Solar thermal systems drive business value by providing:
Reduced Utility Bills: Businesses that require large quantities of hot water or other fluids must pay for the fuel required to heat those fluids. Solar thermal systems use solar energy to heat fluids, reducing utility bills by up to 70 percent.
Compliance with Sustainability Mandates: Many commercial building owners face mandates requiring them to implement renewable energy technologies. Solar thermal systems can help meet these requirements while also providing solid return on investment (ROI).
Reduced Carbon Footprint: By utilizing solar energy instead of fossil fuels, solar thermal systems reduce the amount of site-generated, carbon-based greenhouse gases a business emits into the atmosphere.
A company has this vision and is doing well providing renewable energy to the people. Then the bottom falls out of their operations. A recent example of falling on hard times is a Spanish company called Abengoa. It is the world leader in solar thermal technology, with operations from Algeria to Latin America.
Solar thermal energy (STE) is energy harnessed via technology thermal energy to generate electrical energy for use in industrial, residential, and commercial sectors. The very first installation of solar thermal energy equipment occurred in the Sahara Desert in approximately 1910 when a steam engine was run on steam produced by sunlight. Because liquid fuel engines were developed and found more convenient, the Sahara project was abandoned, only to be revisited several decades later.
Solar thermal collectors are classified by the United States Energy Information Administration as low-, medium-, or high-temperature collectors. Low-temperature collectors are flat plates generally used to heat swimming pools. Medium-temperature collectors are also usually flat plates but are used for heating water or air for residential and commercial use. High-temperature collectors concentrate sunlight using mirrors or lenses and are generally used for fulfilling heat requirements up to 300 degrees Celsius/20 bar pressure in industries, and for electric power production. Two categories include Concentrated Solar Thermal (CST) for fulfilling heat requirements in industries, and Concentrated Solar Power (CSP) when the heat collected is used for power generation. CST and CSP are not replaceable in terms of application.
Since 2010, the Spanish firm has built two plants in the U.S., in Arizona and California. The towers are supplying green electricity to more than 160,000 homes.
It has been global ambitions that are now the source of the company's problems.
Saddled with debt due to expansion, the company is scrambling to avoid what would be the largest bankruptcy in Spanish corporate history. Court battles are already underway. The company's changing fortunes, from industry darling to financial cripple are an extreme example of the challenges facing players in the renewable energy business.
Clean-energy technologies will play a crucial role as countries try to meet the ambitious targets set by the United Nations climate accord last December. But many of the technologies shoring up renewables are proving economically unsustainable in the short term, particularly with oil prices declining and governments reducing incentives.
The financial reality is forcing companies globally to adjust. A big British utility is rethinking its wind farms, as the country cuts subsidies. Some American renewable companies left Nevada after the state withdrew its support of rooftop systems. In the Spanish case, it's signature American projects still have around $2 billion in outstanding loans guaranteed by the U.S. government and the company benefited heavily from subsidies in Spain. But its solar thermal projects have been slow to turn a profit and generate little income in the interim, amplifying its cash squeeze.
The firm's fall from grace, said Valeriano Ruiz Hernández, a retired professor at Seville University who taught many of the company's engineers, is "a genuine hammer blow" for Spain and its renewable energy sector. "I always had the intuition that so much corporate ambition would end up bursting at the seams." he said.1
Founded by two engineers in Seville in 1941, Abengoa took its first steps into renewables in the 1980s. In 2007, the company establish the world's first commercial solar thermal power plant in Sanlúcar la Mayor. On the outskirts of Seville, a small number of towers dominate farmers' fields, rising above sunflower fields and cattle pastures like modern obelisks to solar energy. In a solar thermal power plant, mirrors reflect the sun's rays toward the top of each tower, concentrating the light and generating high enough temperatures to heat up a transfer fluid. That heat creates steam to power a turbine, creating electricity.
The firm now accounts for more than a quarter of the five gigawatts produced worldwide by solar thermal power plants. Unlike conventional solar power, the thermal technology allows energy to be stored, meaning the turbines can generate joy for hours after the sun sets.
The year the Sanlúcar plant opened Abegoa's stock hit a record high of 7.39 euros per share. By November when it started talking bailout, it had fallen below 40 euro cents. It now trades at around 70 euro cents. The stricken company is currently looking for lifeline to restructure its $10.3 billion debt.2
Spanish law gives the company four months to get back on its feet. On March 10, the power company said it had reached an agreement with creditors, which requires final approval. As part of the restructuring, the firm's global activities - from transmissions lines across the Amazon, to desalination plants in Algeria and Ghana - could all be up for grabs.
Looking to cut its debt load, Spain slashed subsidies for renewables. Companies that signed long-term deals to sell green power to customers at guaranteed rates saw those prices cut. The move, which applies retroactively to the summer of 2013, has prompted legal action from international investors. The multitude of problems is amplifying the pain for Abengoa, which lost $1.3 billion last year. In February, its employees were paid late and it asked for more time to repay one of its bonds.
Its troubles have cast a dark shadow on Spain's renewables sector to say nothing for possible downturns in other countries across the planet. Industry groups, fearful of a withdrawal of government support, are on the defence.
"The problem of Abengoa is not the failure of a sector, far from it," said Luis Crespo, the president of Estela, the European solar thermal electricity association. "We really hope policy makers don't start mixing up cost and value."3
1 Raphael Minder, "Spain's Solar Star Faces Reckoning" The New York Times International Weekly (April 2-3, 2016): 8
2 Ibid
3 Ibid
