As a leading enterprise in Concentrated Solar Power industry, a foreign company with its global strategic focus deeply rooted in China CSP market, because of Ivanpah, BrightSource is widely recognized by CSP industry for its innovative application of tower technology at commercial scale; it is also rightly because of Ivanpah, BrightSource has been receiving considerable attention both at home and abroad since 2014.
As the initial developer of Ivanpah, BrightSource is now also one of the owners and the technology provider. Recently, CSPPLAZA reporter has had an exclusive interview with David Ramm, CEO of BrightSource in Beijing office of BrightSource. Now, BrightSource is immersed in public voices, because Ivanpah is reported that it might be forced to shut down for falling short of the expected power generation.
David Ramm, CEO of BrightSource
Some reporting is inaccurate Performance of Ivanpah is within expectation
CSPPLAZA：How would you evaluate Ivanpah’s actual performance in these two years?
David Ramm: Ivanpah, the world’s largest operating CSP power station, has three 130 MW units and each unit has a separate legal entity and has a separate off-take contract. The purchaser of unit 1 and unit 3 is PG&E; and Southern California Edison, the purchaser of unit 2. As it is the first project of its kind in the world, a four-year performance “learning curve”, that is, a 4 year ramp up period stipulated in the PPA, has always been assumed since BrightSource’s PPA negotiation stages for Ivanpah, and it is typical for operating a major utility-scale thermal power plant with innovative technology of any kind.
All units started in January 2014. Now we’ve passed two years operation. We are pleased with the actual performance of Ivanpah in the past two years. All the three units have performed as anticipated by us and our partners.
CSPPLAZA：It is reported that Ivanpah may be forced to shut down, because it has fallen well short of its expected power output in PPA contract signed with PG&E. China CSP industry has also noticed this report. Is that true? What’s your response to this topic?
David Ramm：As Ivanpah is the first of its kind in the world, it has always drawn attention from media. It is unfortunate that a lot of inaccurate reporting has been done around Ivanpah.
In the commercial arrangement of Ivanpah, BrightSource, as a technology provider, made commitments on technolgy standards to the owners under an agreement. Meanwhile, the owners of the power plants also made commitments on generation ramp up standards and mature year targets to the purchasers under the PPAs.
As I said previously, it was agreed in the PPAs, that the first four years is a ramp up period during which the generation mature year target is gradually achieved. But some inaccurate reporting contrasted the actual performance during the ramp up period with the generation target of the fourth year, that is, the mature year. So a conclusion that the plant fell short of its expected output was made. In fact, the power purchase agreement never anticipated that we will be at mature performance in the first year. Now what we need to achieve is the output standard in the ramp up period predetermined in the PPAs. That means the percentage of gradual increase against the mature year output target. We completed our first 2-year block and we were quite close to the standard required over that period. We performed about 80% of that standard compared with the predetermined ramp up standard. What delights us most is that over the last year of the 2-year block, in 2015, we performed at 95% of the standard. It is understandable even if there is a gap between actual performance and predetermined ramp up standard. After all, some factors like weather conditions had impacts and Ivanpah is the first of its kind in the world. Because of Ivanpah’s positive performance, after discussing with us, PG&E granted the owners a 6-month extension period, in which a new generation ramp up standard was agreed upon. In addition, CPUC voted unanimously for its approval.
Judging from Ivanpah’s current performance, we will be well in excess of the new obligations required. Ivanpah will not be shut down. Both PG&E and CPUC believe the performance of Ivanpah is on the rise, and we are confident that we would achieve 100% of power generation goal at the later stage of the 4- year ramp up period. With Ivanpah accumulating more experience, the ramp up period for BrightSource’s subsequent projects will become shorter and shorter.
Ivanpah plant didn’t use massive gas and the proportion is within 5%
CSPPLAZA：Majority of China CSP industry people think Ivanpah has used massive gas. Is that right? What’s the actual proportion of gas in Ivanpah?
David Ramm： This is not the truth. I think it’s also a misconception about Ivanpah. There are legal regulations on renewable energy plants’ use of gas in California. We must comply with it. It is true that we use part of gas to raise plants’ efficient use of solar energy and ensure the system to operate safely. We utilize the gas to preheat our system for quick start-up. In fact, many CSP power plants in the world need to use auxiliary fuel to keep the system hot when solar energy is unavailable. The proportion of gas used as fuel in Ivanpah is absolutely controlled within the range the law permits from the very beginning to now. That is, not more than 5%.
SRSG tower and MSR tower would be developed in parallel by BrightSource
CSPPLAZA: The initial founding team members of BrightSource are from LUZ who once developed the first of its kind utility scale commercial parabolic trough plant. However, after setting up, BrightSource focused on tower technology. Then after the development of Ivanaph plant, today, how do you think of trough and tower technology?
David Ramm：First, you are correct about the heritage of our company. The core technology team had experience at LUZ. LUZ was the most successful developer of trough technology in the world, it had been strong in the California market and had great experience with trough. Prior to purchase of LUZ by BrightSource, Luz has already made the decision to transition to tower technology. It is a judgement made by the team after years of practice and experience accumulation. So it is a decision based on the experience of the technologists who founded LUZ.
Why do we change? The main reason was that after developing the trough technology and successfully reducing the cost of trough technology, the pioneers behind LUZ believed that cost reduction was flattening and there wasn’t going to be too much more room. So, they were looking for a new approach, because they believe that solar thermal technology was an important branch of new energy technology. The advantage of energy storage is remarkable. Costs could be further lowered through technological progress and competiveness could be raised. And that was the reason why we went to tower.
