Last week upstart solar company Glasspoint unveiled what at first glance seems to be a bizarre new approach to solar power. In the middle of a 100-year-old oil field in Bakersfield, Calif. owned by Berry Petroleum, it has built a glass house, roughly a half-acre in size. Inside the house are flimsy solar reflecting mirrors, little more than curved sheets of aluminum foil, suspended by wires. As the sun passes overhead a motorized system slowly adjusts the wires, positioning the mirrors to catch optimal rays. The mirrors concentrate the sunlight and focus it on a network of water-filled pipes suspended from the roof of the glasshouse. The water boils into steam, which is continuously injected deep down into Berry's oilwells where it loosens up and pushes out gunky crude oil.
Using the sun to help produce crude oil is a pretty neat trick. And it could have an enormous impact. Berry (and other big Kern County players like Aera, Chevron and Occidental) have been using steam to coax out crude oil for decades. But until now that steam has been generated almost exclusively by burning natural gas to heat water boilers. In this way, the Kern County fields are responsible for more than a quarter of all the natural gas consumed in California. Glasspoint's invention could change all that, and eventually change the entire solar industry.
As Glasspoint Chief Executive Rod MacGregor explained in an interview with Forbes, the biggest cost driver in the installation of solar panels is how to deal with the wind. Install a panel outdoors and its large flat surface area makes it like a giant sail. The wind just wants to blow it away, so installers have to use steel structures anchored in concrete to keep the mirrors rigid enough that they can be focused precisely to catch the rays. They heavier the panel, the more robust must be the hydraulic actuators used to move it.
Thus arise the benefits of installing your panels in the wind-free confines of a glass box. Glass houses have been in mass production for agriculture for hundreds of years. The glass panels, steel frames and water pipes are easily manufactured around the world. The mirrors are thin sheets of aluminum. "Our raw material is a tiny fraction of the cost" of more common outdoor systems, says MacGregor, and unlike new photovoltaic cells, there's no requirement for exotic metals like gallium and indium. Maintenance is easier. The houses are dehumidified so moisture doesn't condense on the mirrors and trap dust like in open air systems, which need to be regularly hosed off.
I'm usually very cynical when it comes to solar technology. The idea of getting clean, green energy from the sun is wonderful, but two problems plague the solar power industry. Price and scalability. For most commercial and residential solar systems the payback period is a decade or more, equating to a cost of anywhere from 20 to 30 cents per kwh versus 3 cents for coal-fired power, 5 cents for gas and an average of 10 cents for wind. And you can't build them vast enough to make a dent in electricity demand.
But the value proposition that Glasspoint offers is something different. McGregor explains that he's not competing with solar plants built for electric generation. Glasspoint's offering only has to compete with the oil companies' costs of making steam from natural gas. The glass house it built on Berry's field took six weeks start to finish. It has enough mirrors to offset 1 million BTU an hour of natural gas needs--that's an admittedly tiny amount, less than $100 worth a day.
But build more glass houses and it will add up. MacGregor won't say what the house cost to erect, only that the long-term cost per million BTU of solar energy will be roughly half the cost of gas, about $3 per million BTU. The payback period would be just a couple of years. If California ever gets around to passing its carbon cap-and-trade program, the payback could be even shorter.
But this is far from an instantaneous solution. MacGregor says that an oil field like Berry's would likely need 100 acres of glass houses to satisfy its daytime steam needs (they'll still need to use some gas after the sun sets). While Chevron, which uses an estimated 140 trillion BTU of gas in Kern County each year (that's roughly $700 million of gas) would need more like 3,200 acres. All of the Kern County fields: 6,000 acres. Before you gasp, consider MacGregor's assertion that Glasspoint's houses take up just one-fifth the surface area of the tower-based solar system built by BrightSource that Chevron is currently testing for steam generation. (We'll see what BrightSource has to say about that.)
The U.S. potential for solar-assisted steam generation is in California and the Permian Basin of Texas. But worldwide, the big prize is in the Middle East. McGregor has been spending lots of time pitching the technology to Oman's national oil company. Oman used to have lots of natural gas, and even built an LNG export terminal. But since its oil production peaked in 2000, the country has had to redirect some of that gas in order to steam out tougher oil, preferring even to pay penalties to LNG customers that had contracted for supplies. Under those conditions, the payback period for investing in Glasspoint would be even more favorable than in California.
Oman is not alone. In the Gulf region only Qatar is wholly self-sufficient in gas. Even Saudi Arabia is looking to reduce its oilfield gas needs so that it has enough to grow its industrial base. Abu Dhabi has gone so far as to hire Spain's solar giant Abengoa and France's Total oil company to build the Shams solar field,
one of the world's largest, generating 100 mw from a square mile of parabolic troughs. It cost $600 million. For the same money you could build a gas-fired plant that generated five times the electricity, if only you had enough gas.