Rising From the Desert, Solar-Thermal Giant Defies Musk Battery

(Bloomberg) -- South America’s only solar-thermal project is resuming construction just as the technology it uses risks being overtaken by a cheaper alternative.

Cerro Dominador had been gathering dust on the plains of Chile’s Atacama Desert for more than two years after former co-owner Abengoa SA got into financial difficulties. The company finally sold its stake to its partner, private equity firm EIG Global Energy Partners LLC, which in May secured the $758 million needed to finish the $1.1 billion plant.

"It hasn’t been easy to get here, we’ve gone through some dark hours when we didn’t know if we would make it," Fernando Gonzalez, Cerro Dominador chief executive officer, said at the site on Thursday as work resumed. "Closing the financing was a milestone that shows international banks’ confidence in the technology and in the country."

Rising From the Desert, Solar-Thermal Giant Defies Musk Battery

When finished, Cerro Dominador will be a breathtaking piece of engineering, with 10,800 giant mirrors focusing light to the top of a tower more than twice the height of the Statue of Liberty. As the sun crosses the sky, minute movements in the mirrors, some as far as a kilometer and a half from the tower, will heat a salt solution that in turn will boil water. The result is electrical power 24 hours a day.

Workers have started washing away the layers of dust that have accumulated on the mirrors, with construction of the 110 megawatt plant due to be completed at the end of 2019. It will function in combination with a conventional 100 megawatt solar farm that was connected to the grid in May.

Its Nemesis

Thousands of miles away, in the Australian outback, sits a rival technology that may make solar-thermal plants a thing of the past.

The world’s largest lithium-ion battery, built by Elon Musk’s Tesla Inc., can store 129 megawatts/hours of the electricity generated from a nearby wind farm, according to Bloomberg New Energy Finance. The battery was built in less than 100 days and the estimated cost of the project is between A$100 million ($74 million) and A$120 million. You would need a lot of those batteries to supply the same amount of electricity as Cerro Dominador all night.

Rising From the Desert, Solar-Thermal Giant Defies Musk Battery

"The (solar thermal) technology is not obsolete, but it is a niche technology, meaning it’s only viable in geographies that have very high patterns of sunlight," such as northern Chile, said Pavel Molchanov, an analyst at Raymond James.

Rising From the Desert, Solar-Thermal Giant Defies Musk Battery

Battery prices fell 24 percent in the year to December 2017, according to a Bloomberg New Energy Finance 2018 report, more than forecast at the beginning of the year.

"Large-scale batteries for the electric grid are a new technology that did not exist 10 years ago," Molchanov said. "It’s increasingly becoming mainstream."

Unfazed

Cerro Dominador has signed a 15-year contract to produce electricity at $114 per megawatt per hour, starting in 2019. That contract has enabled EIG to push ahead with the project despite the potential competition from batteries.

“In 15 years’ time, this plant will be operating just as it does now,” Gonzalez said. “It has been built with a lifespan of 30 to 40 years.”

Rising From the Desert, Solar-Thermal Giant Defies Musk Battery

So confident is EIG that it has started studying the potential for a second solar-thermal project in the Atacama desert, company President Bill Sonneborn said in an interview last week.

Predictions about the future in this industry are hard to make though.

"Fifteen years is an eternity in the solar industry,” Molchanov said. “Everything in solar will be completely different in 15 years."

©2018 Bloomberg L.P.