by Kevin Killough
The plant promised to demonstrate technologies to help with the so-called energy transition. It received a $1.6 billion loan guarantee, which hasn't been paid, on top of other subsidies. Now it may close 14 years earlier than planned.
When the Ivanpah concentrated solar project went online in 2014, it opened to great fanfare. Then-President Barack Obama was making climate change an important issue in his second term, which included replacing coal-fired power plants with renewable energy. The plant was expected to further that goal.
Initially advertised to last 25 years, the plant owners, including NRG Energy Inc., and Pacific Gas and Electric announced recently that they are seeking to terminate their contracts with the units 1 and 3 at the plant. The decision, according to PG&E, would save customers money compared to the cost of keeping the contract through 2039.
A cautionary tale
From its beginnings, the project’s critics had been skeptical that Ivanpah would deliver benefits that justify the subsidies being poured into it. Now that the project appears to have failed to deliver on its promises, critics say it provides a cautionary tale for other expensive green energy projects that require massive taxpayer support for small reductions in energy-related emissions, such as offshore wind and green hydrogen.
“What we're doing in our country with these trillion-dollar subsidies and tax breaks out of the IRA [Inflation Reduction Act] is probably the most enormous government cost misallocation of capital in world history. And it's going to take a long time to recover from it. It's really a heck of a detriment to our society,” David Blackmon, an energy analyst who publishes his work on his “Energy Absurdities” Substack.
Costly demonstration
Unlike typical solar farms, which use solar cells to convert sunlight into electricity, Ivanpah utilizes 347,000 mirrors spread over five square miles to direct sunlight to heat water in 450-foot towers. The steam produced is then used to turn turbines, just like a typical thermal power plant.
The capital costs to build the plant were $2.2 billion, which was supported with a $1.6 billion loan guarantee, and according to E&E News, that loan hasn’t yet been repaid. NRG Energy didn’t respond to questions from Just the News about when or how the loan would be repaid.
One of the plant’s early critics was Benjamin Zycher, senior fellow with the American Enterprise Institute. In 2014, he detailed how the costs to taxpayers was only the beginning. The program administering the loan requires that the credit subsidy cost be paid for by the owner of the project or a Congressional appropriation. This subsidy is about 10% of the underlying guarantee.
Zycher ran the math and determined it would be $160 million over the expected 25-year life of the project, or $6.4 million per year. The annual payments at an assumed rate of 5%, Zycher estimated, would be approximately $11.4 million per year. Zycher notes that the federal government understates the cost of the subsidy and to the economy.
“Greater federal debt obligations must increase the interest rate that the federal government pays, whether by an amount small or large, and the marginal excess burden (“deadweight loss”) created by the tax system means that the private sector shrinks by more than a given increase in federal spending,” Zycher explained.
The project qualified for a 30% investment tax credit, as well as other taxpayer supported incentives. California’s Renewable Portfolio Standards also forced the state’s utilities to purchase power produced at Ivanpah.
For all that support, Zycher estimated that Ivanpah’s electricity in 2014 cost three times more than a conventional gas-fired generator. The PG&E announcement noted that since the plant was built, the costs of solar photovoltaic today rivals concentrated solar power in costs.
“I wish there was more skepticism about these things. It certainly is true that much of the media fails to ask the obvious question, which is, if these things make sense economically, if they're really so cheap, why do they have to have massive subsidies and guaranteed market shares and all this?” Zycher told Just the News.
Experience gained
The plant also suffers from the shortcoming of all wind and solar energy — intermittent power. In the cold desert nights or on cloudy days, the water in the tower cools down. Rather than use valuable daylight hours to heat up the water again, the plant utilized natural gas-fired generators to heat up the water. Originally, Zycher writes, those units were expected to run only one hour per day. Shortly after Ivanpah began operating, the operators asked regulators to increase that to about 4.5 hours per day. The natural gas burned at the plant, according to Utility Dive, produced enough emissions that the plant was required to participate in California’s cap and trade program.
“The experience gained during commercial operations indicates that more boiler steam would be needed than previously expected in order to operate the system efficiently and in a manner that protects plant equipment, and to maximize solar electricity generation,” the operators explained to regulators at the time.
If the plant averted any emissions for the electricity produced, it would likely be fairly small. Zycher said that there’s no evidence that climate change is causing anything that could be reasonably characterized as a crisis, and that makes it hard to defend the project on the merits of emissions avoidance when one considers the costs.
“If you actually apply the EPA climate model and ask, what is the effect of these subsidies and everything in this energy transition, and all the rest in terms of global climate phenomena, on temperatures by the end of the century? The answer is it would be virtually unmeasurable,” Zycher said in an interview.
In addition to the emissions the plant produced, the plant reportedly killed birds, many of which were scorched to death in mid-air. Environmentalists sued the plant owners over its impacts to desert tortoises, and in the settlement, the plant owners agreed to take mitigating measures to protect the reptiles.
Successful demonstration
Regulators will still need to approve the agreement to terminate the contracts on units 1 and 3. Southern California Edison, which is contracted to buy the power from unit 2, is in discussions with NRG and the DOE about a potential buyout of that contract, according to E&E News.
In a statement, NRG called the project a “successful demonstration of CSP [concentrated solar power] technology,” but said it was no longer competitive with solar farms. Once the site is deactivated, NRG said, the site can be used for solar photovoltaic.
Kevin Killough
Source: https://justthenews.com/politics-policy/energy/ivanpah-solar-cost-taxpayers-delivered-little-which-typical-renewable
No comments:
Post a Comment