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Clean Power energy subsidies

Published on September 30th, 2012 | by Guest Contributor

9

BrightSource Corrects Numerous LA Times Mistakes Regarding Solar Energy

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September 30th, 2012 by  

 
Last week, the LA Times ran a horrible piece on solar power plants in California. There was a particular focus on the BrightSource Energy solar project known as Ivanpah. Herman Trabish of Greentech Media posted a good point-by-point response from BrightSource. The piece is called BrightSource Energy Versus LA Times. Here’s that post in full:

This was the headline: “Taxpayers, ratepayers will fund California solar plants; A new breed of prospectors — banks, insurers, utility companies — are receiving billions in subsidies while taxpayer and ratepayers are paying most of the costs. Critics say it’s a rip-off.” The front-page Los Angeles Times (LAT) story last week raised questions about the economics of the newest generation of concentrating solar power (CSP) plants.

Because its Ivanpah solar power tower project got special attention, BrightSource Energy (BSE) responded.

LAT: “The cost for decades to come will also be borne by ratepayers.”

BSE: “Ratepayers have always funded power plants — whether coal, nuclear, natural gas, hydro, biomass, wind or solar.”
 

 
LAT: “Confidential agreements between solar developers and utilities lock in power prices two to four times the cost of conventional electricity,” the paper reported. According to Stanford University economist and California electricity market authority Frank Wolak, the state’s renewable energy strategy “could boost electricity rates ten percent to 20 percent” or even “by 50 percent.”

BSE: A 2012 California Public Utilities Commission (CPUC) report highlighted how “the falling cost of renewable energy is leading to cost-competitive prices for utilities,” BSE responded. “In 2020, the total statewide electricity expenditures of achieving a 33 percent RPS is projected to be 10.2 percent higher compared to an all-gas scenario [and] if California makes no further investments in renewable energy, this analysis projects that average electricity costs per kilowatt-hour will rise by 16.7 percent in 2020.”

LAT: Critics of CSP solar power towers told the Times that “solar entrepreneurs are getting too much government money.” San Diego-based electrical engineer and power plant consultant Bill Powers called them “a huge waste of money” and ”an old fashioned ripoff.”

BSE: Governments always use incentives to encourage the development of domestic energy resources, BSE replied, including “direct subsidies, tax breaks, market support, technology demonstration programs, research and development (R&D) programs, procurement mandates, information generation and dissemination, technology transfer, directed purchases, and government‐funded regulations.”

The biggest beneficiaries of federal energy incentives over the last 60 years, BSE added, have been oil and gas, with almost 60 percent ($490 billion). Coal got 12 percent ($104 billion). Wind, solar and geothermal got about 10 percent ($81 billion).

LAT: “The incentives allow solar developers to reap annual returns on their investments of 8 percent to 12 percent, as much as tripling their money in a decade. In some cases the returns could go as high as 17 percent,” the Times reported, drawing in “banks and Wall Street.”

BSE: “Subsidies reduce the cost to build a power plant, which in turn lowers the cost of electricity that must be charged to pay for it,” BSE said. In California, “renewable energy is procured through a competitive process, and subsidies are reflected in the bid prices. They do not line the pockets of banks, insurers and utility companies.”

LAT: “To make such projects economically attractive for developers, the government created a mix of federal loan guarantees, grants and tax incentives,” the Times reported. “Taken together, the incentives can provide solar companies with more than half a project’s costs in cash, with the remainder covered by the federally guaranteed loans.” And, it also said, “the low-interest, government-guaranteed loans — more than $16 billion for renewable energy projects so far — pay up to 80 percent of a project’s construction costs.”

BSE: “Lower interest rates (as a result of available loan guarantees) translate to lower energy rates in the same way a low-interest mortgage reduces a homeowner’s monthly payment.”

LAT: “The $2.2-billion Ivanpah Solar Electric Generating System is being built by Oakland-based BrightSource Energy Inc.,” the Times reported. “The Ivanpah plant was made possible by government-backed loans at low rates — 4 percent to 4.2 percent. BrightSource and its corporate investors will receive about $600 million in federal grants once the plant starts producing.”

BSE: “Government-backed loans are paid back with interest to taxpayers, making the loans an investment, not a subsidy. [And] insurance and performance guarantees are required for all power plants to protect ratepayers if something goes wrong. Without those protections, a power plant — renewable or fossil — could not be financed and constructed.” The bulk of the upfront money provided to BSE “will be used to repay a portion of the guaranteed loanwith interest,” it said.

LAT: “The California Public Utilities Commission, which approves all rate agreements, won’t disclose the rate for Ivanpah,” reported the Times. But outside experts, it said, “estimate that Ivanpah power is priced at $90 to $130 per megawatt hour — three to four times the cost of electricity in the state last year. BrightSource declined to specify the price but said it was in line with the PUC’s recommended renewable rate of $129 per megawatt-hour.”

