A global solar-development company that received a $737-million loan guarantee from the U.S. Department of Energy in 2011 and $4 million in subsequent awards is now suing DOE and its own subsidiary for interfering with its "right to participate in the management" of Tonopah Solar Energy, the subsidiary established by Santa Monica, California-based developer SolarReserve to own and operate the Nevada concentrated-solar plant supported by the original DOE loan.
The plant's only customer, Nevada's regulated monopoly utility NV Energy, in an unrelated move on Oct. 4 terminated its 25-year power-purchase agreement with Tonopah, which operates the 110-MW Crescent Dunes Solar Energy Plant, a concentrated-solar facility using molten-salt technology. NV Energy said the facility, which has suffered from numerous outages, is not providing the promised power.
The Energy Department, SolarReserve claims in its complaint, has taken over Tonopah's Board of Managers, and without board representation SolarReserve cannot prevent unanimous decisions required for major company decisions, including initiating bankruptcy proceedings, the complaint says.
In a lawsuit filed Oct. 2 in the Court of Chancery for the State of Delaware, SolarReserve asks the court to determine whether its designee, Troy Taylor, may remain as a manager on Tonopah's board or if DOE has the authority, by virtue of a Sept. 17 notice of default issued to SolarReserve, to remove SolarReserve's manager and appoint a DOE designee to the four-member board in Taylor's place. SolarReserve seeks a finding that Taylor may remain and that any actions taken by the DOE-appointed managers since the notice of default be rendered "not effective."
SolarReserve claims in the suit that it was assured board representation in Tonopah's limited liability company agreement. It accuses DOE of improperly securing control of Tonopah's board and argues that with the purported takeover, DOE "now exposes SolarReserve's equity to the uncertainty of a Tonopah bankruptcy filing."
NV Energy on Jan. 1 sent a notice of potential default to Tonopah, and in June notified Tonopah it was terminating the PPA "because Tonopah failed to produce the requisite energy levels required by the PPA," according to the complaint.
Tonopah, SolarReserve's complaint says, responded that its inability to produce energy in compliance with the PPA was a result of unforeseen problems with a salt tank that qualified as a force majeure under the terms of the PPA. But SolarReserve said the problems were related to its engineering, procurement and construction contractor, Cobra Thermosolar Plants of Las Vegas, according to the complaint. The 90-day deadline for Tonopah to resolve the issues with its PPA compliance that NV Energy raised expired Oct. 3. NV Energy terminated the contract the following day.
"We are following the terms and conditions of our contract expressly with this action," NV Energy spokeswoman Jennifer Schuricht said in an email. "We have a responsibility to our customers to ensure the projects for which we have Public Utilities Commission of Nevada approval are delivering as contractually required."
The $975-million Crescent Dunes facility in Nye County, Nevada, was expected to produce 500,000 MWh per year, according to the National Renewable Energy Laboratory. But in a June filing at the PUCN, NV Energy said Crescent Dunes represented a "prime example" of an operating project potentially failing to meet its contractual supply commitment. "Frequent, prolonged outages" at Crescent Dunes prompted the utility to reduce expectations by 50 percent for 2019 and 25 percent for 2020 and beyond, the filing says [19-06039].
"Unfortunately, this project is not performing pursuant to the terms and conditions of its contract and we will enforce its provisions diligently to protect our customers from any negative reliability and cost impacts as a result," NV Energy said.
DOE in 2017 awarded SolarReserve a $2-million Technology to Market 3 SunShot grant for research into developing new tank designs that might eliminate the need for expensive alloys in molten-salt storage tanks at concentrated-solar power plants and "pave the way for storage solutions in the future as the industry enables nitrate salts to reach even higher operating temperatures." SolarReserve in October 2018 won another $2-million award from the department for research into creating "a new heliostat system that aims to lower costs and improve the performance of solar collectors in concentrating solar-thermal power systems that use power towers."
SolarReserve in May filed with the California Energy Commission for closure of its Rice Solar Energy Project, a 150-MW solar-thermal plant that was to be located in Riverside County. Preliminary work on the site was completed, but construction never began. The company also pulled its application with the U.S. Bureau of Land Management to construct the $5-billion, 10-tower Sandstone Project in January.
SolarReserve's former CEO, Kevin Smith, left the company in January to take a position as CEO for the Americas for Lightsource BP. SolarReserve also in January announced the appointment of its new CEO, Tom Georgis. The Georgis announcement is the company's most recent post on both its public Facebook and LinkedIn pages. SolarReserve last tweeted in March, with a save-the-date announcement for an April seminar in Chile.
SolarReserve's website appeared to be down this week. An automated response to an email with questions sent to SolarReserve's former spokeswoman, Mary Grikas, indicated Grikas no longer works for the company and directed those with "questions about outstanding invoices" to contact the accounts payable department via email. A voice message left in the company's general mailbox was not returned.