Alternative Energy Watch: Google Invests in BrightSource Project; China Looks at More Solar Installation; Shale Gas Not So Clean (GOOG, NRG, FSLR, LDK, JASO, TSL)

Today’s look at the goings-on in alternative energy includes a significant investment, a possible shift in China’s energy policy, another look at wind power, some budget hits to alternative energy, and a new study on emissions from natural gas.

Google Inc. (NASDAQ: GOOG) has decided to invest $168 million in the Ivanpah solar thermal power plant being constructed by BrightSource Energy in the southern California desert. The total cost of the project, including a $1.6 billion federal loan guarantee, is set at $2.1 billion. NRG Energy, Inc. (NYSE: NRG) has already invested $300 million in the project and will help with construction. The 392-megawatt plant is expected to be completed in 2013.

In that vein, the federal budget discussions that avoided a government shutdown included the Department of Energy’s loan guarantee program from renewable and alternative energy projects. That’s good news for BrightSource, of course, but First Solar Inc. (NASDAQ: FSLR) also reaps a $967 million loan guarantee for a 290-megawatt solar PV project in Arizona. The budget negotiations also eliminated a White House staff position for an adviser to the president on climate change and $438 million from a DoE energy-efficiency and renewable-energy program, according to The Wall Street Journal.

Caixin Online reports that an association of Chinese solar energy providers are about to present a plan to the government’s State Council that would substantially increase the solar PV build-out in China.  The new plan more than doubles the planned solar PV installed base from 5,000 megawatts in 2015 and 20,000 megawatts in 2020, to 15,000 megawatts by 2015 and 50,000 megawatts by 2020. The new targets are expected to be approved by the end of 2011. This could substantially improve the outlook for China’s solar PV makers like LDK Solar Co., Ltd. (NYSE: LDK), JA Solar Holdings Co., Ltd. (NASDAQ: JASO), and Trina Solar Ltd. (NYSE: TSL) which are expanding capacity significantly this year, even as a supply glut is expected.

We have just recently noted a study from the UK that called into question the actual role that wind power plays in supplying electricity, rather than just the advertised nameplate capacity of wind generation.  The American Wind Energy Association (AWEA) recently released its annual market report, noting that since 2007 wind power accounts for about 35% of all new electricity generating capacity in the US. 

The US added more than 5,000 megawatts of wind power in 2010 and the total US wind generating capacity now exceeds 40,000 megawatts. At the beginning of 2011, some 5,600 megawatts of new wind capacity was under construction in the US, which is double the amount being built at the beginning of 2010. The AWEA estimates that by 2030 about 20% of US electricity generation will come from wind.

A study similar to the one done in the UK would be useful in determining if the US is really getting its money’s worth by building this new wind generation capacity. Loan guarantees and other incentives could be distorting the actual role wind energy plays in US electricity generation.

Finally, claims that the explosion in shale gas extraction and natural gas-fired electricity generation lower carbon emissions have been called into question by a study from researchers at Cornell University.  According to the researchers, methane emissions associated with shale gas extraction are at least 30% greater than methane emissions from conventional gas extraction. The shale gas methane emissions might even be double the amount from conventional gas. Methane is the main constituent of natural gas. Methane is also a greenhouse gas that is 20-times more potent than carbon dioxide.

In the researchers’ abstract they note, “The higher emissions from shale gas occur at the time wells are hydraulically fractured — as methane escapes from flow-back return fluids — and during drill out following the fracturing.” Expect the shale gas industry to issue a denial shortly.

Paul Ausick