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Worley Parsons (ASX: WOR) Announces Pilbara Solar Energy Project

Continuing our contrast of Aussie banks with better businesses to invest in, what did you think of Worley Parsons (ASX:WOR) big new Pilbara solar project announced yesterday? We thought it was pretty audacious.

Worley Parsons says it wants to build 34 250-megawatt power stations in Australia by 2020. Now that is real vision! The goal is to provide alternative power to industrial customers in WA, who are currently vulnerable to any disruptions from the natural terminal at Varanus.

Australia is the buckle on the global sun belt
Chart: http://www.dailyreckoning.com.au/images/20080813dra.jpg
Source: Worley Parsons

As you can see from the image above (taken from Worley’s presentation to investors on its plan) Australia is in the world’s “Sun Belt.” As we’ve said in this space before, getting more energy from sun is one of the key challenges of Peak Oil.

By the way, our technical analyst Gabriel Andre, who has studied energy and engineering (along with currencies and trading) tells us that the X axis is the longitude (in degrees West and in degrees East from Greenwich meridian, while the Y axis is the latitude (in degrees North and South from the Equator). For the data in colours, what you see is solar radiation per annum, in KW/H per M2, which is the total amount of beam radiation that you receive from the sun on a particular area.

Got that?

One more note on this. Worley Parsons wants to use solar thermal technology, not solar panels. It’s a subject we’ve covered in the Australian Small Cap Investigator (although the best Aussie company at it is now doing business in America and is not publicly listed). It’s part of the “portfolio of energy experiments” we’ll need to produce energy in the future.

The trouble with silicon based photovoltaic panels is that there’s a limit to how much of the sun’s light they can convert into electricity. Experiments in thin film solar panels and in materials science (a kind of artificial photosynthesis that converts more light into energy) are designed to improve the efficiencies of photovoltaics. But progress is slow.

Solar thermal produces electricity, but uses sunlight to produce heat, which then produces electricity. Solar thermal concentrates the sun’s rays to superheat a fluid, which is then used to drive a turbine to produce electricity. The nice thing about it is that the superheated fluid can be stored, which means a solar thermal power station can operate at night, when the sun is not shining. It’s a great idea, and great to see Worley Parsons moving on it.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning is the Editor-in-Chief of The Daily Reckoning Australia and the author of 2005’s best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 as a small-cap analyst. From 2000 to 2005 he was the managing editor of Strategic Investment, where he recommended gold and warned of the US housing bubble. Dan has covered financial markets from Baltimore, Paris, London and, beginning in 2005, Melbourne Australia, where he is the Publisher of Port Phillip Publishing. To follow Dan's financial world view more closely you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails.

7 Comments

  1. GWSkeptic says:

    The only sensible alternative energy initiative for Western Australia is the one proposed by the Western Australian Chamber of Commerce and Industry, who suggested that nuclear power should be considered for WA.

  2. GaryB says:

    Goodonya Worley Parsons. Solar is the only form of “nuclear energy” we want or need in Australia. Having a thermonuclear reactor like the sun, far enough away that we don’t have any nuclear waste to worry about, and pumping out energy at approx 700 kwhr per sqm on the earth’s surface, is a neat setup. And apart from the cost of the infrastructure to harvest this energy, it’s free to all.

  3. Graeme says:

    GaryB my house is nearly “free” apart from the infrastructure costs. That’s the problem with solar. Massive initial capital cost (and incidentally massive initial fossil fuel energy investment). Do you realise the 700 kWh/yr is worth less than $100/yr at the retail level and probably half that at the supply level?

    Solar may be all we have eventually but there’s a time for everything. I will not be rushing to invest in Worley Pasons on the basis of project that could only be viable with a massive subsidy from the mug taxpayer.

  4. GWSkeptic says:

    The problem with solar energy is that it’s dilute energy and trying to convert dilute energy into an efficient usable power source is very difficult. The energy in 700 kwh/m2/yr of insolation is relatively low; even if we take the higher figure of 1400 kwh/m2/yr given the proposed location in NW Australia, it’s still low. This energy needs to be collected over a wide area thus increasing capital and maintenance costs. Also, the conversion of solar energy into electrical energy is quite inefficient, typically between 10 to 15% for commercial solar cells. Even though the project proposed by Worley Parsons is for solar-thermal plants, their efficiency is still very low. The Californian Solar II plant’s efficiency is between 9 and 14% only for example.

    In spite of 35 years of research and development into various forms of solar energy and other forms of alternative energy since the first oil crisis, the world’s use of renewable energy per capita has decreased, continuing the long term trend of the last 150 years. It’s a sobering thought to consider too that the majority of renewable energy is still derived from hydroelectric power and biomass and only a tiny amount from direct solar power and wind turbines.

    The world’s needs are for not only the provision of the current energy income but also the means to produce more to enable the evolution and growth of civilisation. Renewable energy sources are not capable of doing this. The only feasible solution is nuclear power.

  5. All thermal processes are subject to the limitations imposed by the fundamental laws of nature, in particular the laws of thermodynamics. Solar thermal and geothermal energy will have theoretical Carnot efficiencies between 20% and 65% depending on operating conditions with practical efficiencies likely to be around 40$ to 50%. Consequently half the thermal energy will have to be dissipated in the environment.

    Most fossil fuel thermal power stations use fresh water evaporation or sea water cooling for waste heat dissipation. Few sites with appropriate solar energy exposure have access to fresh or sea water.

    I would be interested to learn the method(s) of waste heat disposal proposed by Worley Parsons.

  6. OnlyOne says:

    Worley parsons sucks. They speak of loyalty to the company and expect it from their employees, but when the time comes to reciprocate…. Well, business is business, right? I hope wp goes belly up. Get rid of the global behemoth that does nothing more than sucks the life out of everyone and everything it touches.

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