Monday, June 15, 2015

Ivanpah Solar Thermal Generating Station

The Ivanpah Solar Thermal Plant rises 450 feet above the Mohave Dessert and "power towers" shine with sunlight reflected by 350,000 software controlled mirrors that follow the sun (heliostats) spread across an area of about 3,500 acres. Receivers atop the towers heat to nearly 1,000 degrees Fahrenheit, boiling water to turn turbines that crank out power. At 392 megawatts, the Ivanpah solar thermal plant cost $2.2 billion (or $5,612 per kilowatt) and was intended to produce 940,000 megawatt hours of energy a year. In its first year of operation it produced about 40% of that amount of energy and has been plagued by other problems including massive kills of birds.

Solar thermal creates electricity by using mirrors to direct intense amounts of heat at a centralized collector, which is used to heat a substance like water to create steam and drive a conventional steam power turbine. Solar photovoltaic, meanwhile, directly converts solar energy into electricity through semiconductors. Solar thermal is looking like an Edsel in the dessert and the investors in the solar utility scale photovoltaic systems (who include Warren Buffet) are looking like the smarter investors.

In April 2011, the Department of Energy issued three loan guarantees for BrightSource Energy, NRG Energy and Google totaling $1.6 billion to finance the construction of Ivanpah. BrightSource is a privately held company backed by $615 million in equity from investors including VantagePoint Capital Partners,, California State Teachers' Retirement System, Morgan Stanley and others. BrightSource began developing Ivanpah and then sold the majority stake in the project to NRG and Google which used the operation to off-set their conventionally generated power used in their data centers.

Though it is difficult to tell from government reports, it appears as if BrightSource Energy Inc. has been able to delayed repaying hundreds of millions of dollars of the project's federal loans for about a year. As of September 2014, the DOE financed projects have repaid nearly $3.5 billion of principal, as well as more than $810 million in interest payments to the U.S. Treasury, which issued the loans guaranteed by DOE through the Federal Financing Bank. In the five years since DOE began financing projects, actual and estimated loan losses are $780 million or approximately 2% of the program’s loans or 3.6% of funds disbursed to date. Not a great performance for a loan portfolio that has not aged, but better than the approximately 5% SBA (Small Business Administration) loan portfolio.

Nonetheless, the Ivanpah loans will be repaid. BrightSource locked in a 20-year power purchase agreements with local utilities that includes fixed pricing, and the vast majority of costs were borne up front, so even with significantly reduced production of power, the marginal cost of that power is very low. That means that the Department of Energy should get its money back as well as interest. It is the rate payers in California that will pay the bill in the end. It is unlikely; however, that there will be further Solar Thermal Installations built. This appears to be a failed technology.

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