Saturday, July 26, 2008

Desert land as an investment

Land is being snapped up in the Southwest by companies to use for solar power projects. It's becoming a modern day gold rush, with the likes of Chevron, PG&E and Goldman Sachs involved.

Just 20 months ago only five applications for solar sites had been filed with the BLM in the California Mojave. Today 104 claims have been received for nearly a million acres of land, representing a theoretical 60 gigawatts of electricity. (The entire state of California currently consumes 33 gigawatts annually.)
The BLM is the Bureau of Land Management, in charge of the federal-land the solar developers want. 60 gigawatts would be a nice addition to the nation's power supply. I'm not sure exactly how to play a solar investment quite yet, but I'd like to get into the right one. If Goldman Sachs is in this, there is big money to be made. Examples of the increase in land prices are:
Such is the land frenzy that farmers in Arizona were paid $45 million for 1,920 acres by Spanish solar company Abengoa so that it could build a 280-megawatt power plant; the land had an assessed value of a few hundred thousand dollars. The company also plunked down $30 million for 3,000 acres in the California Mojave that had traded hands for $1.25 million nine years earlier. That prompted developer Scott Martin to put his adjacent 300-acre parcel - land he had bought only a few months earlier for $457,500 - on the market for $3 million.
For the more technically inclined, the story discusses what will be built on the land.
Most of the power production contemplated for the Mojave will rely on solar thermal technology - the common approach in large-scale generation projects - in which arrays of mirrors heat liquids to produce steam that drives electricity-generating turbines. But a secretive Hayward, Calif., startup called OptiSolar has filed claims on 105,300 acres to build nine gigawatts' worth of photovoltaic power plants, which employ solar panels similar to those found on residential rooftops. (The company also has applied for leases on 21,800 acres in Arizona and Nevada.) To put those ambitions in context, the biggest photovoltaic power plant operating today produces 15 megawatts. Says OptiSolar executive vice president Phil Rettger: "We have a proprietary technology and a business approach that we're convinced will let us deploy PV at large scale and be competitive with other forms of renewable energy."