GE BUILDING THE WORLD,S LARGEST SOLAR ENERGY PLANT

UNCLAS SECTION 01 OF 02 LISBON 001524

SIPDIS

SIPDIS

NASA PASS TO DAVID A. AMIDEI IN ENVIRONMENTAL MANAGEMENT
DIVISION

E.O. 12958: N/A
TAGS: ENRG EINV TRGY ECON ETRD ETTC PO
SUBJECT: GE BUILDING THE WORLD,S LARGEST SOLAR ENERGY PLANT
IN PORTUGAL



1. SUMMARY: GE Energy Financial Services has joined with the
PowerLight Corporation (US) and Catavento (Portugal) to
construct the world,s largest solar photovoltaic (PV) power
plant, slated to open in January 2007. This $75 million
project - located in Serpa, Portugal - is GE,s first solar
power venture in Europe. The project is expected to increase
Portugal,s current PV capacity by 400% and provide
electricity to over 8,000 households. END SUMMARY.

ABOUT THE PROJECT
--------------

2. On July 6, POL/ECON Officer met with Piero Dal Maso,
co-CEO of the Portugal-based energy firm Catavento Produo
de Energia Elica, Lda, to discuss its joint venture with GE
and PowerLight to build the world,s largest PV power plant.
Catavento is one of only a handful of renewable energy firms
in Portugal and has already invested heavily in several wind
farm projects.


3. In 2002, Catavento developed a proposal to create a large
scale solar PV power plant in Serpa, Portugal. The Serpa
region is considered one of the sunniest areas in Europe and
is located approximately 130 miles southeast of Lisbon on the
Spanish border.


4. Catavento shopped its proposal in Europe and the United
States. In 2004 and 2005 respectively, the PowerLight
Corporation and GE joined the project. GE will finance and
own the project and has invested $75 million in its
construction and maintenance. The PowerLight Corporation is
responsible for its operation and for installing the
PowerTracker system. PowerLight created the PowerTracker
technology which is the most widely used solar power system
in the world. Catavento will provide project management
services and liaison with the host government for licenses
and permits.


5. The construction of the 150-acre Serpa PV power plant
began in May 2006 and is expected to be completed by January

2007. Currently, the Bavaria SolarPark in Germany is the
world,s largest PV power plant. GE estimates that the Serpa
plant will produce enough electricity to power over 8,000
homes and save over 30,000 tons of greenhouse gas emissions
per year.

ENERGY IN PORTUGAL
--------------

6. In 2005, Portugal,s electricity and heating needs were
provided by the following sources: natural gas/thermal (29%),
coal (24%),petroleum/gas (23%),hydro (12%),wind (7%),and
other (5%). Other includes solid biomass/biogas (living and
dead biological material like plants and fermented organic
matter),wave power (from ocean surface waves) and
photovoltaics (solar cells that collect and convert sunlight).


7. In 2001, Portugal and Spain drafted a plan to create a
joint electricity market called the Mercado Ibrico de
Electricidade (MIBEL),which would completely integrate the
two country,s electricity markets and regulate the costs of
energy while increasing the efficiency of regional
electricity grids. Because of regulatory delays on both sides
of the aisle, the MIBEL project has not been implemented.

RENEWABLE ENERGY RESOURCES (RES) IN PORTUGAL
--------------

8. Portugal has limited domestic energy reserves and depends
heavily on imports. During the 1990s, Portugal began
investing in energy from within its borders and exploring
alternative forms that were both cost effective and
environmentally safe. Following the lead of countries such as
Germany and Spain, Portugal began investing in Renewable
Energy Sources (RES) such as hydro, wind, solar and solid
biomass.


9. Hydro and wind energies are the two most popular RES used
in Portugal. Hydro is not very reliable as its production
levels vary depending on the amount of rainfall per year.
Hydropower accounts for 12% of electricity production, down
from just over 30% in 2000. During extremely dry seasons it
can account for less than 10%. Wind energy is more reliable
because of its production consistency, but it is difficult to
store and expensive to convert. The use of solar energy,
while accounting for less than 1% of overall energy
production, is growing at a steady rate each year.


LISBON 00001524 002 OF 002



10. By 2010, the GOP plans to increase its production of wind
energy by 250%, hydropower by almost 400%, and solar energy
by 1000%. In order to meet its 2010 energy goals, the GOP
launched an international tender for three large-scale wind
parks with capacities of 1,000 megawatts (MW),500 MW and 200
MW. In addition, a second PV solar plant project is planned
for Moura, Portugal. British Petroleum Solar and Amper
Central Solar, S.A. are the two major stakeholders in this
ambitious 62 MW capacity project. If successful, that project
would surpass the Serpa PV power plant six times over in size
and capacity. At this point, little has been publicly
released about the project, its production costs or its
prospective construction dates.

OBSTACLES TO CHANGE
--------------

11. Major obstacles that may prohibit Portugal from reaching
its 2010 renewable energy goals are insufficient government
funds, bureaucratic inefficiencies in processing
permits/licenses, a lack of a technically-trained workforce
(Portugal has among the highest high school drop-out rates in
Europe),and access to land not already deemed
"environmentally protected".


12. COMMENT: With the rising costs of fuels on the world
market, the GOP now realizes more than ever that it must
reduce its dependency on external energy supplies. The Serpa
PV power plant project is a step in the right direction and
shows that Portugal is dedicated to promoting the use of
alternative energies and open to direct investment.
Portugal,s geographic location is ideal for many renewable
energy projects, and the Azores archipelago presents
additional opportunities for hydropower and geothermal energy
production. END COMMENT.
Hoffman