Solar thermal power technology and service provider, Skyfuel plans to develop nearly 2,000 MW of solar plants in the coming years. CSPToday talks exclusively to the company’s chief project officer Richard J. Guy

By M. Hriday

Albuquerque, New Mexico-based SkyFuel recently appointed Richard J. Guy as its first chief project officer. CSP Today spoke to him about his plans.

In the last year or so, both utility-driven and utility-scale project/programme announcements have emerged as a new and significant solar market. How do you assess the current environment?

Richard Guy: For CSP, the utility driven projects and programmes, each for utility scale resources, largely make up the market.   The direct involvement by regulated utilities in the development and ownership of such projects, now that utilities can take advantage of the tax benefits, is particularly encouraging, as such projects have a higher probability of success. 

However, the need to be able to demonstrate least cost is not diminished because a project may be rate based.  Indeed, the process for such projects is more transparent and subject to more scrutiny.  So, given this even greater emphasis on least cost, while of course maintaining technical performance, we see this as a market perfectly suited for our product, the SkyTrough glass-free parabolic trough solar collector.

Considering your experience in power project development and SkyFuel’s parabolic trough solar collector, how do you think SkyFuel has the potential to contribute in terms of keeping the costs under control and at the same improve upon the efficiency of CSP power plants?

Richard Guy: The market is always seeking improved economic performance either through lower cost or improved performance.  SkyFuel’s SkyTrough collector was conceived and designed to offer both, but recognising that the biggest gain would come from much lower cost rather than focusing on performance—although we also notched that up. And that is precisely what the finished product does.  Developers and constructors will use this lower cost, high performance product to achieve increased penetration of solar power into the electric generation market. 

New CSP generation systems need experienced project development partners to bring them to market. What doing you think is the major challenge which you need to address from SkyFuel’s perspective?

Richard Guy: From our perspective, the major challenge is to insure that CSP is competitive with other forms of power generation.  That’s why we have been working to improve the economics of CSP facilities through development of the low cost, high performance SkyTrough. But we also chose the vendor business model where we sell to experienced project developers, rather than attempting to compete with them. We believe we have the most competitive product and we make it easy to buy from us.  Rapid dissemination of the SkyTrough will bring down the cost of solar electricity for all parties.

Utilities says California RPS programme is technology agnostic. As they launch their next annual solicitation for 2009 and look forward to receiving additional competitive proposals from CSP and other renewable projects, what do you think is going to be critical for the CSP industry going forward?

Richard Guy: Transparent focus on least cost is always crucial to a functioning market.  The recent announcement of what appear to be royalty contracts between a CA utility and a CSP company promoting its own technology, and with which the utility has solar energy supply agreements, will make optimal economic decisions more difficult.  It seems to cloud -  pun intended - transparency. But there also needs to be a focus on getting projects realised. We believe the only entities capable of developing, owning and operating major solar facilities are experienced, highly capitalised developers or the utilities themselves. In response, SkyFuel will keep its focus on delivering the least cost solar alternative to those who can get the job done and fostering all efforts to maintain open markets. 

You are going to focus on working with construction contractors, equipment suppliers and independent developers. How are you going to bring in efficiency in the overall process?

Richard Guy: Our SkyTrough collector introduces efficiency by lowering construction and maintenance costs without lowering technical performance.  This is particularly important for a CSP facility as the cost of the collectors make up a significant portion of the actual facility construction cost.  For instance, a 20% reduction in collector cost could yield a 10% reduction in overall facility cost—a very substantial saving.  Specifically with regard to lowering construction costs, the SkyTrough sets a new benchmark for speed and ease of deployment of utility scale CSP systems by virtue of being delivered to the site as ready-to-build, modular kit. This leads directly to lower labor costs and lower project financing costs.

There are many potential surprises in project development that must be carefully weighed and mitigated where possible. Which is the best way to approach them? To what extent do expertise in project development and maturity of a technology help in mitigating risks?

Richard Guy: There are many risks that the developer faces.  The best way to approach them is individually.  Reducing risk in any one development area will reduce overall development risk, thus increasing the chances that your project can ride out potential surprises.  SkyFuel offers developers the opportunity to reduce risk by providing a well-designed and independently tested collector with unbreakable mirrors and by reducing the construction costs.  With this, the developer can ride out cost increases in, for instance, transmission.  Also, by reducing technology risk the developers can obtain better access to both equity and debt capital.

Renewable energy development is driven by policy, whether it's a price on carbon, RPS goals, or others.  How do you think recent developments related to Federal Cash Grant programme and the loan guarantee are going to propel projects?

Richard Guy: Many states with RPS goals also have built in mechanisms to insure that meeting the goals does not result in unacceptable increases in electricity prices to customers. Further in California the reference market price suggests what a reasonable cost of renewable energy is, but this price is linked to the price of natural gas, which collapsed during the last year. The challenge is that the renewable energy prices are too low for a project regardless of the availability of the federal incentives. That said, the cash grant programme should allow more renewable projects to achieve cost structures that allow them to be used to meet RPS goals.