Interview with Jon Bonanno, president, Principle Power

"Hybrid plants of CPV and CSP will likely emerge in the middle time horizon" Special

In May this year, when Principle Power closed US$2.3 million seed funding, it was shared that the mission is to produce and supply utility grade renewable energy to the grid by commercialising proven best-of-breed technologies.

As of today, the company is initially rolling out utility scale CPV power plants in Spain, Portugal and Mexico, according to Jon Bonanno, president, Principle Power.

Bonanno told in an interview that the company's project development team is very busy in these markets.

"Principle Power will build, own and operate these plants, always with local partners," shared Bonanno, who is scheduled to speak during CPV and CSP Investment & Finance Summit USA 2008, to be held on 2-3 October in San Francisco.

"As our focused regional strategy begins to bear fruit, we intend to expand our CPV footprint to include other key markets, such as the Middle East. These plants will not only be for grid tied electricity but also desalination, a critical challenge in the region. We have heard a strong signal of leadership from this region, where local captains of industry are showing global vision for renewable energy and sustainable living to solve their problems and safeguard their future," added Bonanno.

According to Bonanno, the company's project development team is making strong progress on resource assessment, transmission calculations, site control, technology selection and local consensus building.

"At Principle Power, we are taking advantage of the short-term financial supports in Europe but clearly see our competition as natural gas fired power plants.  Until we are competing and winning head to head, we will not be satisfied.  There is a fortune to be made on incentive arbitrage, but our true goal is to replace fossil peak supply," he said.

This is why the company is "laser" focused on driving down the cost of MW/hours of solar electricity through its exclusive working relationships with disruptive CPV technologies.

Bonanno added that these technologies will allow the company to offer its customers electricity on parity with natural gas fired plants and eventually carbon priced coal fired plants.

"To respond to the ITC renewal failure, I feel that a new president will resolve this issue as one of his first points of business. Sadly, the ITC and PTC are being cast and used as political hot potatoes. Principle Power sees it as a very straightforward choice - support ITC and PTC.  Industry groups like SEIA and SEPA are excellent resources for understanding the US solar political scene. Simultaneously, education on the benefits of the ITC must be provided to the public and politicians to win this battle," said Bonanno.

It is acknowledged that the success or failure of solar projects depends not only on getting units installed, but learning how best to financially structure your project.

When it comes to approaching prospects for project finance or venture capital, Bonanno said the companies in this sector should be prepared to be very creative and hear a lot of "no".

"With the credit market in the emergency room on life support, independent power producers (IPP), like Principle Power, must be resourceful, leverage the management team's professional network and learn how to structure debt and equity to mitigate risk," he said.

"Our approach of championing pre-commercial solar technologies and bringing them to scale yields an additional twist of complexity, but also invigorates the upside.  Investors are attracted to our model, as we represent medium risk and medium reward," said Bonanno.

When asked whether the industry can witness a faster ramp up for CSP since there are less technological hurdles to overcome and because they come often with energy storage solutions, Bonanno said CSP is excellent for certain applications. 

He sees CSP not as a competitor to CPV, but another tool in the IPP's toolbox. 

"Storage is, and will become increasingly more, important as parity between solar supply and demand converge.  We feel that this convergence will occur in the middle time horizon and thus storage is not paramount," said Bonanno.

He added that the second challenge faced by CSP is that thermal boilers/exchangers take almost 12 months to permit, whereas CPV avoids this added time and money by not having a boiler, plus it can be built modularly. 

Principle Power focuses on putting CPV MW/hours of electricity on the grid quickly, safely, profitably and reliably in the short - middle time horizon and see CSP as a long-term solution.  Hybrid plants of CPV and CSP will likely emerge in the middle time horizon, according to Bonanno.

It is acknowledged that the success or failure of solar projects depends not only on getting units installed, but learning how best to financially structure your project.

On how are companies are currently proving that unproven technology works or how are they evoking optimism in the wake of rising need for renewable energy across the US to get project finance for their projects, Bonanno said, "As a champion of emerging and proven at sub-scale solar technologies, we accept this risk by building the first plant on our own dime."

The process of selecting which technologies Principle Power takes to scale is identical to that of an early stage venture investor. 

"This is part of our management team's heritage, so comes quite naturally. Couple that together with our experienced energy veterans' experience, we make a strong candidate for project and corporate funding.  The reward for bridging the commercialisation gap is that Principle Power gains exclusive rights to continue building scaled projects with that technology, representing a clear win for the technology provider and for us," explained Bonanno.

CPV and CSP Investment & Finance Summit USA 2008

CPV and CSP Investment & Finance Summit USA 2008 is scheduled to take place in San Francisco on 2-3 October.

For more info, click here:


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