How Green Was My Bankruptcy?

Guest Post by David Middleton

My apologies to the memories of the late Richard Llewellyn and late John Ford; but I just had to borrow their title for this post. This paragraph from a 2010 Telegraph article really says it all…

Its 500,000 photovoltaic panels will generate 30 megawatts of electricity, enough, in the popular measurement, to power 9,000 homes. It is costing about $250 million to build, significantly less than a gas, coal or nuclear power station, which can easily exceed $1 billion. And it represents a sea-change in America’s energy business.

America has been notoriously devoted to hydrocarbon fuels. Big Oil, Big Coal and big Texan hats in the White House were seen by the rest of the world to be keeping it so, whatever the global interest. Oil barons funnelled money to scientists ready to pour doubt on the science of climate change, and conservative Republicans led the charge to pour scorn on those such as the former Democrat vice-president Al Gore who were urging Americans to rethink where their energy was coming from.

The power plant described in the preceding passage is the Cimarron Solar Facility, built on Ted Turner’s 590,823 acre ranch in northern New Mexico. It is indeed true that most natural gas- and coal-fired power plants cost a lot more than $250 million to build. However, it’s also true that most natural gas- and coal-fired power plants have nameplate generating capacities a bit larger than 30 MW…

TVA to build natural gas power plant

By DUNCAN MANSFIELD, Associated Press

Posted June 4, 2009

KNOXVILLE — The Tennessee Valley Authority on Thursday decided to build an $820 million natural gas power plant in northeastern Tennessee to comply with a North Carolina lawsuit over air quality.

The 880-megawatt combined-cycle gas plant would be as large as the 1950s-era, coal-fired John Sevier plant in Rogersville that a federal judge has targeted for new pollution controls on North Carolina’s behalf.

[…]

LINK

  • $820 million divided by 880 MW works out to $931,818 per MW.
  • $250 million divided by 30 MW works out to $8,333,333 per MW.

Assuming that the gas-fired plant managed an 85% capacity factor and a 30-yr plant lifetime, the initial capital expenditure would work out to $0.004/kWh… A bit less than half-a-cent per kilowatt-hour. Assuming a 25% capacity factor and a 30-yr plant lifetime for the Cimarron Solar Facility, the initial capital expenditure works out to $0.127/kWh… Almost 13 cents per kilowatt-hour! The average residential electricity rate in the US is currently around 12 cents per kWh… That’s the retail price. As a consumer of electricity, I know which plan I would pick. I’m currently paying about 9 cents per kWh. I sure as heck wouldn’t seek out a provider who would have to raise my current rate by about 50% just to cover their plant construction costs.

Solar photovoltaic electricity is bankruptcy the green way writ large. Here in Texas, Austin Energy has agreed to a long-term purchase agreement to pay $10 million a year for 25 years, for the electricity generated by the Webberville Solar Farm. That works out to more than 15 cents per kWh.

Figure 1. Levelized Cost of New Electricity Generating Sources

In concert with his efforts to drive up the cost of coal- and natural gas-fired power plants, President Obama has aggressively pursued an agenda of financing expensive power plants with taxpayer dollars. Many of these taxpayer-guaranteed loans have gone to financially strapped companies, lacking the means to repay those loans. In most cases local utilities were coerced or enticed into signing long-term purchase agreements to buy electricity at nearly double the cost of coal- and natural gas-generated electricity. The sole justification for this “green” centralized industrial policy is the Lysenko-like junk science of catastrophic anthropogenic global warming.

The economics of this “green” centralized industrial policy are mind numbingly horrible.

Figure 2. The economics of solar photovoltaic poer plants are simply awful.

The capex for solar power plants averages between $6- and $7-million per MW of installed capacity. Coal-fired plants generally run less than $2-million per MW and natural gas plants currently run less than $1-million per MW. The average retail residential electricity rate in the U.S. is currently less than 12¢ per kWh. The levelized generation cost for the plants being financed by the Obama administration is more than 20¢ per kWh. His “green” centralized industrial policy will drive the wholesale cost of electricity to nearly double the current retail rate.

One need not literally seize the assets of businesses and install gov’t bureaucrats into management position to effectively nationalize those businesses. All it takes is to make them dependent on gov’t and/or direct their activities through regulatory constraints.

