Meridian ready to flick the solar power switch

Power from Meridian's Californian project comes on stream in January.

Power from Meridian Energy's foray into the United States solar generation market will come on stream next month.

The taxpayer-owned company bought a California solar utility company, Cleantech America, with the twin aims of gaining experience in the solar power industry and taking advantage of generous state subsidies and tax breaks for renewable power producers.

The plant near Fresno is one of the biggest in California in what is still a fledgling industry. With generating capacity of 5MW it is small compared to other power stations here but the sector is about to resume growth after being knocked back by the global financial crisis.

Meridian's corporate ventures manager Guy Waipara said the US$25 million ($34.9 million) venture would end up costing his company around US$5 million after refunds and the ability to write down the cost of the project over a short period.

California is providing incentives as part of its goal to have one-third of power from renewable sources by 2020.

"It's somewhere where we can add solar to our portfolio of capabilities but do so while making a handsome return," said Waipara.

"Everything we do has to be commercial otherwise we have no licence to do it. We don't want to spend New Zealanders' money if we're not making the right returns."

Solar power initiatives have also been hit by the financial crisis - the Cleantech project was to be much larger - but this had allowed Meridian to buy the company at a substantial discount.

"Its been fortuitous for companies like us - it does allow us to move and get things done in an environment where surprisingly not many companies are doing anything," he said.

The solar farm is spread over 20ha with 50,000 semiconductors laminated behind glass sheets pointing south to capture maximum sun. Its life-span should be around 40 years.

It has a 20-year supply agreement with one of California's biggest utilities, Pacific Gas & Electricity.

The biggest solar farm in the US is a 14MW project in Nevada. There are bigger projects in Spain, Germany and Japan, said Waipara.

Meridian was looking to use the technology in other countries, including New Zealand. However, the price of land and unreliable weather in many areas meant cost effective solar generation was some way off.

There were some "sweet spots" in the upper North Island, Coromandel, Gisborne and the East Coast which were sunny but some have transmission constraints from other areas.