BrightSource Energy’s 377 MWe (net at peak) Ivanpah solar thermal power station officially opened on February 13, 2014. Secretary Earnest Moniz, in a rather amusing turn of phrase, called the plant a “shining example of how the United States is becoming a world leader in solar energy.” With more than 340,000 computer controlled mirrors spread over 3,500 acres of desert land focusing reflected sunlight onto three 459 foot tall towers, there is no doubt that the plant will shine brightly. As the DOE blog described it, Ivanpah is a “photogenic facility”.
With an expected capacity factor of 32% the plant should produce about a billion kilowatt-hours per year. According to most sources, the plant cost $2.2 billion, about $1.6 billion of which was financed with a loan guarantee from the Department of Energy. Though that financial support is mentioned frequently, the project received several additional incentives that made it an attractive investment.
Since Ivanpah is a solar energy project and not a nuclear project, it was eligible for DOE loan guarantees under section 1705 as opposed to the section 1703. That means the government appropriated funds for the Credit Subsidy Cost, which is the fee that is supposed to reimburse the federal government for the risk associated with providing the loan guarantee.
In contrast, when Constellation Energy was offered a loan guarantee for the Calvert Cliff unit 2 nuclear project under the same 2005 Energy Policy Act program that provided Ivanpah’s funding, the Office of Management and Budget (OMB) calculated a fee of $880 million for a $7.5 billion loan.
Since it began operation before 2016, Ivanpah was eligible for the 30% Investment Tax Credit in Lieu of Production Tax Credits that was initially devised as part of the American Recovery and Reinvestment Act (ARRA) and applied to solar thermal with subsequent legislation, so the developers will receive a refund of $660 million within the next 18 months.
Since Ivanpah is a solar thermal power system that began operating before the end of 2013, it qualifies for Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2013). The value of that treatment varied depending on the profitability of the company taking the deduction, but there is an active market that enables even loss making companies like BrightSource to benefit from the favorable depreciation schedules.
The project also benefits from California’s renewables portfolio standard that mandates that utilities operating in the state purchase at least 33% of their power by 2020 from qualifying renewable energy sources. The Wall Street Journal reports that utilities have signed 25 year power purchase agreements to buy the power from Ivanpah, but neither the utilities nor the state utility regulator has disclosed the price that the utilities will pay. They have only stated that the costs will be rolled into the bundled rate paid by electricity customers.
If you are interested in a complete list of the incentives that made it possible for the Ivanpah developers to attract the “private” capital that Robert F. Kennedy, Jr. has often described as being very interested in solar energy development, I highly recommend reading the Risk Factors section of BrightSource’s S-1 filing for their aborted initial public offering.
As Kennedy described, the power purchase agreement encouraged by the renewable portfolio standard was one of the clinchers that made the deal attractive to his investment company.
Unlike Solyndra which received corporate financing from DOE, and which had no assurance that it would be able to sell its product, Ivanpah and the Central Valley Solar Ranch projects have contractual commitments from California’s largest utilities to buy all of its power at fixed prices. This is comparable to building a new hotel with the guarantee that it will have 100% occupancy rates for 20+ years.
There has been quite a bit of commentary in sources like KCET Rewire about the effect that the operation of the system is having on birds. As one might imagine, flying over a 4,000 acre field of shining mirrors that are focusing solar energy to specific points more than 450 feet above the ground might be a hazardous endeavor. Apparently air temperatures near the boilers can reach 1,000 F. Solar energy may be natural and renewable, but it is not necessarily safe in concentrated form.
The site’s construction was also delayed when the builders discovered that there were more desert tortoises on the site than initially expected.
It will be interesting to follow the performance of this project over time. There are a large number of moving parts – at least 340,000 of them keeping the mirrors aimed at the boilers – and all of the normal pumps, valves, pipes, and chemistry associated with operating high pressure steam systems. It will be wonderful if the system operates reliably, but I suspect that there will be more than a few unscheduled maintenance shutdowns that reduce the achieved capacity factor to something substantially less than the claimed 32%.
Does anyone know if there will be any publicly accessible performance reports submitted?
Photo Credit: Large Solar Energy Projects/shutterstock