GE invests in and licenses solar tech from eSolar

GE (s GE) is stepping squarely into the market for solar thermal technology, which uses the sun’s heat to produce electricity, in contrast to solar panels that convert sun light into electricity. On Monday afternoon, GE announced it has made a strategic investment in solar thermal startup eSolar and has entered into a deal for an exclusive license to deploy eSolar’s technology in combination with natural gas power plants.
GE and eSolar didn’t disclose the size of the investment, or the financial terms of the licensing deal, but said GE will be a minority shareholder in eSolar. GE said Turkish renewable developer MetCap Energy Investments will also invest alongside GE in the eSolar projects. The deployment deal is exclusive only for installing eSolar tech in combo with natural gas plants — not for eSolar’s standalone solar tech — and is also not exclusive in China and India, where eSolar already has deals in place.
GE’s interest in using eSolar tech in combination with natural gas power follows on GE’s announcement last week that it’s launching a new natural gas power plant design that is more efficient than the standard, and allows grid and power plant operators to better integrate natural gas power with clean power like solar. GE said the eSolar tech can be used in conjunction with that efficient power plant — called the FlexEfficiency 50 design — to create a hybrid plant that provides better than 70-percent fuel efficiency.
Hybrid natural gas/solar power plants are just starting to be deployed. GE explains that the hybrid tech it’s calling Integrated Solar Combined Cycle (ISCC) uses gas turbines, steam turbines, generators, heat recovery steam generators, and a field of mirrors that concentrate sunlight onto a solar receiver to produce steam. Power company FPL says in 2010 it built the world’s first hybrid solar plant connected to a combined-cycle power plant in Indiantown, Fla.
The deal between GE and eSolar is further proof that large power gear players and service providers will be the ones likely to deploy the next generation of clean power, instead of startups on their own. Areva bought up solar thermal startup Ausra in February 2010, and other solar thermal players like Abengoa are already large. Solar thermal startup BrightSource is raising massive amounts of money to just get its first solar thermal project deployed.
Licensing deals are a good strategy for a less capital-intensive strategy to get eSolar’s technology to market. Last year, Next Up! Research noted in a report that because of licensing deals, eSolar can achieve margins of as high as 50 percent, and normalized margins of about 30 percent, and could bring in an estimated $185 million a year in revenue by 2015.
eSolar uses solar power technology, where mirrors are built in a field to concentrate the sun’s rays onto centralized tall receivers on top of towers. It’s a next-generation technology compared to the more traditional solar thermal trough technology. eSolar also says its innovation is using pre-fabricated smaller mirrors and components that can ship cheaply and be put together quickly and with little skill. Check out this video clip we did with eSolar chairman and former CEO Bill Gross here.
eSolar has signed long-term licensing agreements with NRG Energy (s nrg), Penglai Electric in China, Acme group in India, and Ferrostaal AG in Europe, the Middle East and Africa. eSolar also has a signed power-purchase agreement with Southern California Edison (SCE) for a 245 MW solar thermal plant. In addition to GE, eSolar has raised $170 million in investment from ACME group, NRG Energy, Oak Investments, Quercus Trust, Google’s venture capital arm (s goog), and Gross’ Idealabs.