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crosspatch

You also have to consider degradation of that solar farm of about 10% capacity per year. So they might get 30 megawatts the first year but that will drop to 27 megawatts the second year. 24.3 year 3, 21.9 year 4, 20.7 in year 5. After 5 years they will have lost 1/3 of the original generating capacity due to various things such as individual cell failures, degradation of individual cells, etc.

How is it not obvious to all concerned that this is madness?

Wally

Here in Australia where our dollar is pretty much parity with the US$, we’re paying about 30 cents / kW-hr (summer tariff) and around 25 as the winter tariff. Our summer tariff is higher because of peak demand for air-con cooling in summer.

Dr Burns

Does the $250M for the solar plant include the cost of the backup gas plant ?

GlynnMhor

At least they don’t frequently have the problem of snow covering the panels for weeks at a time…

Philip Bradley

Solar power will only ever get close to the rated capacity on sunny days in mid-summer. Come winter, it might generate 20% of rated capacity on a sunny day and as little as 5% on a cloudy day.
The seasonality of solar power (at mid to high latitudes) is such an intractable problem that no one is even pretending to try and solve it.

Curious George

How many megawatt-hours will that solar plant produce between 8pm and 6am?

Skiphil

Ted Turner and friends should be required to pay for these costly fiascos entirely.
If greenie watermelon types want to do un-economical politically correct projects, they may finance their own fantasy companies to try to do them. Don’t make all of us pay for this crap.

Ian of Fremantle

Whether or not you believe in CAGW and on this blog most are sceptical as indeed am I, the development of non polluting forms of energy production surely is a plus for the environment. Isn’t it? Everything isn’t always down to the dollars and cents. Is it?

davidmhoffer

You’v forgotten that very critical factor in green thinking, job creation:
Solar panels require thousands of person years to build the manufacturing plant and install the solar panels.
Natural gas plants are evil, so the jobs to build it don’t count.
Solar plants require thousands pf person years to maintain.
Natural gas plants are evil, so the jobs to maintain it don’t count.
Yes, there is a cost to the economy to support green energy, but look at all the jobs it creates!

John West


■$820 million divided by 880 MW works out to $931,818 per MW.
■$250 million divided by 30 MW works out to $8,333,333 per MW.

How dare you compare apples to apples like that! This is no longer allowed in post modern science. You have to use “adjusted units” for comparisons between green energy and evil energy. For example, you can’t compare the 30 MW green energy “in the popular measurement, to power 9,000 homes” to the evil energy powering 264,000 homes; no, the evil power must use “home” units of the “Al Gore type” such that it can only power ……. naught ….. naught ……. carry the one …….. ………… 42. You see, this way instead of the cost being about $28k for each home the green plant powers compared to $3k for the evil power, once properly adjusted it’s $28k per home powered greenly compared to $19.5 Million per home* powered evilly.
[*: fine print too small to see.]
For your own sake, I hope you get the hang of this soon.
(Surely, this is not necessary, but just in case: /sarc)

gerrydorrian66

In the UK, the green boom seems to be fuelled by the desire of rich people to make more money by hosting heavily- and even fully-subsidised wind-farms, and I’m sure, as flooding continues during the heavy rainfall of our “drought”, solar cell farms will follow. It’s enclosure all over again

cartoonasaur

And so the tax dollars must continue to swirl, swirl, swirl down the solar powered drain…

Greg M

But…but…but…
…it’s for the CHILDREN!
/sarc

FrankSW

Crosspatch – is that true, where can we get more information in an easilydigestable form?

Mac the Knife

“It ain’t easy, being green.” Kermit the Frog
It ain’t cost effective either, Kermie! Mac the Knife

Mike Smith

First Solar, operators of the Cimarron Solar Facility are not having a great week:
http://www.forbes.com/sites/ericsavitz/2012/05/04/first-solar-drops-to-all-time-low-as-q1-results-miss-badly/

Tommy Roche

In Ireland, at current exchange rates I am paying $0.21 per kWh,( €0.161) thanks in part to green subsidies and carbon taxes. I can only dream of the authors $0.09 rate, which converts to under €0.07.