30 years has passed since LUZ developed trough technology and it is very mature now. But we generate higher temperatures in the tower technology, higher capacity factors, higher generation efficiency, and less consumption of parasitic electricity. Meanwhile, tower technology requires less flatness of terrain to operate and less civil work required… Seen from all these strengths, we think tower is a better choice. BrightSource obtained support from investors, and this to a large extent comes from our transition to tower. Particularly now, when the market is in urgent need of energy storage, we also think that tower is a more suitable technology.
CSPPLAZA：What’s your opinion on the BrightSource change?
David Ramm: Personally, I think that having had a previous significant experience in energy industry, the thing that matters most is cost. Many new energy technologies including solar energy are under demonstration and development. But if you can’t produce low-cost energy, you cannot compete with those technologies, then you eventually cannot get a big market. We actually wanted to drive our cost reduction curve to a very competitive state.
CSPPLAZA：Given one more chance if BrightSource would choose this way to change?
David Ramm：If I had a choice to do ever again, I would make the same choice absolutely, because the ideas are not just producing energy, but to produce in a very cost competitive way. I think that is a wise decision and we benefit from the decision. You can see that tower has become the most competitive technology and I believe there is most room and ability for it to be improved and to be cost competitive.
CSPPLAZA：Vast majority of China CSP industry people think MSR technology has much more cost reduction potential and there is no necessary to develop SRSG, even SRSG with thermal storage. Do you agree with this comment?
David Ramm： We think that both direct steam generation and molten salt generation are good tower technologies. Under certain specific project conditions, direct steam generation is a good choice; under other specific project conditions, molten salt generation is good. As molten salt tower technology is relatively complicated and has special material requirements, plus it also needs one to two years’ actual performance data before it becomes more convincing, at this moment, if you want to invest in this kind of projects, you need to have very prudent commercial arrangements to mitigate its technology risks. As a must-have technical reserve for a technology provider, BrightSource has been piloting molten salt receiver on our test site in Israel for one year. Based on this, we currently have the strengths to bid molten salt technology projects around the world. Generally, we will continue to develop these two kinds of tower technologies in parallel. We will recommend either of the two to our clients according to the specific project conditions and their needs.
We recently bid molten salt technology with energy storage in South Africa, we are waiting for bid result. If we are selected as the winner with our partners, we would expect to close finance and start construction in 2016.
China market is extremely important and China CSP demonstration project needs to be selected seriously
CSPPLAZA: China CSP demonstration projects and FIT is to be public. What’s your expectation to this policy?
David Ramm: We are very excited about the policy. We are very supportive with the policy. We think it’s a good step by China to have such policy in place, because this technology is at a stage where it needs more volume so that CSP industry can get more experience and continue to learn better ways to construct, design and operate power plants. So this is a unique opportunity to push CSP industry towards commercialization.
Our expectation is that the program will be designed to allow participants to start at a certain tariff level, and accumulates experiences to further drive down tariff level. This whole process will make CSP competitive not only in China, but around the world. We have seen the results in wind, we have seen the results in PV and we expect the same results in CSP.
CSPPLAZA: For China CSP industry people, some hold it had better develop independently. Some hold Sino-foreign cooperation is better. It is a typical Sino-foreign cooperation case between BrightSource and Shanghai Electric Co., Ltd. Would you think it is the best and most efficient way to cooperate with overseas leading technology companies, like BrightSource?
David Ramm: Well, I think every company can have its own choice of partners. I think there are actually a number of good examples where combination of strong Chinese companies and foreign companies, putting an effort together creating a successful starting point. I think it probably makes much more sense for a Chinese company that is interested in CSP market to find a good partner, rather than start from the beginning, because there are lots of experiences that are going to move the industry towards this today.
We are very lucky and happy to have such a good partner like Shanghai Electric. They bring things we need, and we bring things they need, that is the basis of a good partnership. They have strong market presence, they have good expertise and equipment for the balance of plant, we have good expertise in the solar field and software and the overall integration of things, so it’s a very very good partnership and I believe strongly in those kind of partnership. I think foreigners try to enter into China market without a partnership is not a very smart thing.
CSPPLAZA: The success or failure of first batch demonstration projects has deep influence on the future development of China CSP industry. What’s your suggestion on successful construction of batch demonstration projects?
David Ramm: I think those who are fortunate to be selected need to take good care to do the best work they can do, because I agree with your statement that the results of these pilots will have a long range effect on how people to do CSP both in China and around the world. So all the developers and technology providers who are selected in this pilot need to take extraordinary care to do their very best to make sure these projects are delivered on time and they perform properly and they work within the limit of budget. So I think it’s extremely important that this first group be high quality and pay very careful attention to their work. We take that responsibility for working up to be selected and we take that responsibility very seriously.
CSPPLAZA: Can you describe your current global development situation and plans for the future?
David Ramm: We view ourselves as a global company, we feel capable of developing and constructing projects anywhere in the world. As you know, because we have talked about Ivanpah, we have good experiences in the United States, we think that the US market will eventually come back and be a good market for CSP, and right now it is very quiet. We think the Latin American market is interesting, particularly in Chile, so we are interested in Chile in development and are taking steps there. We’ve been active in South Africa and as mentioned previously, we are waiting the decision on the Solis round in South Africa. So we are active developer in South Africa and have been there for several years. We are very hopeful being the winner for the latest round. We are building our Ashalim project in Israel. We think that the Middle East market, North Africa market will be developed as a CSP market. So we are interested in that. We participated in project development in Morocco. China is the most important market to us, so we have a lot of focus on China right now, because of the influence and supporting CSP in the near term volume of pilot. This is a good opportunity. In summary, we devote our efforts to where we think the best markets are, and we have made very good deployment.