Reaching for the sun

by Ruthie Blum
The Jerusalem Post
June 12, 2008

Following Arnold Goldman to a lot near his offices in Jerusalem's 
Har Hotzvim industrial zone to view a row of his solar panels, 
one wonders where the 65-year-old founder and chairman of 
BrightSource Energy - the parent company of Luz II - gets his 
own energy, if not from the sun. 

According to Goldman - whose first attempt at saving the world 
both ecologically and geopolitically took the form of Luz 
International - regrouping with his colleagues from the old days to 
"finish what we started" is "electrifying." 

Perhaps. Still, it takes a special kind of drive to be able pick up 
the pieces of a former failure, no matter how successful its initial 
run, or how much of its subsequent flop was due to forces beyond 
its control. 

That other forces have since emerged to create the right cultural 
and financial conditions for another go at it explains only part of 
Goldman's renewed passion for the project. Indeed, after an 
hour-long interview with the expat Californian who made aliya in 
the late 1970s with his wife and children, one gets the sense that 
he is ambitious beyond the norm - even for someone whose resume 
includes cofounding Electric Fuel and Lexitron (the first American 
word processing company), winning two international awards for 
his contribution to solar-energy development and authoring two 
books, A Working Paper on Project Luz and Moving Jewish Thought 
to the Center of Modern Science. 

So bold are his aspirations, in fact, that not only is he hoping to 
make his business successful (though he is that); nor is he merely 
bent on securing Israel's safety in the process (though he is that, 
too); he's actually got his heart and soul set on transforming the 
entire world. Tikkun olam's a tall order, indeed, as he himself 
acknowledges. Yet it's a goal he claims is achievable. 
"The technology and capability are there," he says, raising his 
otherwise quiet voice to express frustration. "It's the will that's 
lacking." 

Goldman - who holds a bachelor's degree in engineering from 
UCLA and a master's in electrical engineering from the University of 
Southern California - asserts that countries must drastically alter 
the ratio between their fossil-fuel and alternative-energy use. 
He likens what he considers overall resistance to doing so to the 
psychological block that characterized opposition to the Industrial 
Revolution. And this is why, he says, he isn't sure whether it will 
happen "in this cycle." 

Not that any such flickers of apprehension are making the slightest 
dent in Goldman's charging full speed ahead into a second try, 
mind you. Which may explain why he's retained the name Luz for 
the Israel-based BrightSource subsidiary - after the biblical city 
where Jacob dreamed of a ladder ascending to heaven. After all, 
dreaming and climbing seem to be the stuff Goldman is made of. 
Now all he needs is for the heavens to shine down on his efforts. 

>> What happened with Luz International - your first such 
endeavor - and what is Luz II all about? 

The first Luz, founded in 1980, was the attempt to define, design 
and put in place technology that could compete commercially in 
the American energy marketplace. Between 1984 and 1990, 
we built and installed nine solar power stations in California - in the 
Mojave Desert - which at the time constituted 90 percent of all 
solar electrical power delivered in the world. But to create that kind 
of record and capability, we had to be able to design products that 
were capable of providing energy at "avoidance costs" - costs that 
were established by the California Public Utility Commission for 
the electricity companies - in order to sell energy to them. 
We had to do this while making sure that investors got an 
acceptable return on their investments, and that we made a profit 
in designing, manufacturing and installing the equipment in the 
projects. 

Well, we were able to do that successfully nine times. When we 
got to the 10th project, we assumed that our investors from the 
previous projects would go along with this one, as well. And they 
might have, if we could guarantee the same fiscal conditions as 
before. However, the exemption for property tax we had enjoyed 
from the State of California ended in 1991. And solar and other 
renewable energy plants require working in a zero, or at least very 
low, property-tax environment in order to be economic. 

>> Why? 

Solar - or wind - energy is basically a fuel substitute. Like fuel, 
what solar thermal does is heat up water to make steam, which 
makes electricity. Unlike fuel, such as coal or gas or fossil - which 
when burned goes into the air, and therefore does not require 
property tax - solar energy requires a huge amount of solar-energy 
heat-producing equipment. In fact, large solar plants can have 
billions of dollars' worth of solar equipment. Equipment is 
considered "assets." And assets - unless expressly exempt - 
require property tax. 