Mike Edwards

The costs described in this article also leave out the costs of building the gas/coal/nuclear power plant that still has to be built as backup for the times when the solar station isn’t generating. Which then also have to be paid to sit idle at times when the solar station is generating.
These are the economics of the madhouse.

juanslayton

…bolting solar energy panels to steel tresses…
Sounds a bit hairy….

Avfuktare vind

One of the main benefits of solar energy is that it can be produced at the place of consumption. If you cut out the need for (extra) transmission lines and compare to the energy retail price its almost comparable to conventional energy. Add a decade of further development and I think we will see a lot of solar panels complementing other energy sources, especially photovoltaic and heat producing version.
Big solar farm with todays technology doesnt seem a good idea though.

jorgekafkazar

davidmhoffer says: “…Yes, there is a cost to the economy to support green energy, but look at all the jobs it creates!”
Real jobs create wealth. A quick look at the economics shows that sunbath power is long on capital investment and short on net wealth creation. The money would be better invested in real power plants. These things are elitist toys.

Most people stop taking in information at the first ‘illion’ and assume that the jumping eco-politico-clowns (sorry Julia and Al) are trustworthy.

John F. Hultquist

Ian of Fremantle says:
May 4, 2012 at 9:54 pm “ . . . non polluting . . .

Nonsense. These things are expensive, damaging to the environment where they are built, and almost useless. Look intently at the photo at the top of this post and explain the environmental “plus” you see. Yes, I know, you were thinking of CO2 emissions and global warming. The contribution of this facility to a reduced future temperature to the nearest whole number is zero. In scattered remote locations when cost is not an issue, small scale solar power can find an effective home. The type of activity represented by the Cimarron Solar Facility is a parasite within a developed economy.

Phillip Bratby

It’s far worse in the UK where we don’t get much sun. The average capacity factor of solar farms is less than 6%. The subsidies are much larger than in the US and the solar farms are built on farmland, as we don’t have much in the way of desert.

I think I’m getting the picture but it’s patently obvious that pictures of solar panels covering the desert floor are vastly superior to pictures, complete with the inevitable sun blocking camera angle, of smoke stacks belching dangerous white steam.

Richard111

I read somewhere that solar panels only produce their peak power when they are aligned to within seven degrees of normal of the the incoming sunlight. That means rigidly mounted solar panels only produce their peak power for about one hour per day (sun moves across sky at fifteen degrees an hour).
Also the efficiency of the current solar panels is just 20% so 1,000 watts of sunlight will give 200 watts of electricity. I understand 40% efficiency UV panels are under development but not commercially available as yet. Does the above UV panel field really produce 30 megawatts?

crosspatch

Crosspatch – is that true, where can we get more information in an easilydigestable form?

There are several methods of degradation. The most common these days is cell delamination in the cheaper cells coming from China, basically the layers come apart. There is another problem where the output of the cell fades over time. This article states that average is something 4.5% per year degradation ( http://energy.aol.com/2011/10/07/solar-panels-dont-work-and-no-one-knows/ ) but industry reports from Germany are that the cheaper cells from China have twice that rate.
The thing is that a panel is often made from many individual cells. One single cell can fail or greatly degrade and there is really no decent way to tell. Google has done some work with monitoring each individual cell on a panel to spot problem cells.
This document shows some case histories with older modules with somewhat better results but even then we see a significant number of modules (which contain many individual cells) with considerable degradation: http://www.solar-santral.com/menuis/Long%20Term%20Performance%20of%20PV%20Systems030226.pdf
What I am looking for and not finding was a report from a newer German plant that had to be abandoned because the solar cells were simply falling apart. The pictures I saw showed pieces of delaminated cells on the ground around the panels. Systems installed up to about 2006 or 2007 seem to be OK. Systems installed more recently seem to be of poorer construction quality.
IF you can get very well-constructed panels, you might get 1% per year degradation assuming no hot spots, no browning, no delamination, no chemical degradation. If you get the cheapest ones available on the market, you are going to have trouble maintaining 5% per year degradation and are likely to see closer to 10%.

