(Corrects number of households served by NRG to 20 million in paragraph 5)
By Nichola Groom and Bernie Woodall
LOS ANGELES, Feb 23 (Reuters) - Power plant owner NRG Energy (NRG.N) stepped into the solar energy arena for the first time on Monday with a deal to invest $10 million in solar thermal startup eSolar Inc and create up to 500 megawatts of emissions-free power in the U.S. Southwest.
The companies billed the announcement as the first fully funded utility-scale renewable energy deal since global credit markets froze late last year, hampering even high-flying green power projects’ access to funding.
NRG said it will gain equity and associated development rights for three projects, and a portfolio of power purchase agreements to develop, build, own and operate up to 11 eSolar solar plants. The first project, which eSolar is building for California utility Southern California Edison (EIX.N), is due to come online in 2011.
The companies could not give a timeline for when all 500 MW would be completed, saying the performance of an eSolar demonstration plant would help dictate the speed at which new plants can be constructed.
Princeton, New Jersey-based NRG has 48 coal, natural gas and nuclear power plants that generate enough electricity to serve 20 million households.
On a conference call with reporters, Michael Liebelson, NRG’s chief development officer for low carbon technology, said the power company’s construction and operating expertise would enable eSolar to accelerate deployment of its technology.
“Utilities can really drive the solar market because they have, in general, better access to capital and they have the scale to make a very meaningful dent in the growth curve,” said Raymond James analyst Pavel Molchanov. “Putting up a solar panel on a rooftop, you need thousands upon thousands of those to equal one utility project. So it can add up very quickly.”
NRG said the companies would seek federal loan guarantees earmarked for renewable energy projects to help fund development. In addition, NRG will benefit from tax credits passed last year that are aimed at spurring development of solar power.
The NRG plants will use Pasadena, California-based eSolar’s pre-fabricated concentrating solar power plants, which use a tower of mirrors to concentrate the sun’s heat on a fluid, creating steam that then turns conventional turbines.
The plants make no carbon dioxide emissions.
ESolar is completing its first demonstration plant in Southern California. Its method is to build plants in a modular fashion, allowing flexibility of size.
Esolar investors include Gross’ technology incubator, Idealab, Google (GOOG.O), and Oak Investment Partners. (Reporting by Bernie Woodall and Nichola Groom; Editing by Marguerita Choy and Matthew Lewis)