By George Lobsenz
Lockheed Martin [LMT], the giant defense contractor, announced this week it is jumping into the red-hot solar energy market through a joint venture with Starwood Energy Group Global LLC that will pursue utility-scale solar generation projects in North America.
Lockheed Martin and Starwood said they believe Lockheed Martin’s project management skills could significantly lower the cost of large-scale solar projects, resulting in easier financing and more competitive electricity prices.
“Significant demand is growing for utility-scale solar generation projects of over 50 megawatts capacity in the United States,” said Chris Myers, vice president of business development at Lockheed Martin’s Maritime Systems and Sensors business.
“We believe that Lockheed Martin’s proven capabilities in systems integration, engineering and precision manufacturing will allow us to drive down the costs of these projects, while better assuring the achievement of performance standards and delivery schedules desired by utilities, regulators and other stakeholders.”
Lockheed Martin and Starwood estimate that up to 10,000 MW of solar power could come on line in the next 10 years, representing a potential $30 billion market. The companies will initially focus on projects in California and the Southwest.
Under the joint venture agreement, Lockheed Martin will be primarily responsible for engineering, procurement, manufacturing and systems integration.
Starwood Energy Group, an affiliate of Starwood Capital Group Global LLC, an investment firm, will handle long-term power purchase agreements, site selection, permitting and financing for the solar projects.
“Despite its enormous potential benefits, utility-scale solar generation historically has remained difficult to finance because the industry lacked what we believe are Lockheed Martin’s best strengths–achieving large-scale production while actually lowering costs,” said Madison Grose, vice chairman of Starwood Energy Group.
“Lockheed Martin’s ability to perform on engineering, procurement and construction contracts will make financing available that will help lower the cost of capital, ultimately resulting in more competitive electricity costs.”
Starwood Energy, based in Greenwich, Conn., currently has interests in three transmission projects in the Northeast, including the recently completed 660 MW Neptune undersea power line linking Long Island to northern New Jersey. It also has interests in five natural gas-fired power plants in California totaling 240 MW of generation capacity and a 120 MW project under development for a California utility.