Still, we decided to try to build the 10th project, because 
approximately 90% of the California State Assembly favored 
extending the property tax exemption. But, in his last few minutes 
in office, governor George Deukmejian vetoed the legislation, 
and this made it impossible for us to finance the 10th project. 
[Congress finally passed the exemption, but by that time, Luz had 
run out of money.] 

>> What is the logic of canceling a property tax exemption on a 
project that saves money in the long run? Wasn't it in California's 
interest to encourage such ventures? 

Yes, it was absolutely ridiculous. In California at the time, 
we employed about 2,500 people. That alone generated a lot of 
income and tax revenues. Beyond that, aside from the fact that 
solar energy doesn't create a "greenhouse effect" and doesn't 
make emissions, it's incredible for stabilizing cash flows, balance 
of payments and geopolitical influence. 

>> What happened in the interim since 1991 that brought you to 
where you are today? 

The Kyoto Protocol happened. [The Kyoto Protocol, agreed upon 
in 1997 and put into force in 2005, is a treaty under the United 
Nations Framework Convention on Climate Change, ratified by the 
European Union and other countries, requiring the reduction of 
greenhouse gas emissions. The United States has not ratified it. 
Israel has.] When Europe really started pushing for clean energy, 
it created an atmosphere that influenced Californians. So, even 
though the US didn't adopt it, California - in sympathy - adopted a 
lot of its policy objectives, for example, requiring utility companies 
to put 20% of their portfolios toward renewable energy. In 2004, 
then, it looked like there was another opportunity for us to try and 
complete the work that we'd started years before. And the market 
was just so different this time. Wind had been quite successful in 
commercializing; utility companies now had departments that 
wanted to buy renewable energy; investment banks and major 
venture capital groups were funding such projects in a way that 
hadn't been in the '90s. 

>> In other words, now that renewable energy is the "in" thing, the 
time is ripe? 

Yes. And in the historic Luz, we had a collection of people who 
were trying to create a better world, while developing a good 
company and making a good living. At that time, we had a peak 
number of 500 people working for us in Israel. Over the years, 
we kept in close contact. And even though many of them are 
well-positioned, and some of them by now have their own 
companies, the idea of coming back together to finish what we'd 
started was electrifying. Indeed, a lot of people came back and 
put in so much know-how and capability into the organization 
that we were able to go out to the financial world and bring in 
[venture capital company] Vantage Point as a first investor. 
This enabled us to attract other prestigious investors, which gave 
us our start, and enabled us to bring in the historic team, as well as 
new talent. 

>> Most people are not familiar with the the whole science of solar 
energy, and think of it as a way to heat water for their showers 
from panels on their roofs. In this country, using solar power for 
anything else is foreign. Can you elaborate on how what you're 
doing is relevant to the average person? 

What we do is build very, very large solar-thermal fields, covering 
many, many dunams. A typical field might cover 4,000 dunams, 
for a 200-megawatt output. Solar-thermal systems use heat to 
make steam, and the steam drives a turbine generator, like that 
which is used in fossil-fuel stations. This gives the utility company 
the option of using solar energy to make electricity for the grid 
when the sun is shining, and to burn natural gas for the same 
purpose when it isn't, such as at night or in winter. 

>> Can't solar energy be stored "for a rainy day"? 

This is the focus of one of our research projects, which should be 
viable by our third or fourth project: to have additional solar fields 
that charge up melted salts or other heat-storage mechanisms 
in order to utilize stored heat to make steam when it's not sunny. 

>> Other than possibly being lucrative and environment-friendly, what 
advantage do solar fields have for the average consumer? Will they 
actually reduce electricity costs for the individual? 

Cost is really a complicated part of social structure. So, not only 
does solar energy work on global warming and air quality, but also 
on balance of payments and creation of jobs. In the US, the dollar 
has been grossly devalued, but a large part of that - maybe $500 
billion a year - is petroleum-generated. Were cars to be pluggable - 
hybrids and electric - the balance of payments would be altered 
and dollars would be stronger. 

>> What about in Israel? 

In Israel, there are tariffs for solar energy - both roof-top and 
large-scale solar. But land constraints and other obstacles prevent 
the kind of large-scale solar projects necessary for developing solar 
energy cost-effectively. In order for there to be comparative costs 
between solar energy and natural gas at international prices, 
there would have to be cooperation with Jordan or Egypt, as well as 
credit for low emission and other even-playing-field policies put in 
place. Today, Israel anticipates getting a lot of its natural gas from 
Egypt, and I don't know the price structures, but in environments 
where policy and regulatory conditions are set up to give 
even-playing-field tax environments, the BrightSource second- and 
third-generation technology can basically compete with natural gas, 
which is what we're starting to do in California. But again, it has to 
be done on a very large scale. There has to be real commitment 
on the part of governments. 