BSE: “The returns earned on renewable project investments are comparable to the returns earned on other large infrastructure projects of similar size with similar risk profiles. No more, no less,” BSE responded. “California utilities don’t earn profits on fuel costs, such as natural gas. Instead, they are passed through to ratepayers without a markup. Natural gas is a commodity, its price is volatile and it is projected to increase over time. In contrast, once a solar plant is constructed, the fuel — sun — is free as long as the plant operates.”

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  • geo brecke

    I’m amazed at how little data some people need to make a decision on the benefit of Ivanpah to humanity. Most of the articles I see are no more than a rehash of the propaganda the principals feed to the media. If there’s any respect for facts, we’ll see a power meter placed for the public to view, and we’ll also see how actual maintenance costs line up with the projected ones. IF you don’t see this happen soon, think the worst. Meanwhile check out El Paso Electric and their honorable and ethical efforts to share reality with rate payers and stock holders. Pay attention to that Roadrunner Power Plant, it’s KISS, and puts power through the meter. It starts early, and works as late into the afternoon as most I’ve studied.

  • robertemery

    Whatever is said the Reality will be the same. The Ivanpah project is 50% low interest Gov loan, 30% GRANT and 20% equity and is common public knowledge. Simply the value of an investor’s share increased in 150% from the Grant.

    Less than 1% of US Electric generation is from oil. Using 60 years of oil and gas subsidies is an invalid comparison.According to an Energy Information Administration study the U.S. subsidizes solar power to the tune of $24.34 a megawatt hour, $23.37 that year for wind, 44 cents for coal, 25 cents for natural gas and $1.59 for nuclear power. Since solar only works when the sun shines and Ivanpah doesn’t include thermal storage, it has the capability to burn natural gas, inefficiently as compared to a Combined Cycle. It is more efficient and cost effective to add solar trough direct steam generation to an existing fossil fuel facility than adding fossil fuel components to a solar facility. This design was tested by the DOE in the 80s. Both of these facts are why there aren’t many these facilities presently planned in the rest of the world.

    Before I am labeled a solar heretic, I have a pending US Patent on solar direct steam technology presently being incorporated in designs in China and SE Asia where cost is a factor

    • Bob_Wallace

      “Using 60 years of oil and gas subsidies is an invalid comparison.”

      Horse-hockey.

      We’ve subsidized oil and gas for 60 years and likely more. By now they should be able to stand on their own.

      Subsidizing emerging technologies is how we generally bring new technologies to market. Subsidizing wind and PV solar has been
      wildly successful. The price of wind-generated electricity has dropped to 1/6th of what it was, making wind our cheapest way to generate electricity. The price of PV solar is approaching 1/20th of where it started and it is now cheaper than new nuclear or coal.

      We’ve subsidized oil and gas and the price just keeps going up….

      • robertemery

        Why don’t we wait 60 years and compare 60 years of subsidies to solar vs oil and gas. I believe you find Solar will Win out. Also we don’t use oil to generate electricity.in the US,

        Solar PV is now competitive with CSP solar and some projects are switching over to PV. Solar PV van be located on roof tops in town and minimize the need for transmission upgrades.

        A true believer in solar sees Facts as goals to overcome and the fact it NOW may cost more than a combined cycle doesn’t be little its potential

        • Bob_Wallace

          I’m not sure what your point is re: not using oil to generate electricity. We use oil and we subsidize oil. And the price of oil continues to climb.
          And, as I pointed out, our modest subsidies for wind and solar have helped bring about enormous price decreases for those technologies.

          I think we should subsidize some thermal solar. I think we need to study that technology more thoroughly although I suspect PV solar + battery storage will turn out to be a better technology.

          • robertemery

            The article compares 60 years of oil and gas incentives to the amounts of solar and wind recent sources. Oil is not used to generate electricity. Therefore the only valid comparison are energy sources used to produce electricity on the on a present yearly which numbers I used were the United States Energy Information Agency which is much valid and accurate comparison. Then the profit aspect of Ivanpah: The news media widely reported the 30% Grant, I reviewed the project for investors and I am invested myself through Goldman Sachs. So I know the costs as well as the PPA.

            Now my point; every time the media like LA Times publishes an an article and there is a major rebuttal, my phone rings off the hook and my email box fills up from other sources seeking the facts so I share my displeasure. These are relatively new technologies of the future and they time and money to develop. Why don’t people quit trying to cloud the facts. Let’s move on an get er done.

          • robertemery

            Reliable battery technology is some ways in the future. But solar electricity can be used to produce hydrogen and oxygen from water, stored and used in a fuel cell to produce electricity and hot water. Almost all components are off the shelf. Fuel cells are presently used as back up power and solar to produce hydrogen from water is already under study for fueling stations for fuel cell or hydrogen powered vehicles

  • StefanoR99

    LA Times, rapidly becoming the Fox News of the newspaper world

  • http://www.facebook.com/edward.kerr.33 Edward Kerr

    Since the cabal that runs the country and doesn’t want to “let go” of the poison that makes them rich while putting all of us in harms way own the media too, it’s no wonder that rags like the LA Times does “hit pieces” that are designed to confuse people while looking like they are “investigative journalists”. They are masters at this type of BS..
    In the end, though, green wins the race.

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