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Los Angeles company opens ninth solar-energy plant

Los Angeles Business Journal, Oct 1, 1990

WEST LOS ANGELES - In the nick o' time, Luz International fired up its latest solar-energy plant in the Mojave Desert.

The parabolic mirror-troughs and boilers were put in motion for the 80-megawatt complex only days before the Sept. 30 sunset of a federal tax credit for investors involved in the $270 million project at the desolate, sizzling Harper Lake site.

"We're at a real crossroads now, because we wouldn't be able to build these projects without the tax incentives," said Kathleen Flanagan, government affairs official for West Los Angeles-based Luz, builder of nine such plants. In jeopardy are four more projects proposed for adjacent sites. "There'd have to be a miracle some-place" for them to be financially viable without 10 percent U.S. and California tax breaks, Flanagan said.

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Gov. George Deukmejian last week vetoed a bill to de-link the state credit from the dying federal credit. Flanagan did not speculate on the prospects of a South Dakota senator's bill to extend the federal credits until 1995.

Iraq's oil squeeze may help. Southern California Edison Co. buys Luz' juice at a rate generally pegged to oil and gas prices. Without tax credits, oil must stay well above the old $21-a-barrel break-even point.

This, while Capitol Hill talks about widening subsidies to the oil industry and continues subsidizing coal production and nuclear power waste disposal.

The ninth generator, located 140 miles northeast of Los Angeles, will serve electricity needs of about 115,000 people, the company said. All nine, which Luz says are larger than any other in the world, supply needs of about 500,000 people. Those plants supply 90 percent of the world's solar electricity, Luz claims.

No other solar projects are proposed by competitors, said Edison contracts manager Tom Besich. "It's surprising they can make money at these energy prices," said Besich. "I guess they're very efficient."

The largest single shareholder of privately owned Luz is Ohio-based telephone company Alltel Corp., with 38 percent of the shares, said Flanagan.

Among Luz' major partnership investors are Chrysler Capital Corp. and Constellation Energy, a subsidiary of Baltimore Gas & Electric.

The solar partnerships are sold on the assumption of an average 7 percent annual rise in general energy costs. Investors must hold on to their partnership interest for at least five years and can sell under certain conditions afterward.

PHOTO : Luz' 80-megawatt Solar Electric Generating System in the Mohave Desert

Business Services Industry

Los Angeles company opens ninth solar-energy plant

Los Angeles Business Journal, Oct 1, 1990

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