GE plans largest solar plant in Portugal

This month the company PowerLight, using $75 million of General Electric's money, will begin installing on the 150 acres the first of what will be 52,000 solar panels, capable of generating 11 megawatts of electricity enough to light and heat 8,000 homes.

GE Energy Financial Services, the conglomerate's energy financing arm, will own the plant, and PowerLight will continue to run it. The companies expect it to be fully operational in January, 2007.

Both companies concede that it remains far more expensive to produce energy from sunlight than from fossil fuels, or even wind, and that the plant may not make money right away.

"Solar is not yet highly profitable, but we know we'll get a good payback from this project," said Andrew Marsden, managing director of European operations for GE Energy Financial Services.

The Portuguese government, seeking to reduce greenhouse gas emissions and dependence on fossil fuels, has introduced legislation that forces utilities to pay 31 euro cents a kilowatt hour for solar energy. Spain and Germany have similar programs, and Italy recently introduced one as well.

"It takes a huge amount of work to develop these projects, to get the permits, to find the modules and solar energy still costs more than fossil fuels or wind," Marsden said. "So we are only going to invest in countries with supportive regimes."

That list does not yet include the United States. Richard King, a team leader in the Energy Department's photovoltaic research group, said that many homeowners, particularly in California, had installed rooftop panels, as had some Wal-Mart stores and other businesses. But King conceded that American economics did not yet favor solar energy.

He said people in Portugal and many other parts of Europe were already accustomed to paying 25 cents to 30 cents a kilowatt hour for electricity.

In the United States, the cost still averages 10 cents to 14 cents, "and utilities are just not going to buy 25-cent solar electricity," he said.

King said the U.S. Energy Department was already spending about $78 million a year to seek ways to bring down the cost of photovoltaic cells, and that President George W. Bush had asked Congress to authorize an additional $63 million a year. "We want to mainstream solar energy by 2015," he said, "and that means putting it on cost parity with any other source of energy." Solar panels are arrays of semiconductors that convert light to electricity. The wattage can be used directly in a home or fed into a utility's power grid.

PowerLight, which was founded in 1991, already operates three interconnected clusters of solar panels in Bavaria that together generate 10 megawatts of electricity, and it is building a 3- megawatt plant in Las Vegas, which will be the largest in the United States.

GE's manufacturing arm makes rooftop solar panels that are appearing in California and New Jersey. And Energy Financial Services already has $162 million invested in assorted solar projects that generate about 149 megawatts of electricity. But solar farms remain expensive to build, and a persistent shortage of the purified silicon needed to make solar panels has been a barrier to the industry's growth.

Alex Urquhart, the unit's president, said solar energy was among the areas that his group was actively exploring, but for now, "The overall picture is still dominated by wind."

That may change, though. The silicon shortages are easing, and developing technologies are making solar installations more productive. For example, the PowerLight panels used in the Portugal project track the sun as it moves across the sky, to maximize exposure.