adequately consult with the Quechan over the project’s impact on their ancestral lands.

Environmental and union groups, meanwhile, have said they are considering suing the California Energy Commission over the harm they say the Calico project will do to protected wildlife.

Citing a nondisclosure agreement, SCE has not stated a reason for its withdrawing from the power purchase agreement (PPA), according to the San Diego Union Tribune. Tessera Solar is reportedly pursuing alternative plans for securing a PPA.

The company proposing huge desert solar farms featuring tens of thousands of mirrored dishes pointed at the sun got another blow last week when one of its largest customers bowed out.

Edison wouldn’t say why it terminated the contract with Tessera. "We have a nondisclosure agreement," spokeswoman Vanessa McGrady said Monday.Tessera spokeswoman Janette Coates said the project has all the permits it needs and the company "is pursuing alternative (deals) to assure its position as a key component of California’s renewable energy future."

The move came a week after a San Diego federal judge put a halt on a sister project, Imperial Valley Solar, at the urging of the Quechan Indian tribe, which says it wasn’t properly consulted on impacts on ancient sites. The 709-megawatt Imperial Valley Solar project was to provide power to San Diego Gas & Electric.

Besides the legal holdup, Tessera said it doesn’t have the money to build the $2 billion project, and is hoping for a partner to buy into it. Both Tessera and sister company Stirling Energy Systems are owned by NTR, a money-losing Irish conglomerate which wrote down a substantial portion of its investment in the solar technology.

Both companies have undergone management shakeups and layoffs in recent weeks. Stirling Energy is focused on engineering and manufacturing Suncatcher dishes, which utilize a Stirling engine to make power. Unlike photovoltaic panels, they rely on heat to make electricity.

SDG&E has said it hopes Tessera is able to overcome the obstacles to development of Imperial Valley Solar. A spokeswoman said Monday that nothing has changed in recent days.