Research claims that renewable energy is more cost effective than fossil fuels at producing electricity. But at the Ivanpah Solar Power Facility in California, taxpayers are actually losing out on their money.
Ivanpah, the 377-megawatt, world’s largest solar thermal plant located in the Mojave Desert, fell short of production in 2014 and 2015. Managers attributed the shortfall to less sunny weather than expected, but the plant’s problems extend far past weather forecasts.
Despite being owned by three private companies – Google, BrightSource Energy Inc. and NRG Energy – the plant received $1.6 billion in loan guarantees from the U.S. Department of Energy. It is paid four to five times more per-megawatt hour than natural gas plants.
Ironically, the plant burns natural gas for four and a half hours to start each day. This amount of natural gas could generate one quarter of what the solar panels produce all day. The plant also creates a risk to wildlife; within five months, nearly 300 birds were killed from the intense radiation in the plant mirrors.
Unfortunately, energy regulations prevent taxpayers from funding a more energy efficient plant. Taxpayers are shelling out money for the inefficient plant so utility companies can follow the state mandate on renewable energy.
Established in 2002, California’s Renewables Portfolio Standard required that 20 percent of electricity sales be made by renewable energy. By 2020, the standard will become 33 percent. A 2015 bill mandates that half of retailer sellers and publicly-owned utilities’ energy must be renewable by 2030.
Americans for Tax Reform has supported states that worked to eliminate renewable portfolio standards, like Ohio did in 2014 and North Carolina almost did in 2013. Removing this burdensome regulation ensures taxpayers are only funding the most efficient energy options.
But when the Ivanpah solar panels are producing 32 percent less than expected, there is much room for taxpayer frustration. The plant defaulted on a contract with Pacific Gas and Electric Co. NRG Energy, which operates the plant, said increased output from February shows the plant is on track to fulfill its obligations to utility companies. California regulators recently approved a deal that the plant meets its obligations to Pacific Gas and Electric Co and pay for past shortfalls by Aug. 1.
The plant’s insistence that it will improve production comes as one of the world’s largest renewable energy companies could go bankrupt. SunEdison has collected $11 billion in debt from developing or acquiring renewable energy products, despite depending heavily on government subsidies. This goes to show even government support cannot help ineffective methods of energy production.
If Ivanpah’s production failures are any indication of how renewable energy performs, California will have trouble meeting its regulation requirements. Unfortunately, taxpayers will pick up the tab.