NRG Solar said Monday it has bought a near-completesolarpower plant in California from First Solar, which entered the project development business to create demand for its solar panels.
The 21-megawatt Blythe project in Riverside County, about 200 miles east of Los Angeles, will be the first solar power plant in operation for NRG when it comes online later this year, the Princeton, N.J.-based company said.
The solar farm, which will occupy about 200 acres, will be the largest solar farm in California that makes use of solar panels, said Tempe, Ariz.-based First Solar. The project will require about 350,000 of First Solar's cadmium-telluride solar panels, NRG said.
Electricity from the power plant will go to Southern California Edison, which already has signed a 20-year power purchase agreement. Although First Solar won't own the power plant, it will be responsible for operating and maintaining it.
The two companies declined to disclose the sales price.
The deal is a marriage of two companies that have jumped into solar power plant development business in earnest in recent years.
First Solar inherited the Blythe project, which was sized at 7.5 megawatts, when it bought Turner Renewables in December 2007. First Solar has been making cadmium-telluride solar panels for over a decade, and saw an opportunity to create demand for its products.
But it wasn't until earlier this year when First Solar expanded its project development operation considerably by buying OptiSolar's unfinished pipeline of projects for $400 million. Back then, First Solar's CEO Michael Ahearn said the company hadn't decided for sure whether it would want to build and own power plants, or to build and sell them.
Last month, First Solar said it was selling one of the former OptiSolar projects, located in Canada, to Enbridge Inc. for an undisclosed price. Enbridge agreed to buy the 20-megawatt power plant that was due to be completed by the end of this year, and to hire First Solar to operate it.
Selling completed power plants – rather than owning them over a 20-year period, more closely complements First Solar's manufacturing business because it provides a much quicker return on its investments, said Daniel Englander, a senior energy analyst with GTM Research.
Besides, the renewable energy business has no shortage of cautionary tales about equipment makers who aspired to be power plant owners only to find that they didn't have the finances to do both. OptiSolar was a good example, and so were those in the wind industry, Englander said.
"By selling the project to NRG, First Solar gets immediate revenue to cover the construction and installation costs of the facility, as well as some return on investment," Englander said via email.
Like many established power companies, NRG Energy, the parent company of NRG Solar, has sketched out ambitious plans to own and sell renewable electricity. More than half of the states require their utilities to boost their renewable energy offerings to consumers and businesses.
NRG is also developing solar farms that will use mirrors to concentrate the sunlight and boil water to make steam for electricity generation. The company bought the rights to build this kind of solar thermal power projects in the United States from eSolar earlier this year (see NRG Deal, eSolar Shifts From Provider to Equipment Maker). NRG paid eSolar for both the development rights and for a stake in Pasadena, Calif.-based eSolar.
NRG is developing solar thermal power plants in California and New Mexico, and expects to bring the first one online as early as 2011 (see NRG, eSolar Plan for 92MW Solar Thermal Project in New Mexico).
Photo of a First Solar installation via the company.