In 2008, one venture capital firm was not playing the same game as all the others when it came to solar. Day4 Energy had a lukewarm reception from investors when it went public in 2007. Its venture backers, Vancouver-based Chrysalix Vancouver, heeded the warning and quietly withdrew from its other solar plays.
That was not the case for many VCs that have often ended up backing a series of bankruptcies, from Solyndra to Evergreen, or firesales such as MiaSole or business models left without a clear exit, such as BrightSource.
But Chrysalix VCs are a savvy bunch and have invested a sizeable contribution towards the US$33 million behind Glasspoint, a quirky but apparently quite effective solar design that shields concentrating solar power plants from desert winds inside glasshouses. Even low winds can halt operations at Concentrating Solar Power (CSP) plants because the heliostats have to be laid flat and the dust and desert storms require the mirrors to be cleaned more regularly than in other climates. The glasshouses are adapted from existing designs that have automated window cleaning, and only around 7% of the sunlight is interrupted by the frame itself.
Glasspoint's enclosed trough design is focused on Enhanced Oil Recovery, which requires that a large block of subterranean rock be heated to 300˚C to melt hard-set oil.
Earlier this year, I met with John O'Donnell, vice president of business development, at Intersolar North America. He's no stranger to steam, having been a founder of Ausra, which was sold in 2010 to Areva, and his enthusiasm for CSP continues to sputter like a geyser.
“Historically there haven't been markets because no one had a technology that could compete with fossil fuels, but this can.
“If I wanted to go from New York to Chicago I could book a trip on the space shuttle but I might not be able to afford it,” he said. “If I have an economical technology, it opens the market. The market that Glasspoint chose to go after is enhanced oil recovery, which is a niche, an afterthought in the solar industry.”
It happens to be a niche of an interesting size and competitive against the power from natural gas it replaces in some regions, where gas supply is running short or already being imported. Current EOR operations worldwide consume over 1.7 billion MMBtu of natural gas each year, a figure that will grow substantially.
Glasspoint has two projects that are currently operational, one was developed for Berry Petroleum near Bakersfield, California. The second project began operating at the end of 2012 in Oman. The 7MW plant is the first solar EOR project in the Middle East, but it's unlikely to be the last.
Petroleum Development Oman (PDO), the largest producer of oil and gas in Oman, was delighted with the project, which kicked out 10% more steam than it was contracted to.
Oman now burns as much gas to produce oil as they do to run their grid, according to O'Donnell.
“After oil production started to fall in Oman in 2000, PDO invested aggressively in enhanced recovery using steam generated with natural gas,” he said. “But since natural gas is in short supply in Oman, Saudi Arabia, Kuwait and Bahrain, they're all starting to import LNG which is at a much higher price than gas in North America.
“We're solving an economically important problem and delivering energy at a price lower than any fuel – that's a milestone in solar.”
In California, 20% of all the gas burned is burned to produce oil.
“It's by far the largest single application – 30% of all the non-residential gas in the state,” said O'Donnell.
BrightSource can't use this model because its technology is the “Ferrari” of CSP, however, which raises the steam temperature to 500˚C. That's great for electricity generation, but it's not needed for EOR applications, even though it's a technology application BrightSource seeks to develop after its Coalinga pilot plant for Chevron.
“If you want to pull a horse trailer, you can use a pick-up truck or a Ferrari. They both have internal combustion engines and you can put a trailer hitch on either one, the Ferrari might cost you a bit more than the pick-up truck. The BrightSource system concentrates the sunlight by a 1,000 times, whereas we only need it 127 times brighter,” he said.
“The EOR application for them is a bit like putting a horse trailer on a Ferrari – they built a system at Coalinga that makes 500˚C steam to make what the oil field needs, which is 300˚C steam. In our case we make 300˚C steam directly, we don't need a heat exchanger.”
It's perhaps refreshing to hear an executive talk down his product, but Glassspoint remains true to its low-tech roots as the company started out as CleanBoard, a manufacturer of solar-made gypsum wallboard.
However, that lower-tech modesty has not dimmed its ambitious designs on the Middle East. Glasspoint recently appointed Daniel Palmer, formerly of Schlumberger, the world’s largest oilfield service provider, as director of business development for the Middle East.
The reasons why are clear from two slides by McKinsey which show how keen the Saudis are to profit from oil for export rather than waste it in the generation of electricity. Saudi Arabia alone is targeting 24GW of renewable power by 2020.
So it comes as no surprise that Glasspoint is not the only company looking to the Middle East.
After four years of stealth and many rumours of a disruption into thin film, when Alion Energy finally unstealthed this year, many observers were surprised to see the results of this high-tech venture: a concrete extruder and a rack-installing robot that can clean panels for utility-scale systems.
“The founders had started thinking about some very early stage panel technology – thin-film ink deposition of CdTe,” explained Jesse Atkinson, VP of marketing and development at Alion Energy.
“But when they got together with some early-stage investors and started forming the company they were really thinking about the right direction to take. Even in 2008 they recognised that just producing a better panel was only so good of a story.
Last year, the founders realised that they were still a few years away from being commercially ready and dropped the panel technology. But the robotic installation process that had been developed in tandem looked promising for certain markets.
Concrete extrusion sounds very workmanlike, but like Glasspoint, it's a pragmatic approach to the construction of ground-mount systems at scale.
“The founders looked at the utility industry and said this was a segment that didn't have a really ideal panel or ideal mounting system and installation methodology,” said Atkinson. “People were taking rooftop type systems’ racks, metal frames and just putting them on posts in the ground and as projects started getting bigger people took the same rack frame mounting system and were just going bigger – we rethought everything from the ground up.”
Balance of system costs can reduce by 10% because labour is automated, and that in turn can raise the Investor Rate of Return by a percentage point from 8.5%.
Alion Energy too is targeting the Middle East – its system of optimised installation and automated cleaning is perfect for large desert expanses, although such large-scale use of concrete reduces some of its “green” credentials. But it would be fascinating to know where its business plan had started – far from the one that's now made public, I'm sure.
Glasspoint and Alion have managed to survive the onslaught of consolidation so far by adapting to the new normal in the global solar industry. They are not quite disruptive technologies, but in some markets, they might just be in the right place at the right time. VCs may be disappointed not to get the Ferrari of solar investments, but if a humble pick-up can stay on the rocky road, that has to be better than running off the road entirely.