Solar Millennium sells off massive solar project pipeline

Remember that gigawatt solar farm called Blythe in California that turned down a $2.1 billion federal loan guarantee? That project and 1.25 GW of other solar farm proposals are being sold by Solar Millennium to Solarhybrid, the two German companies said Thursday.

Solarhybrid will take over the 2.25 GW project pipeline and build them with solar panels, not the originally planned solar thermal tech. The company will not only pay the amount of investment Solar Millennium has put into the pipeline but also share in the profits after the projects are built, Solar Millennium said. The companies declined to disclose the financial details and expect to complete the sale negotiations by the end of this month. Solarhybrid already paid part of the purchase price.

The sale follows other similar solar deals over the past year, including MEMC Electronic Materials’ purchase of the U.S. subsidiary of the Spain-based Fotowatio Renewable Ventures, and Sharp’s acquisition of San Francisco-based Recurrent Energy. Some developers recently sold individual projects. First Solar (s fslr) sold two projects totaling 780 MW for Excelon, GE Financial Service (s ge) and NextEra Energy Resource after finalizing roughly $1.8 billion in loan guarantees. NRG Energy (s nrg) has bought several projects that are completed or under construction, including a 250MW project by SunPower. (s spwra)

But why would you sell a fat project pipeline? It could be an issue of financing – lining up hundreds of millions – or even billions – of dollars from private sources is not easy, and the federal government, once considered a trusted source of project capital, is facing significant budget cuts and backlash for its renewable energy loan guarantee program (and yes, Solyndra has something to do with it).

Or perhaps the cost of developing projects is not all that feasible. Solar Millennium — through its U.S. project development company Solar Trust of America, was embroiled in a dispute with the California Energy Commission over its 250 MW Ridgecrest Solar Power project, which poses serious environmental impact on nearby wildlife.

Finally, it could be that the offer to buy these project pipelines were just too good to refuse. A Solar Trust spokesman said the company can’t say more about the sale but more announcements are coming in the next few weeks.

In the mean time, here’s what Solar Millennium’s CEO, Christoph Wolff, said in a statement:

“The agreement on the US projects is not only favorable for Solar Millennium and its shareholders from an economic and strategic point of view. It ensures that our project investments in the US retain their value, adequately involves Solar Millennium in the future earnings of the solar power plants located there and gives the company a clear structure.”

Solar thermal

Solar Millennium develops concentrating solar thermal technology, which uses mirrors and other equipment to generate steam from the sun’s heat. The steam then goes to a turbine generator to produce electricity. The solar thermal technology has been deployed more widely in Europe, particularly Spain. It’s just now showing up in the U.S., where BrightSource Energy is building a 392 MW solar farm in California with its own solar thermal technology (see photo).

Solar Millennium set up Solar Trust of America in 2009 to develop solar farms using solar thermal equipment. Solar Trust seemed to be on its way to develop the marquee 1 GW Blythe project using solar thermal technology when it clinched California and federal permits last year and won a $2.1 billion Department of Energy loan guarantee offer to help build part of Blythe.

The story of Solar Trust took a few turns after that, though. Solar Trust announced in May that it would form a joint venture with Solarhybrid to co-develop power plants in the country. Solar Trust said it became quite interested in using solar panels for some projects and might even use both solar panels and solar thermal to maximize land use. Solar panel prices have been falling quickly in recent years, making them more attractive to project developers. Solar Trust wasn’t alone in considering the technology switch.

Solar Trust held a groundbreaking ceremony for the Blythe solar farm in June, but then in August announced that it would use solar panels for half of the project and forego the $2.1 billion loan guarantee.

With Solarhybrid’s takeover, Blythe will be the first project being built by the new owner, but construction won’t start until 2013 at the earliest, Solar Millennium said. Solar Millennium said it will continue to develop solar power plants in Europe, Asia and other parts of the world.

Photo courtesy of Andreas Demmelbauer via Flickr