Magzan

First of all the prices for solar panels dropped in the last two years dramatically, now you get panels already for 0,7 USD/Watt and the prices are steadily going further down. So taking two year old prices for comparison is already manipulatory. In addition the sun power is free whereas the natural gas operating costs were disregarded. Furthermore PV is producing electricity usually at times of peak consumption, i.e. midday, thus lowering- at least in Europe- the electicity peak prices for industrial customers.
All in all I do not understand why it always has to be “either-or”, I think we will need in the future all sorts of power supply to safeguard our streadily rising consumption needs.

John F. Hultquist

FrankSW says:
May 4, 2012 at 10:11 pm
Crosspatch – is that true, where can we get more information in an easilydigestable form?

Beware of simple answers to the question of degradation or anything else about solar power. ‘crosspatch’s’ numbers are likely high but there are other issues. The panels and the instillations are quite variable. Some home set-ups will have battery storage, others connected to the local utility may not. These require additional safety features and add cost. Does the area get snow? Are they self cleaning or do you have this chore to do? Commercial facilities (utility-scale solar) in warmer reliably sunny areas likely do not have a snow problem but may have a dust issue and need a self-dusting capability. These and many other issues are moving targets. Do a lot of reading and watch the date of publication and who the source is. Someone selling panels may not be the best place to get information – although the contract you are asked to sign may enlighten. Many hits on Bing or Google — one source of green tech info is here:
http://www.greentechmedia.com/

Claude Harvey

Only those photovoltaic solar plants in the very best locations (think Mojave Dessert) achieve 25% capacity factors. CCGT plants routinely exceed 90% capacity factors. Therefore, the spread between the economics of the two technologies is even more extreme than the author supposes. Yet the band plays on!

boydo3 N Albany

At least they won’t have to look for a place to encapsulate and contain vast quantities of radioactive waste for thousands of years. And the millions of dollars that will be spent trying to rectify the polluting result of fracking. And the millions of dollars spent on cleanup of oil spills. And the millions of dollars spent trying to scrub the coal fired plants of the release of toxic chemicals into local environments. Time is of the essence. When we have to drill many miles into the sea floor. When we are cracking rock to squeeze out the last remaining fossil fuels, the knock is on the door. We should be finding new ways to provide the energy our children and our children’s children will need. Gas and oil are highly concentrated and very valuable sources of energy. But they are limited indeed. They should be conserved. We’re gonna need them, big time.
Time to dump this silly propaganda from the oil and gas industry and start looking to future sources of energy, whatever they may be.

Timmo

David, can you please add the price for the fuel itself to the equation. You don’t want to be blamed for incorrect calculations. My guestimate is that it still boils down to only 2 to 5 cents per Kw.

Streetcred

^ LOL !

Jonathan Smith

Magzan says:
May 4, 2012 at 11:12 pm
Not sure where you get that from. Go to the National Grid (UK electricity distributor in case you are not from the UK) website:
http://www.nationalgrid.com/uk/Electricity/Data/Demand+Data/
If you plot graphs of the data you will find, particularly in winter, that PV provides very little when it is needed.
JS

David Cage

Wally says:
May 4, 2012 at 9:31 pm
Here in Australia …….. Our summer tariff is higher because of peak demand for air-con cooling in summer.
It is sheer insanity even if you accept the AGW belief that they are generating power at three times the cost when many years ago we has absorption refrigeration that slots neatly into a solar powered system cooling via direct heating panels at least five decades ago. I know it sound daft but it worked and we had a gas heater powered fridge for years when I was young.
Unlike other applications the solar power available to drive the cooling system increases at exactly the rate that demand for it increases. All it needs is for a good old fashioned water heater type panel and the return of a refrigeration system that only commercial pressures from a big company GE against its smaller rivals like Electrolux, removed from the market, The market cost differential we were talking about was about a ten percent one, so we are talking about a twenty percent one to include the extra heat exchanger and a no mechanical parts system with panel cleaning as the only maintenance cost.
If the grants thrown away on the PV and wind follies were spent on a new factory to produce this type of unit it would save more fossil fuel than the far more expensive plants generate which would be good for both those with and without the faith.

