NRG Solar signed a letter of intent to partner with BrightSource to construct, finance, own and operate the 392-MW Ivanpah plant. NRG will become the lead investor, although Bechtel (the EPC firm) will also be an equity investor.
As illustrated in our CSP Tracker, Ivanpah has all the necessary permits, so the only remaining hold-up will be financing.
While BrightSource is still waiting for the loan guarantee to be finalized (thus far it only has a conditional commitment), the company's team isn't just waiting around and twiddling their thumbs. Construction has already begun at the site this month, and all three phases of the project are expected to be operational by mid-2013.
It looks like the project will be 75% debt financed. Assuming NRG will provide between 60% and 90% of the equity (with the other 10% to 40% coming from Bechtel), that would imply total equity of $333M to $500M, and a total project cost between $1,333M and $2,000M. Assuming NRG will provide 75% of the equity, and that that equity will represent 25% of the project value, that would imply a total cost of $1,600M (equal to $4.08/W-AC).
This is a big deal for BrightSource. For the company's project partners, it is also good news, but perhaps not as big of a deal.
Click here to view the new GTM Research CSP Ecosystem and to see which companies BrightSource is partnered with, as well as to get an overview of the rest of the CSP value chain.
For a Fortune 500 company like NRG, this transaction is relatively minor. NRG owns over 24,000 MW of power plants, so Ivanpah will increase their generation fleet by only 2%.
Bechtel is also a behemoth, with $31B in annual revenues and more than 49,000 employees. Ivanpah will require 1,000 employees for the 2.5 years of construction, so if all of those were Bechtel employees, that could keep about 2% of their workforce busy.
Alternatively, EPC costs are ~40% of total project cost, so Bechtel might expect revenues of $1,600M multiplied by 40%, which equates to $640M over 2.5 years, or ~$250M annually. That would represent less than 1% of Bechtel's annual revenue.
Siemens, the power block provider, would also likely consider this yawn-worthy.
Nonetheless, for the CSP industry, this is a vote of confidence from the finance/investor community. It gives all the developers hope that if you have all your permitting ducks in a row, an adequate PPA price, and technology that works, the money required to build a plant can be found. It remains to be seen whether equity investors feel the same level of comfort for the recently approved Tessera/Stirling plants at Imperial and Calico. They use dish-engine systems that have the potential for higher-than-expected O&M costs, which could hurt equity investors' returns. NRG's investment is a highly visible statement that power tower plants are financeable. It remains to be seen if anyone is willing to do the same for dish-engine technology.