Your Tax Dollars at Risk
“Solar Plant to Generate Power After Sundown”, proclaimed a headline in the Wall Street Journal.
The Gila Bend, 250 MW concentrating solar power plant being built by a foreign company, Abengoa, received a $1.45 billion loan guarantee from the Department of Energy (DOE).
In other words, DOE used U.S. tax dollars to guarantee the loan of a foreign company. If the plant fails, the tax payer is on the hook for the money.
The plant itself will use salt beds to store heat so the power plant can continue to generate electricity for a few hours after the sun goes down. Of course, cloudy days will still be a problem.
Concentrating solar uses mirrors to focus sun light on a receiving unit, in this case a tower, where it heats a liquid to produce steam that then drives a steam turbine generator.
The electricity generated by concentrating solar is very expensive. The Gila Bend plant will cost $8,000 per KW to build.
Here are some comparisons of construction costs for other types of power plants.
|Method||Fuel & Operating Costs||Costs incl. Depreciation||Construction Costs|
|Traditional Coal||$0.02 /kWh||$0.04 /kWh||$2,000 /KW|
|Ultra Supercritical Coal||$0.02 /kWh||$0.06 /kWh||$2,500 /KW|
|Natural Gas Combined Cycle||NA||$0.06 /kWh||$1,200 /KW|
|Nuclear (Recent costs increasing)||$0.02 /kWh||$0.09 /kWh||$4,000 /KW|
|Integrated Gasification Combined Cycle||NA||NA||$5,000 /KW|
Natural Gas Combined Cycle and Ultra Supercritical Coal power plants cost far less to build and generate electricity at a much lower cost.
To make matters worse, the true cost per KW must recognize that solar power plants have a low capacity factor. Capacity factor measures the actual amount of electricity produced by a power plant as compared with what it could theoretically produce based on its nameplate rating. The table shows adjusted costs for typical installations based on capacity factors.
|Alternative||Capacity Factor||Construction Costs|
|Wind, land based||30%||$6,600 / KW|
|Wind, off shore||39%||$6,200 to $12,800 / KW|
|Solar, PV||16% – 25%||$24,000 to $37,000|
|Solar, concentrating||22% – 30%||$12,000 to $16,000 / KW|
|Ultra-supercritical coal||80%||$3,100 / KW|
In the case of the Gila Bend plant, the capacity factor should be around 40% which results in an adjusted cost of $20,000 per KW.
Because states have enacted Renewable Portfolio Standards that require utilities to purchase electricity produced by renewable methods, such as wind and solar, this very expensive electricity will be foisted off on to the consumer. In this case, Abengoa has a 30-year purchase agreement with Arizona Public Service, so the electric bills of Arizona Public Service customers will go up.
If the RPS law is overturned, or if operating costs are higher than anticipated, or the salt beds don’t work as predicted, Abengoa could have difficulty meeting its loan obligations, and the tax payer will foot the bill.
If the system works as predicted, then the tax paying customer will foot the bill.
In either case, the ordinary consumer foots the bill.
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