Hidden Gem in Sahara Desert – Solar thermal power for Europe…

During my June trip to Europe, my German friends were talking about a project to create a “huge” solar thermal field in the Sahara to generate electricity for Europe. This sounded unbelievable, and my thoughts went to concerns about reliability and safety of the transmission method.

Well, it is a reality and last week the story was see in several print and web media, including the Economist -- http://www.economist.com/displaystory.cfm?story_id=13982870

Munich Re, the world’s largest reinsurance company, has invited 20 large companies to join it in developing this massive solar thermal field to satisfy 15% of Europe’s needs by 2050. The project is called Desertec and the companies invited to join this venture include Siemens (Germany’s engineering giant) power suppliers RWE and E.ON, and Deutsche Bank, Germany’s biggest bank.

Why would an insurance company promote this project? Munich Re’s goal is to reduce weather-related losses due to global warming.

Even though Desertec is still a vision, and there are risks having 15% of Europe’s energy supply depend on a foreign country in Africa, I still see several benefits. This is a great place to promote research and development in solar thermal power. The size of the investment ($560 billion) will motivate large and small players to improve the technology and obtain economies of scale thus reducing the cost of production. And, as it has to travel over a distance of over 2000 km, it’s a good application for high-voltage direct current which reduces the transmission losses vs. traditional AC lines.

This project will certainly be a good step for solar thermal generation and will add to the objective of making renewable energy competitive vs. coal and other fossil fuels.

Best use of government energy subsidies in this energy market…

An article in the Wall Street Journal last week confirmed what I have been observing over the past couple months as I speak to people in the energy business.

Government subsidies alone may not be enough to overcome generation options which are not commercially viable.

In addition to the recent American Recovery and Reinvestment Act of 2009, production tax credits and investment tax credits for renewable energy have been in place since 1998. These credits have promoted alternative energy generation from wind and solar. Unfortunately this market sector is not showing healthy growth -- wind orders are down 50% from the first quarter last year and solar projects in California are down 60% vs. the first quarter of 2008.

Challenges include financing issues and a lower demand for electricity. But, a larger factor is the competition faced from more cost efficient sources of energy like gas generation.

With gas futures at $3.35 per MBTU alternative sources are becoming less attractive to fund. For example, T. Boone Pickens has just delayed his wind farm project until at least 2013.

Funding exciting new sectors of energy generation should continue, but, we need to make these new technologies commercially viable. Government subsidies need to be used to improve wind farm production costs, reduce photovoltaic costs and show a track record of economic production.

The next generation of these important renewable energy options must be economically solvent without government subsidies.

This brings me back to nuclear generation. The current interest in nuclear power is possible because in the last 20 years that energy sector has shown it can produce electricity safely and at the lowest cost. Yes, challenges exist like long term storage and initial construction costs, but the picture is clear – once these plants are built, not only are they are safe but they are one of the most economically viable energy sources out there.

For more about the challenges that clean energy is facing check out the WSJ article WSJ article and Money/CNN article on Wind Power money cnn.com.

Alstom Power leverages turnkey projects...

My recent visit to Switzerland gave me a chance to meet with representatives from Alstom Power to discuss current topics in power generation.

Switzerland is the one of the key countries for Alstom and the headquarters for its power generation business. Throughout the offices of this multicultural company, one can hear discussions being carried out in several languages including German, English, French and Spanish -- clearly a multinational company.

Alstom recently decided to reorganize the company by merging into a single entity. All activities related to power generation, currently managed by two sectors, Power Systems (plants, equipments and retrofit ) and Power Service (after-sales, from service to renovation and spare parts) is now called Alstom Power.

In addition to providing turbo generators for nuclear plants in France and China, Alstom Power continues to lead in turnkey projects for coal and gas plants.

I was very impressed with the quality of the people I met, and the strategy and direction of Alstom Power and enjoyed our discussions. The company’s focus on clean carbon generation and turnkey projects will yield benefits to Alstom Power in the long term. Turnkey projects managed well can be a competitive advantage over other OEMs.

The future of nuclear power in Switzerland

Last week I visited Switzerland where I lived and worked in the nuclear power industry. Switzerland currently relies on nuclear for about 40% of its electricity production.

While there, I had the opportunity to meet with the Resun AG team in charge of developing two new nuclear power plants in Switzerland. Resun AG is a consortium of two main producers in Switzerland -- AXPO and BKW. The Axpo Group companies -- Nordostschweizerische Kraftwerke AG and Centralschweizerische Kraftwerke AG -- have joined forces with BKW FMB Energie AG to set up this company (Resun AG) to plan for the replacement of the Beznau and Mühleberg nuclear power stations.

Aarau, Switzerland-based, Resun AG has produced two framework license applications for identical types of power stations for the Beznau and Mühleberg locations. The Resun team has been diligently working on the licensing documents for these two sites with two key milestones ahead: request for proposals to reactor suppliers in 2010 and a referendum in 2012 by the Swiss people for approval on the planned new units.

It's great to see Switzerland taking the initiative to maintain the nuclear option as a balance to the abundant presence of hydroelectric generation.

Follow this link to get more information on the AXPO press release regarding the creation of Resun AG. AXPO press release