Suggests government policy/subsidies – not free market – give wildlife conflicting, utility-scale projects an edge over distributed generation

Desert Tortoise © Dr. Michael Connor, WWP

NRG Energy CEO David Crane, lead investor in the controversial Ivanpah Solar Thermal Energy Project, discusses why giant utility-scale renewable energy projects are economically viable and what the future might look like for renewables with a reduction of government subsidies:

NRG Energy’s CEO Discusses Q4 2010 Results – Earnings Call TranscriptSeeking Alpha

[We] fully recognize that the current generation of utility-sized solar and wind projects in the United States is largely enabled by favorable government policies and financial assistance.  It seems likely that much of that special assistance is going to be phased out over the next few years, leaving renewable technologies to fend for themselves in the open market.  We do not believe that this will be the end of the flourishing market for solar generation.  We do believe it will lead to a stronger and more accelerated transition from an industry that is currently biased towards utility-sized solar plants to one that’s focused more on distributed and even residential solar solutions on rooftops and in parking lots.

We are already planning for this transition now within NRG, so that any potential decline in either the availability of utility-sized solar projects or in the attractiveness of the returns being realized on these projects, will be exceeded in aggregate by the increase in the business we are doing on smaller distributed and residential solar projects […]

Emphasis Added.

This analysis suggests that distributed and residential renewable energy technologies, technologies that have less impact to wildlife and pristine public landscapes, might otherwise out-compete the giant utility-scale projects currently being promoted by government policies.

Put simply, it seems to vindicate the proposition that the Federal Government is Betting On the Wrong Solar Horse:

The United States is wasting billions of dollars of American Recovery and Reinvestment Act (ARRA) cash grants and loan guarantees on very large, high-cost, high-environmental-impact, transmission-dependent desert solar thermal power plants that will be obsolete before they generate a single kilowatt-hour of electricity.

A solar strategy that would have been stateof-the-art in the 1990s, prior to the advent of low-cost solar photovoltaic (PV) power, is now being executed. This is a victory for the broad government, utility, and environmental organization support that solar thermal technology has gained over the last few decades. It is also a victory for the lobbying power of this coalition over economic common sense. Solar thermal has lost the cost-effectiveness race to solar PV. The federal government has not yet absorbed the significance of this important development.

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Brian Ertz

8 Responses to Renewable Energy Industry CEO looks to the future

  1. avatar Daniel Berg says:

    I couldn’t open the link to the Q4 2010 results. Could be my computer.

    • avatar Brian Ertz says:

      it works on mine with firefox and chrome

      • avatar Daniel Berg says:

        It would make sense that they would first target commercial buildings, or owners of large spaces in residential areas. That would enable them to get the biggest bang for their buck and be right next the consumer, which eliminates most of the transmission issues.

        With a localized approach to solar, I keep wondering what kind of barriers to entry are already existing, or will be created by utility companies who stand to lose business? There seems to be a couple of options for consumers: Do they buy their solar technology outright for their home or business, or do the solar companies/utilities develop some sort of a partnership and coordinated effort to provide a network of localized solar energy across large residential areas? I do not know which scenario would create the most value for the consumer over the long-term.

        On the surface, it makes sense and seems like a potentially smart business move for NRG. It will just take a lot more hard work and a decentralized business model to exploit the opportunity across regions. Definitely not as easy as large, pork-filled projects like Ivanpah.

      • avatar Brian Ertz says:

        There will be a declaration coming from a witness with extensive expertise in power generation systems and regional energy planning for our litigation of the Ivanpah Solar Project.

        In it he was asked to analyze the need for the 370 MW that the Ivanpah Solar project promises to contribute to the California market. Using the California Energy Commission summer peak electricity demand forecast, Summer 2011 Electricity Supply and Demand Outlook[pdf] April, 2011 – it was concluded that there will be no peak demand reliability need for the 370 MW Ivanpah project for at least a decade.

        Additionally – assessing the cost of the Ivanpah Solar Thermal project against Solar photovoltaic (PV) alternatives (which can be put on commercial & residential rooftops – or 100 – 120 acre plots much closer to points of use and out of conflict with public lands and pristine wildlife habitat) is quite profound as well. Ivanpah promises 370MW at a capital cost estimated at $1.9 billion. The unit capital cost per kilowatt (kW) ends up $1.9billion/370,000kW or $5,135/kW for Ivanpah – much more than the $3,600-4,000/kW for solar PV facilities in the 20MW range (RETI Phase 2B Final Report, May 20, 2010)- requiring 100-120 acres of land – and Ivanpah will even cost more than arrays of less than 1MW on commercial building rooftops ($4,500/kW – U.S. Department of Energy, Solar Vision Study – Draft, Chapter 4 – Photovoltaices: Technologies, Cost, and Performance, May 28, 2010).

      • avatar Daniel Berg says:

        So it sounds like Ivanpah doesn’t make sense econimically, causes significant damage to a delicate ecosystem, and won’t be beneficial from a consumption standpoint for ten years. Ten years over which technological advances could significantly alter the solar industry. That’s pretty damning.

  2. avatar JimT says:

    Daniel, the City of Boulder is doing some interesting things to try and get solar healthy and well…check out Western Resource Advocates website and Namaste Solar’s website for information on the whole mega development vs. decentralized generation. Complicated issue, but from an ecological standpoint, maximizing the existing transmission structure, and generation capacity in already impacted areas makes a hell of lot more sense that just another huge stucture that will be a destructive impact on local environments. Siting is key, and that seems to be a non-issue for the Obama Administration in this needed push for alternative energy sources too much of the time.

    • avatar Daniel Berg says:

      I’m looking forward to seeing how the green energy movement evolves over time. With wind and solar, things are not off to a great start. Thanks for the website references.

  3. avatar JimT says:

    The 800 lb gorilla in the room with solar is, of course, WATER and its use to cool the process. Seems like no matter what issue it is, here in the West…water remains number one and I don’t see that changing.

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‎"At some point we must draw a line across the ground of our home and our being, drive a spear into the land and say to the bulldozers, earthmovers, government and corporations, “thus far and no further.” If we do not, we shall later feel, instead of pride, the regret of Thoreau, that good but overly-bookish man, who wrote, near the end of his life, “If I repent of anything it is likely to be my good behaviour."

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