Lockheed Martin Corp. and Starwood Energy Group announced plans Friday to construct a 290-megawatt solar power plant, and Arizona Public Service Co. has signed on to buy its power.
The $1.5 billion plant, Starwood Solar I, will be built on about 1,900 acres about 75 miles west of Phoenix.
Combined with the planned Solana Generating Station outside Gila Bend as well as other projects already on line or pending, APS will have close to 600 megawatts of solar power generation by the end of 2013 -- and more coming from wind, biomass and other renewables.
APS is looking for partners to develop additional power plants, as the company sees solar as the most viable option to meeting a growing customer base, said Chairman and CEO Don Brandt.
“The reality is that large-scale solar is the most attractive for us right now,” he said.
Lockheed and Starwood have worked together on traditional power plants and transmission lines, as well as smaller solar development, but the Arizona venture will be their first into utility-scale solar power.
The pair recently launched a solar test facility project in New Jersey. Lockheed will design and build the plant, and Starwood will maintain and operate it.
The companies have adopted a more traditional concentrated solar power approach, similar to the one being developed by Abengoa Solar at Solana. Lockheed adopted the CSP model because it was the most viable technology that would allow the two companies to seek financing for the projects, said Chris Myers, vice president of energy programs for the company.
The company views energy research as an outgrowth of its work in national security, Myers said. “When we got involved in the market space, we realized it was a national security issue.”
Financing is a key issue for solar companies as the available funding for many renewable projects dried up with the credit crunch. The Solana project, announced 15 months ago, has been pushed back because of credit concerns and may not be finished until 2012.
Starwood CEO Brad Nordholm said the partnership with Lockheed, as well as existing relationships with investors and financial institutions, could make it easier for the company to secure financing.
“If a project is going to get done in these markets, it’s going to be our project,” he said.
Both companies understand there is a difference between announcing the project and completing the project, but the company has a timetable that could have it permitted, financed and under construction by the end of 2010.
While that would make the plant eligible for stimulus grants and federal loan guarantees from the U.S. Department of Energy, the company trying to find private financing for it, Nordholm said.
“We’re approaching this on the basis that we’re not dependent on them,” he said. “We’re on parallel tracks.”
The facility will enable APS to surpass its goals by 2015 for meeting the state’s renewable energy standard of 15 percent of power generated by 2025. APS is required to get 4.5 percent of its energy from renewable sources by 2014, and it should have double that when Starwood and Solana come on line, officials said.
Those rates may change at the discretion of the Arizona Corporation Commission, which set the original standards in 2006, or at the federal level, with legislation potentially setting a 25 percent requirement by 2025. Brandt said APS will work toward what is already established, but indicated the company is working on more power purchase agreements with solar developers.
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