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Investing in Solar Thermal Energy

Written By Nick Hodge

Posted April 2, 2008

Wealth Daily’s home state of Maryland gave preliminary approval to some pretty progressive energy legislation yesterday. And while the measures still need to be confirmed by the House of Delegates, I think they offer a fair amount of insight into the energy problems being face by the country as a whole.

The goal, as proposed by Gov. Martin O’Malley, is to reduce energy consumption in the state 15% by 2015.

Maryland, like most of the country, is facing increasing demands for electricity. And according to the state’s Public Service Commission, limited supply and an aging infrastructure could cause shortages and rolling blackouts as soon as 2011.

The measures proposed in the state senate would:

· require utilities to create programs to reduce electricity bills by providing rebates for customers who buy energy-efficient appliances

· create incentives for people to build more energy efficient homes and

· implement a state fund to promote energy conservation.

The fund would be financed with money Maryland is slated to receive as part of the ten-state Regional Greenhouse Gas Initiative (RGGI)–a cap-and-trade system in which big polluters would be required to either reduce emissions or purchase credits.

Also included in the bill is a provision that would increase the use of renewable energy like wind and solar energy. The goal is to produce 20% of the state’s power renewably by 2022.

And while Maryland’s initiatives are certainly a welcomed change from the status quo, some states are already doing more.

Solar Thermal Energy from Florida to California

California law already requires investor-owned utilities to generate 20% of their electricity renewably by 2010 and 33% by 2017. This has created a robust market for many renewable technologies, but especially for solar thermal energy, or concentrating solar power (CSP).

So robust, in fact, that the giant Florida utility FPL Group (NYSE: FPL) has filed plans with California regulators to build a $1 billion, 250-megawatt solar power plant in the Mojave Desert dubbed the Beacon Solar Energy Project.

It will use a form of solar thermal technology called solar troughs, in which mirrors focus the sun’s heat on tubes of synthetic oil. The hot oil then creates steam which drives turbines to create electricity.

The plan marks the first time a Fortune 500 company has jumped into what some are now calling the Big Solar market.

But FPL isn’t all green when it comes to the Californian solar market. They already operate seven of nine solar trough plants built by Israel’s Luz International in the late 80s and early 90s.

So if you’re looking for a utility play that is favorable to renewable energy, FPL or one of the various Californian utilities–PG&E Corporation (NYSE: PCG), Edison International (NYSE: EIX) or San Diego Gas & Electric–could be the way to go.

But if you’re looking for a solar company to play the burgeoning solar thermal market, the international markets are the place to look–at least for now.

International Investments in Solar Thermal Energy

Because the U.S. has been so slow to adopt renewable energy–especially utility scale–many foreign firms already have a leg up.

According to a recent report from the Prometheus Institute and Greentech Media, the concentrating solar market could be worth up to $200 billion by 2020. Much of that investment will come from Southern Europe and Northern Africa.

Renewable energy in Northern Africa— where the hot Mediterranean sun is ideal for CSP applications–is actually steadily on the rise.

An initiative there, called the Trans-Mediterranean Renewable Energy Cooperation, is focused on turning Europe, North Africa, and the westernmost reaches of Asia (the Middle East) into a supergrid whose power potential would yield heaps of market opportunities for green power companies.

And those green power companies are chomping at the bit.

German concentrating solar company Concentrix Solar closed an undisclosed amount of second round of financing from Good Energies, who has also financed Solarfun Power Holdings (NASDAQ: SOLF), Trina Solar Limited (NYSE: TSL) and photovoltaics juggernaut Q-Cells AG (FRA: QCE).

Incidentally, Spanish renewable energy company Abengoa (MCE: ABG) also contributed to Concentrix’s second round of financing. Together, the pair will form a joint venture, called Concentrix Iberia S.A., that will tap into the booming Spanish CSP market.

Abu Dhabi’s Masdar–the initiative developing the green city in the desert–is also trying to enter the market. They’ve signed up to build $1.2 billion worth of solar thermal projects in the south of Spain.

And the list goes on.

Another Spanish energy firm, Acciona Group (MCE: ANA), recently announced plans to build $1.8 billion worth of solar thermal plants with a total generation capacity of 359 MW.

In addition to the Mediterranean market, the established European companies are looking to crack the budding U.S. domestic market as well. Acciona, Abengoa and Australia’s Ausra each have plans to build solar plants in the sunny southwest.

New deals and new projects are being announced everyday. And Green Chip International is the only advisory service with the knowledge and experience to deliver consistent gains in this growing industry.

If you want to be a part of international cleantech movement, I urge you check out Green Chip International.

Until next time,

nick hodge