ESolar has signed a deal to build 245 megawatts of concentrating solar-thermal plants for Southern California Edison, the company announced Tuesday.

The companies didn’t disclose the price or terms of the deal, other than to say the plants are expected to begin production in 2011. 

ESolar, which in April snagged $130 million from Idealab, and Oak Investment Partners, plans to produce electricity using fields of mirrors that direct sunlight toward a water tower to make steam, which it then converts into electricity.

In an interview with Greentech Media in April, Bill Gross, CEO of Idealab, said eSolar’s advantage is that its power plants will be completely prefabricated, removing the need for construction and extensive labor at the site. He also said using many small, flat mirrors instead of large, curved mirrors reduces the cost. 

The deal represents eSolar’s first power-purchase agreement. The plants will be built in seven modules of 35 megawatts, each of which will take up 160 acres, or a quarter square mile, said Robert Rogan, executive vice president of corporate development at eSolar.

The announcement is notable because Southern California Edison (SCE) was the first large-scale purchaser of solar-thermal power, signing power-purchase agreements with Luz International in the 1980s, said Ron Pernick, a principal at research firm Clean Edge. 

“After almost 20 years of inaction, we’re seeing quite a bit of activity lining up for power-purchase agreements around [concentrated solar power], and one of the first major utilities involved is lining up contracts again,” he said. “We’re really seeing a rebirth.”

But other analysts said it’s too early to call this announcement a big win.

California utilities are rushing to sign renewable-energy power-purchase agreements as they struggle to meet a state goal of getting 20 percent of its energy from renewables by 2010. 

In the last year, new power-purchase deals have been announced every few months. 

Among other examples, BrightSource in April announced the largest solar-thermal deal yet – the company will provide up to 900 megawatts of solar-thermal power to the Pacific Gas and Electric Co.; and Ausra in November announced a 177-megawatt agreement with the same utility (see Ausra to Build 177-Megawatt Solar-Thermal Plant, Ausra Raises $40M for Concentrating Solar-Thermal and FPL and PG&E Back Solar-Thermal).

Also Tuesday, Comverge said it signed a four-year demand-response contract with SCE to reduce energy use by up to 40 megawatts during times of peak demand.

But a utility deal alone isn’t enough to ensure that the project will happen on time. 

According to California Energy Commission numbers in 2007, 12 percent of the renewable-energy contracts signed by publicly owned utilities since 2002 – when the state's renewable-energy portfolio was established – had been canceled and another 20 percent have been delayed.

Nathaniel Bullard, a senior analyst at New Energy Finance, said the process of acquiring permits for a project can take much longer than expected. Companies can wait three months for the California Public Utilities Commission to pre-evaluate the applications, then another year for the full evaluation, he said. 

Only Ausra, Brightsource and FPL Energy have filed applications for certification so far, indicating that other projects – such as Sterling Energy Systems’ projects for Southern California Edison and San Diego Gas & Electric, originally announced in 2005 – could take a little longer, Bullard said.

“I heavily discount the [announcements] unless I’ve seen a permitting application and land surveying is underway,” he said. “I don’t know the mechanics of the project, the full range of stakeholders, the [pieces] necessary for interconnection or anything like that. If I see a power-purchase agreement, that’s nice, but telling’s not selling, especially given the deadline of 2010 to meet these renewable portfolio standards.”

If the projects are being built on public land, the permitting process can take even longer, he said. Rogan said eSolar’s project will be located on private land in southern California’s Antelope Valley.

Southern California Edison raised eyebrows in March when it announced it would build the largest solar photovoltaic installation in the United States, a 250-megawatt project that would distribute solar panels on 65 million square feet of commercial rooftops. 

The utility hopes to begin installing the $875 million project in August. The deal caught industry attention because utilities generally go for centralized projects, which produce a lot of power at one plant, instead of rooftop-solar projects. 

Does the new deal indicate that SCE is reconsidering its strategy?

Ethan Zindler, head of North American research for New Energy Finance, says no. 

“To a certain extent they are trying a little bit of everything to meet the renewable portfolio standard and to get [the renewable energy] from wherever they can source it,” he said. “In some ways, there’s no wrong answer.” 

After all, with these power-purchase agreements (PPAs), utilities are taking very little risk, he said. They're essentially saying, “If you guys make it happen, we’ll buy the juice,” he said. 

“They are putting their name behind supporting these projects, but it’s really the developer spending all the money, getting the project permitted and putting these projects in place. Why wouldn’t you announce a PPA if a project has some legitimate possibility of coming online and has access to transmission?”

Zindler said that in most fossil-fuel-based projects, companies usually wait to announce PPAs until after they have permits in place. 

Because of the tight renewable-energy target, utilities are scrambling to show they have relationships with renewable-energy developers, he said. 

Zindler added that he expects that utilities anticipate that they will not be able to meet the 20 percent goal by 2010, but wants to be able to point to contracts to show they will have more renewable energy coming online soon. 

Keely Wachs, a spokesperson for PG&E, for example, has said the company is on track to meet to goal with energy “under contract or delivered.”

Still, Bullard said he thinks the diversity of the deals is less about utilities spreading their bets and more about playing to different environmental strengths. Some locations are better suited to rooftop projects, while others are ideal for centralized solar-thermal projects, he said.

“The two are not at cross purposes,” he said. “If you’re going to meet 20 percent of electrical capacity in as big a service area as SCE, you’re probably wisely going to go for the best-thought-out generating system in each area.”