Farming the New Power of Light : Desert Firm Generates 95% of the World’s Solar Energy

Falling oil prices have cast a pall on large-scale solar energy production projects nearly everywhere but here in the Mojave Desert, where a Los Angeles firm just doubled its power output to 196 megawatts.

The Luz International Ltd. system, which began in 1983 with a 14-megawatt solar energy generating plant in the nearby community of Dagget, now has seven “solar farms” that use 650,000 parabolic mirrors to convert sunlight into enough electricity to power more than 100,000 homes. Two of those “solar farms” were started in late December.

Luz, which has a permanent work force of 250 people ranging from computer processors to mirror washers, operates the largest commercial solar energy plant in the world.

“We represent 95% of the world’s production of solar power right here at Luz,” said Walter Smith, a vice president. He said the company “takes its name from a place in Israel where Jacob had a dream of building a ladder linking heaven and earth.”

The way Smith sees it, the privately held company is poised to take advantage of an inevitable oil shortage.

“We are assuming that oil won’t be $15 a barrel for the rest of our lives,” Smith said. “Obviously, the higher the price of oil, the more attractive becomes alternative sources of energy.”

Creating Superheated Steam

Luz’s solar fields, which were built on 1,000 acres of desert with $750 million raised from private and utility investors, consist of arrays of curved mirrors that individually track the sun with microprocessors and light-sensing instruments, Smith said. Each mirror focuses the sun’s light onto a steel pipe mounted inside a vacuum-insulated glass tube.

Inside the pipe is a synthetic oil that is heated to 735 degrees Fahrenheit. The oil flows through a heat exchanger, generating superheated steam for a traditional turbine generator.

All the electricity produced by the system is being purchased by Southern California Edison Co., which distributes it to households and businesses throughout Southern California, a spokesman for the utility said.

William von KleinSmid, supervising engineer at Edison, acknowledged that Luz’s 196 megawatts of power barely add up to 1% of the utility’s peak demand load of 20,000 megawatts.

Nonetheless, “I’ve got to give them credit for what they’ve done out there,” von KleinSmid said. “A lot of people thought they couldn’t build those plants.”

Luz’s first solar energy plant in Dagget is situated a few hundred feet away from an experimental 10-megawatt plant that Edison built in 1982, primarily with U.S. Department of Energy funds at a cost of $141 million. That plant, which used 21,816 mirrors to direct the sun’s rays to a giant boiler atop a 300-foot-high tower, was shut down late last year after operating as a research project for six years.

“It wasn’t economic to operate it without subsidized funding,” von KleinSmid said of Edison’s solar plant, which local residents had dubbed “steam on a stick.”

The Luz technology is based on one of three dominant forms of solar energy production in use today throughout the world, according to Scott Sklar, president of the Solar Energy Industries Assn., a lobbying group in Washington.

Huge Plant Planned

Most common is the solar panel, which is often fixed on or near a house to heat water. Still in the embryonic stage of commercial development are photovoltaics, which use specially treated silicon wafers to generate electricity on contact with sunlight. Photovoltaics are used to produce power on some satellites, Sklar said.

Chronar Corp. of Princeton, N.J., is awaiting final approval to begin construction of a $125-million, 50-megawatt photovoltaic plant in Lancaster. In a telephone interview, Chronar founder Zoltan J. Kiss said the plant, which would be seven times larger than any existing photovoltaic plant, could be completed by the end of 1992.

Luz’s success amid a current oil glut and proliferation of independent gas-fire generators is connected to its lucrative 30-year power contracts with Edison, and its track record, according to Mike Henderson, an engineer with the consulting firm of R. W. Beck & Associates of Denver, Colo., which recently completed a review of Luz’s solar projects for its investors.

Tied to Oil Rates

Paul Savoldelli, a spokesman for the company, said investors are getting a 13% to 14% return on their investment after taxes. Luz had revenue in 1988 of $155 million, Savoldelli said, compared to $108 million the year before.

“Luz’s contracts for solar plants 1 through 7 are tied to fixed-cost projections (for oil), which they got when their power sales contracts were signed with Edison back in 1985,” Henderson said. At that time, projections for oil prices were significantly higher than they are today, he said.

Company officials emphasized, however, that all its future power plants will be built on contracts based on going market rates for oil.

“In addition, of the half dozen solar power plants I have reviewed over the past five years, Luz is the pre-eminent in terms of performance and installed capacity,” Henderson said. “I can’t think of anyone else around the world with more than 10 or 20 megawatts.”

“Luz built a better mousetrap,” agreed Charles R. Imbrecht, chairman of the California Energy Commission. “We believe they have produced what is today clearly the most efficient solar thermal electric generation system in the world.”

Bill Meyer, adviser to the president of the California Public Utility Commission, said although “you really have to stretch to find fault with these guys,” the company has the ability to produce nearly 25% of its electricity from gas-fire boilers.

“They are allowed to do that under federal regulations, and some people complain that is cheating,” Meyer said. “To me that is not cheating, since they are still producing 75% of their power from solar sources and that’s pretty damn good.”

Beyond that, Myer said that Luz provides most of its power output during those hours when Edison needs it most, for example, the middle of summer when air conditioners are running throughout the day.

Still, Smith cautioned that “we’ll never replace nuclear power, gas and coal, but we will have a market niche where we will be competitive with oil prices.”

Luz plans to triple its energy production over the next five years by building four 80-megawatt plants and one 60-megawatt plant at the Kramer Junction site where five of its solar fields are.

“By 1993, we will be producing an additional 400 megawatts of power,” Smith said, “which will be a third of the power produced at the San Onofre Nuclear Power Plant.”

Separately, Luz hopes to build similar plants in Sunbelt states such as New Mexico and Arizona, as well as in countries including India, Spain and Israel, where the company’s research laboratory was founded in 1979, Smith said.