Santiago Seage - The Switch Interview

- Makes sense in the US or some other kind of. - Our point of view, first of all, is that we need renewable energy and we need renewable energy worldwide and the reason for that is very simple, it's emissions and it's how to make sure our world is more sustainable. You see where emissions are coming from, obviously energy, power, specifically, is a big source for that and the best way to reduce those emissions is either to use less power or to have more renewable power. And within renewable, we think that solar is the future. As you have probably heard many times, with a small, tiny fraction of solar energy we receive everyday, we could power the world. And that's what we'll try to do. - So solar energy is really taking off here in Spain. What have been some of the drivers of that and really helped get it launched like it is? - What has really driven our growth has been the feed-in tariff concept. Around Europe, most countries in renewable energy, what they do is they approve what we call feed-in tariffs. This means that any power that is produced with a certain renewable energy technology, the developer knows that he will be paid either from utilities or from the government directly, depending on the country, a certain amount per kilowatt hour. Therefore-- - [Host] So it sets a floor price? - It sets in some cases a floor, in some cases a floor and a cap. So in some cases, it's the price. What it does is it manages-- - [Host] So it's a nice hedge almost. - It is so it manages the risk, the risk in doing a solar plant anywhere is the technology, but that's our bread and butter, so we know how to manage that, but who will be the off-taker? Who is going to purchase this power going forward? Many of these plants, you cannot just go into the market and sell because these are huge investments. There's no fuel cost here, but instead of fuel cost, you have a higher investment cost, so you want to know there will be an off taker who will be paying you no matter what for the kilowatt hours you produce. At this point in time, some sort of support is needed. Today, power coming from solar is more expensive than conventional sources. Over time, that premium will decrease and will decrease because of two reasons. Number one, and we tend to overlook this one, is because we don't generate CO2 emissions and in many cases when you compare the cost of a kilowatt hour coming from solar versus conventional fossil fuels, you forget that there's a significant amount of money there that has to be spent in dealing with the CO2 in conventional that we don't have. If you take that into account, you start to close the gap. Second, as the industry grows and we get into higher volumes and we improve our technologies and our efficiencies, we will see a similar process to what we saw in wind, which is wind started very high and over time, costs have been decreasing and today are very close to fossil fuels in most geographies. Basically, there are two families. One is concentrating solar power, which will be the troughs, the towers and some other technologies that use the heat coming from the sun and then you have a family of products around photovoltaics which is using the light coming from the sun. Differences. In the first case, you end up having a larger plant, utility scale, if you want, where as you use the heat in order to produce energy, you can actually store that heat and the plants to have what we call thermal inertia so they don't go on and off the grid when the solar resource disappears. So we can provide utilities or grids, a more stable production. It has a disadvantage nevertheless. CSP only works in areas, in geographies where the direct solar radiation is high enough, in other words where the heat from the sun is enough for that plant to run. In the case of photovoltaics, it has advantages. It can be done at a very small scale like a rooftop and it has disadvantages. You cannot store energy and the production goes on and off quicker, so you need to have very robust networks to be able to deal with that. In towers, what we do as you have seen is we use a large field, in this case, of what we call heliostats, very large mirrors that focus the sun on the upper part of the tower where we have our receiver. The temperature we can create in that area using the mirrors is extremely high. Actually the challenge today is how to use more of that heat effectively. - So you're really storing heat with concentrated solar, not electricity? - Absolutely. In our case, we work in two technologies to store the heat and what we can do is give our clients a completely different product from photovoltaics or wind, so concentrating solar power is one of the very few renewable energies where we can tailor production to the needs and not to the natural resource. An example of where this is important is the southwest of the US, where many utilities have a peak in the evening when people go home and start using the air conditioning in the summer, you have a huge peak that they need to manage and that peak starts when the sun is still shining, but gets into the evening when the sun disappears, so it's very important to be able to continue producing solar power for a few hours into the evening. - [Host] What are some of the early challenges that you've seen, just broadly? - At this point in time, I have usually many. Technology, we believe is the most important and how to make sure that we can improve technologies. In some cases technologies that are proven already, in some other cases, how to move from R and D to demonstration plants to commercial plants and that steps requires significant investments both in terms of financial and resources and our key challenge now is how to move from the lab where we have in our case 80 people doing research and development, how to move from there to commercial plants like the ones you saw. - One of the great challenges for any of the alternative energies is the ability to store electricity. Is your company investing in that? - I mean it has been, obviously, one of the challenges of our industry for decades. Things lately have been improving. There's significant R and D money getting into that. Still today we are far away from having a competitive source of technologies to be able to store electricity, at least at the scale we need it. Here we are not talking about powering a car. We are talking about 10 or 20 or 30 megawatts of storage, so still we are a bit far away from that. I think, eventually, we will be there. We will get to a point where at least in certain cases and certain places, we will have an efficient way of storing electricity. The investment cost in CSP, according to experts, is similar to the cost of a nuclear plant. For example in the US, DOE did a report recently where the numbers per megawatt were somehow similar. Still, obviously, the production is lower in our case because we don't operate every hour. We operate more hours than for example a wind or many wind facilities because of the fact that we can store. That investment cost, we believe, has to decrease over time and will decrease. We are in the infancy of this industry. I mean you have seen the two only solar towers operating worldwide. And as I said before, there are few trough plants. You cannot pretend that that's an efficient industry. - That Sahara project, which I read about on your website, it's an amazing idea, but it's almost like science fiction. Can something like that really be done? - It technically can be done. Solar plants in northern Africa, the technology is there. They can run. They will produce more energy per square meter or foot than in Europe, for example. Transmission, it can be done. There's the technology to be able to move the power from northern Africa into Europe. The challenge is more on the regulation side, on the political side on making sure governments can collaborate among each other to be able to give grants that in principal apply only to European plants, to a plant that is located in northern Africa, how to move the electrons from northern Africa through southern Europe to northern Europe. Those are the kind of challenges we h