>> Isn't the Knesset in the process of passing a law - like that of 
some countries in Europe - to encourage solar-energy use by offering 
citizens monetary reimbursement for any electricity they put back 
into the grid? 

Yes, many governments are beginning to come up with such 
legislation to encourage the private use of PV [photovoltaics] for 
homes. 

>> Do you consider that a hindrance to your own business venture? 

Not really. If you take the American market as an example, I think 
that if every household in the US were to have a PV on its roof, 
this would cover only about 10% of the electricity of the entire US. 
And clearly, nowhere near 100% of the homeowners will decide to 
install PV. According to a January 2008 Scientific American article, 
the US deserts have sufficient space for our kind of solar technology 
and others to provide up to 69% of the US's electrical needs. 

>> You mention that Israel has a size problem. The Negev is the 
largest, least-populated area in the country - and where you have 
set up your solar field here. Are you saying that it's not large 
enough? 

Well, what's been discussed for the Negev is putting in something 
like 1,500 megawatts. This would be significant, because Israel 
today has about 10,000 megawatts from the grid. Beyond that, 
however, for Israel not to have to use fossil fuel, it would have to 
rely on other nuclear sources, or on land-use and other forms of 
cooperation with other countries. 

>> Speaking of which, Luz II is based in Jerusalem, and its pilot 
plant is in the Negev. Are you an Israeli company or not? 

Luz II is a wholly-owned subsidiary of BrightSource, a US-based 
company that has overall corporate responsibility for the company, 
and is responsible for developing and financing projects in the 
US market, which is the center of our marketing efforts. 

Luz II's Israel branch does all the research, development and project 
engineering for the advanced solar-thermal technology of the plants. 
It acts as the system and project engineer for the entire project, 
and as the manufacture of the solar field, supplying all of the 
materials, logistics and quality controls, and will deal with some of 
the international sales to Europe from Israel. The plant we are 
dedicating today was basically designed, built and overseen by 
Israeli operations, which will validate its advanced technology, 
and ship equipment based on these designs to the US for projects 
being developed by BrightSource. 

>> Will you be selling your technology to Arab countries? 

There are potential opportunities there, but sensitivities, as well, 
of course. We have had some discussions about this and 
concluded that if any such deals were to take place, they would 
have to be done through the US company. 

>> What about the Palestinian Authority? 

The PA is both small and complicated, but at some point could be 
relevant, in the framework of a potential joint project with Jordan or 
Egypt - something which hopefully could happen some day. 
Where the bigger picture is concerned, however, there is much 
potential for European-African solar-energy cooperation, which 
could serve to industrialize many African countries. And it's hard to 
have dictatorial regimes where there's a complex industrialized 
society. 

>> Speaking of dictatorial regimes, what about the leaders of Arab 
countries, whose power rests on oil? Clearly, they would be the 
last to support alternative energy projects around the world, correct? 

That's precisely the point - and the reason other countries should 
be looking to alternative energy as a solution. And in spite of all the 
technology and capability that exist, no country in the world is 
making a commitment to make the transition at a transformational 
level - one that would alter security and geopolitical realities. 

>> Do you actually believe that if such a transformation were made, 
the world would no longer be dependent on oil at all? 

That's an exaggeration. The goal is to drastically reduce oil 
consumption, so as to alter the current balance.The fact is that 
5,000 times more solar energy is generated every day than the 
world consumes. It's universally available and economically 
competitive. It simply has to be more intelligently balanced with 
fossil fuel. 

That kind of world is possible. But it requires making changes. 
One is legislating and mandating the use of pluggable hybrid and 
electric cars. A pluggable hybrid car with a good-sized battery 
range would reduce the fuel consumption of average vehicles by 
70%-80%. This would reduce the need for petroleum so 
dramatically that countries like the US would be producing their 
own petroleum and wouldn't have to import it. And a country like 
Israel could become almost totally electrified. This not only reduces 
pollution, but makes the demand for - and therefore the price of - 
petroleum go way down. This, in turn, reduces the adversarial 
effect of all those petrodollars that are feeding the terrorists. 

