Solar proposal facing hurdles

Developer needs buyer for power

Australia-based Enviromission Ltd. still is trading stock, but its plans for a big solar project in Arizona hinge on someone providing $750 million to build the unusual project with no utility lined up to purchase the electricity.

The company no longer has an agreement to sell the power from the plant, something that normally is required before a bank will offer funds for a renewable-energy power plant.

Enviromission had approval to sell the power to a group of California utilities, but in November, it announced the deal was off, telling shareholders that the Southern California Public Power Authority needed an “immediacy of certainty” when purchasing power from renewable-energy projects. Enviromission “could not satisfy that immediacy” because it was still working out the financing, the company said at the time.

“We’ve been working very hard on the financing and making sure the project’s economics are correct,” CEO Roger Davey said Friday from Australia. “There is movement on the project, albeit not as quickly as we like.”

He said he still hopes to break ground next year.

Davey said the company has a party, which he could not name, willing to finance the entire project and build it on spec, with plans to sell the power on the open market.

In 2009, Enviromission proposed building one of the tallest man-made structures on the planet in western Arizona for $750 million. A sprawling greenhouse covering miles of desert would generate hot air, which would rush up through the concrete chimney, spinning turbines and making electricity on the way.

The project would not use water and could, officials said, generate electricity after sundown, unlike solar panels.

At 2,400 feet tall, the tower would be just shy of the height of a building called Burj Khalifa in Dubai that holds title to the world’s tallest building at more than 2,700 feet.

Nobody in the world uses the “solar chimney” technology to make electricity. The technology has been tested only once, and that pilot project in Spain, much smaller than the project Enviromission proposes, was toppled in1989 after running for eight years.

“It’s very, very real,” Davey said. “It’s very genuine. It is a huge project in all aspects, not just size. We will get it done.”

The company announced last month that it is working on potential projects in Texas, issuing a news release regarding a deal to license the solar-tower technology to Apollo Development LLC for potential projects near El Paso, Laredo and the Permian Basin.

Enviromission didn’t report any power-purchase agreements with utilities for those projects.

Davey said the company has not lost focus on the Arizona project.

Company stock is trading at about 30 cents a share on the Australian Securities Exchange, down from better than 80 cents in 2009 when the company announced its Arizona plan.

Meanwhile, company officials report being well-compensated for their unbuilt Arizona endeavor. Davey reported a $325,000 annual salary in fiscal 2012. His son, Christopher Davey, who is the business-development manager, earned a $210,000 salary that year, according to the company’s regulatory filings. The company’s communications manager in Australia also collected a $210,000 salary.

Without a working project, the company has been reporting financial losses. To date, the company has lost more than $35 million, according to regulatory filings.

The executives collected those salaries during a year in which the company’s top operational highlight was conducting an aerial survey of the proposed Arizona site. They also listed other accomplishments, such as native-plant surveys of the area, which would be required before construction. The California power deal was canceled after the fiscal year ended.

Christopher Davey said the executives were not paid as well as the regulatory filings indicate.

“We have not drawn cash in the amounts you have to disclose you are on the books for,” he said. “It is accounting principles.”

He said that the executives often forgo their monthly salaries, and then convert that unpaid debt into stock in the company.

A March regulatory filing with the Australian Securities Exchange shows the company issued stock to convert about $494,000 in debt, but did not list the debts involved. Davey said it was for consultants, executives and staff, himself included.

“We have taken very little in direct salary and remuneration,” he said. “We are not being paid $700,000 a year to move this thing forward.”

When asked about the rich salaries, Roger Davey responded, “I wish it were so.”

“Why did certain people convert (debt) to equity? It’s because they hadn’t been paid.”