In 1913 an American entrepreneur named Frank Shuman brought online the world’s first parabolic trough thermal solar facility – a 55 horsepower project built for the British at Meadi in Egypt

Ninety-three years later, the nearly identical US$806 million AndaSol projects near Granada in Spain closed non-recourse financing using Shuman’s same basic technology, but with a twist – molten salt thermal storage tanks capable of generating power long after the sun goes down.

Project

Each of the 49.9MW AndaSol projects developed by Spanish construction firm ACS Cobra (75 per cent) and German specialists Solar Millennium (25 per cent) consists of 2km² solar fields lined with SKAL-ET parabolic trough receivers which track the sun over the course of the day.

Solar heat is collected using 510 120 m² of curved mirrors that focus the sun’s radiation on stainless steel absorption tubes, covered by a glass insulator and filled with synthetic oil.

The fluid heats up to 400 degrees Celsius and circulates through an oil/steam heat exchanger. The steam then drives a turbine which generates electricity.

If the solar radiation is strong enough, excess energy is stored away in liquid salt tanks. At about 280 degrees Celsius, ‘cold’ salt is pumped through an oil/salt heat exchanger where it collects heat to be stored in the 380 degree Celsius ‘hot’ salt tank.

In the evenings – when solar radiation is no longer enough to generate steam for power – the process reverses and ‘hot’ salt is pumped back through the heat exchanger allowing the plant to generate electricity for an additional six to seven hours.

This is what makes AndaSol unique. The project’s thermal storage unit separates it from other parabolic trough facilities which have been around since Shuman pioneered the technology.

The world’s largest parabolic trough plant (and last to be built) was Luz International’s Kramer Junction development in the Mojave desert in California.

A collection of nine separate systems ranging from 13 to 80MW, Kramer Junction was built between 1984 and 1990. As a whole, the facility is responsible for most of the world’s solar generated electricity.

Drivers

The Iberian Peninsula is ripe for solar development. Spain in particular has provided plenty of incentive by passing Royal Decree 436 in 2004. The decree encourages implementation of renewable energy resources with an attractive long-term tariff structure.

In regards to thermal solar, the decree offers the first 200MWs developed a fixed feed-in tariff of 300 per cent of the reference price for the first 25 years from start-up and 240 per cent afterwards.

Generators who sell their electricity on the free market may receive a 250 per cent premium of the reference price during the first 25 years after startup and 200 per cent there after with an additional incentive of 10 per cent.

The AndaSol projects could be configured to operate a 24-hour schedule by adding a supplementary gas turbine, but the Spanish decree doesn’t allow projects to generate electricity this way. However, it does allow a project to burn 12 per cent gas to maintain the temperature of the storage units.

Another driving factor is the availability of the resource. Compared to Germany, which has led the charge in photovoltaic solar development, the south west of Europe is a much more attractive location.

Irradiation, the quantity of energy coming from the sun and received on a surface unit during a day, is at a maximum in the south of Spain - with values of about 7.2 kWh/m². Measurements taken over three years at Guadix near the AndaSol sites averaged 2.2 kWh/m².

Financing

The European Investment Bank helped launch the AndaSol projects with an initial €10 million (US$12.9) loan signed off last January. Previous research and development support came from Germany’s ministry of environment and a €5 million grant (US$6.4m) from the European Commission. The ICO (Spanish development bank) also contributed.

This set the stage for the first non-recourse project finance of a parabolic trough thermal solar facility.

The developers secured €244 million (US$321m) in financing for the 49.9MW AndaSol1 plant on 31 May 2006.

The second deal, AndaSol2, closed with the same lenders for €253 million (US$333m) on 27 December 2006.

The combined equity for the two projects was €120 million (US$156m) and senior debt for both was arranged by:

• BNP Paribas (€158 million)
• West LB (€158 million)
• Dexia (€130 million)
• Banco Sabadell (€130 million)

Both packages had an 80:20 debt:equity ratio and included a €45 million (US$59.2) VAT tranche to bridge a Spanish tax rebate.

A third AndaSol project is currently in the works and waiting on proposals. The lenders who arranged the first two plants aren’t expected to back the third.

Conclusion

The AndaSol projects will take about two years from ground breaking to come online with plant number one on pace to finish next summer. For technical reasons (related to the Spanish tariff rules), they are considered separate entities – though they will share some facilities.

With positive construction and operation of the AndaSol plants, other solar thermal projects are expected to follow in EU states with similar conditions – such as Greece, Italy and Portugal.

In Spain, companies like Iberdrola and Hidrocantabrico-Genesa have already started promoting of over a dozen 50MW parabolic trough projects. The country is expected to have about 500MW of solar thermal capacity installed by 2010 and campaigners are hoping to increase the 200MW incentive to 1,000MW in the next revision of the tariff system.

Following the success of AndaSol, Solar Millennium hopes to export its thermal technologies to other regions around the world – including the south west of the US, China and north Africa – where the solar and bureaucratic conditions will support development.

Solar thermal technology has evolved considerably over the last century. Research and development in thermal applications has brought us from Shuman’s 55 horsepower facility south of Cairo to AndaSol’s combined peak capacity of over 99MW – not to mention the ability to produce power even after the sun has set.

From a project finance perspective, the timing couldn’t be better. Concerns over climate change have prodded governments into promoting cleaner, renewable power sources and investors have been quick to see the profit potential.

If that’s the case, it’s been a long time coming.

Shuman was derailed by cheap coal writing ‘this is the rock upon which, thus far, all sun-power propositions have been wrecked.’

Nearly a century later, project financers seem to think the time has come to salvage the wreck.

AndaSol1 at a glance

AndaSol2 at a glance