>> But once the price of petrol goes down, doesn't that create 
incentive for the consumer to use it? 

That's exactly why such a move requires legislative and regulatory 
action. When you are faced with statutory requirements for 
environmental reasons, and you have the infrastructure for 
electrical cars available, you don't use the oil. The same goes for 
power stations. You make coal clean by socializing toward clean 
standards, and making them mandatory for all technologies. 

>> Legislative and regulatory action constitutes interference with 
market forces. Isn't that bad for the economy? 

But the economy that's in place now has been legislated! 
The whole fossil-fuel business has been subjected to protected 
monopolies and vested interests. For example, roads are usually 
paid for by sources other than the car industry, and land 
right-of-ways are provided by government decree, using the public 
air as a sewer for emission - for free. These and many more benefits 
are built-in interferences in the market that favor fossil fuel. This is 
also true in the area of bio-fuels, as in the case of the farmers in 
Iowa. They got all these subsidies for their ethanol-producing corn 
fields, due to the perception that this was a good fossil-fuel 
replacement. In fact, from an ecological point of view, it's pointless, 
because of the amount of fossil fuel and carbon-burning needed to 
produce the ethanol versus how much energy ethanol yields. 
So, why do you think this is? Because there are two senators per 
state. Iowa is one such state - the one that holds the first primary 
election. This is a case of managing interests. A fair managing of 
these interests, in a manner that meets the country's current 
social and political agenda - not just its historical one - would yield 
very different results. 

>> Every shift ends up having negative consequences, as well as 
positive ones. Industry created pollution. What might be some 
negative consequences of moving over to renewable energy? 

The using up of a lot of open spaces - desert land - is one example. 

>> We've all witnessed technological advances that we previously 
would have considered more like science fiction than in the realm 
of the possible. In 10 years, what developments of this sort will 
there be in the field of solar energy? 

The real shifting is probably not going to happen within 10 years. 
I mean, you can imagine this stuff getting more efficient and 
cheaper. But, in order for there to be the kind of advancement that 
you're talking about, there has to be a major shift in will. So far, 
there's been no serious movement in will. 

>> To what do you attribute this lack of movement and will? 

Inertia. The desire to keep things largely the way they are. 
There's resistance to change, because change involves a relocation 
of work, power, money, decision-making... 

>> Are you saying that when you tell people they soon will be 
pulling into charging stations to plug in their cars, instead of into 
gas stations to fill up their tanks, you encounter resistance? 

It's not so much the individual. But you see, what about all the 
people working in gas stations, for example? They hear that, and 
think it means they will be out of jobs. 

>> Haven't people throughout history always been initially afraid 
about becoming redundant when faced with modernization - 
such as in factories, when new machinery is introduced, 
or in offices, with the advent of the computer - but then discover 
that other jobs are created as a result? 

Absolutely. But the difference between the kind of modernizations 
you are referring to, such as word processors, got introduced into 
offices one by one, while renewable energy requires a structural 
change within an existing environment. 

>> A structural change like the Industrial Revolution? 

Exactly. And just as with the Industrial Revolution, jobs were not 
merely lost; others were created. And even more jobs. But people 
are fearful of such changes, and there will be a lot of dislocation 
when moving over to renewable energy. Institutional changes take 
either revolutions or Putins or tremendous cooperation with real 
institutional support. So, I think at the personal level, there are 
a lot of people who would welcome the change-over to reduced 
fossil-fuel dependence, but there's all this resistance on the part of 
institutions that want to protect their jobs and positions - and 
they're thinking: "Let it happen in the next generation, not mine." 

>> Nevertheless, the Industrial Revolution did take place. Do you 
believe that such a revolution will take place in the field of 
renewable energy? On the one hand, you say it has to, and on the 
other, you sound pessimistic. 

I think that it will. I hope for my own psyche and satisfaction that it 
will happen in this cycle, but I can't tell. There's a lot of momentum. 
Whether it's enough momentum is not clear. But I believe that it 
only has to happen in one significant place, and then others will 
follow its example. 

>> Which significant place do you have in mind - the US? 

Actually, I think Israel could be significant as a mindframe-setter. 
I mean, Israel is the third largest center in the world for international 
media. Were it to set such an example, it would get massive 
coverage, which would expose this transformational opportunity to 
others, who might then follow suit.