David Jones

Ian of Fremantle says:
May 4, 2012 at 9:54 pm
Whether or not you believe in CAGW and on this blog most are sceptical as indeed am I, the development of non polluting forms of energy production surely is a plus for the environment. Isn’t it? Everything isn’t always down to the dollars and cents. Is it?
How many people do you know who are prepared, voluntarily, to to pay 50% extra for electricity above current rates, solely because the source is “green?” Of course, if you look at the real numbers, which include the degradation of plant and the necessary backup plant, etc. as mentioned by other commenters, that 50% is a major understatement. It is not an efficient use of capital, which is just as much “a resource” as anything else.

dp

Doomed to repeat…
http://www.abc.net.au/news/2011-07-25/solar-umuwa-apy-lands-sun-farm/2808796
Don’t forget to unclick the Notify me… box below or WordPress will spam you.

Has anybody who governs any of the Western world countries thought this through? Our economies at the moment are close to collapse, so what do we do? Hike energy prices by a huge amount to satisfy some delusional theory! In the UK, they have opted to derive energy from wind and sun, this is despite the fact that neither of these are exactlystrong features of the UK climate. What we do have though is geological stability, so if our government believes in AGW why not build nuclear power stations?
Our governments are not fit to govern and as a consequence China and India will be the major economies and consequently dominant military powers within a few years.

David Cage

boydo3 N Albany says:
May 4, 2012 at 11:41 pm
At least they won’t have to look for a place to encapsulate and contain vast quantities of radioactive waste for thousands of years.
Have you any idea of the materials used in these panels. Clearly not. As for the thousand year nuclear waste I think it was Goebbels who said for a good plausible lie make the claim outrageous and contain a grain of truth.
The green movement certainly succeeded with this claim. Waste contains a mixture of long half life low energy and short half life high energy. The fifty to one hundred year waste is a problem but after that only the low energy components are still active and the really low energy ones are around for a thousand years. The danger of these can be judged from the fact that the same ingredients were used in luminous dials in WW2 planes and one old lady I knew said they used to lick the brushes to get a finer point on them. She left us in no doubt that to her us kids today ( us being pensioners) were self indulgent fuss pots when she read about the action on waste in Scotland which was just this sort of instrumentation. She died aged nearly 90.

Andrew

A great article David. Very well written and presented. No fudging or weasel words and calculations.. directly comparable costs of energy generation in MW and cents per kw/h to allow people to see just what a major fraud these Govt-backed solar schemes are. I hope many people read this and send it onto family and friends. People really do need to know how they are being robbed blind by these evil buggers.

Disko Troop

There was more radiation coming up through the floor of my parents house in Cornwall than you could get by sitting on the top of the pile of so-called low level contaminated waste at Windscale. I must ask my 94 year old, perfectly fit, mother how much it has shortened her life.

Billy

At least sunlight is free. ????
Dhuh, gas, oil, coal and uranium are all free too. All you have to do is drill a well or build and operate a mine and you have free fuel. Even if you understand arithmetic and calculate the cost it is still much less expensive than solar. The developed cost of every energy source is a direct reflection of its associated pollution, Higher cost means more resources have been exploited and consumed to produce a unit of energy..
All types of energy are only free if you don’t use them, except maybe sunburn and forest fires.

Larry in Texas

I have abandoned utility companies that have sizable wind and solar facilities in their energy portfolios. It is delusional to think that solar and wind power are economical. As of the last bill from my current utility company, which is using mostly coal and natural gas facilities, my current rate is $0.0993/kWh. Which is considerably less than my average bill from the so-called “environment-friendly” utility: around $0.12 – 0.15/kWh.
Barack the Usurper’s energy policy is a sure prescription for bankruptcy for everybody, especially the United States.

Pete in Cumbria UK

What never ceases to amaze (me) is how the costs of these government mandated things can and do simply skyrocket.
Example:
Presently in the UK, installers are saying they can put 4kW of solar PV on your roof for ~£6,000, call that £1.50 per watt or US$3.2. It is possible to buy (at RETAIL) prices, the basic panels for £0.50 per watt. Each installation is a custom job, with scaffolding, climbing about inside the roof space, lifting and replacing roof-tiles, installing new meters and piles of paperwork for each (4kW) job. Custom built, it still comes in at US$3.2 per watt, delivered, as a turnkey project.
So, given the obvious economy(s) of scale of planting 240 acres of panels in a desert, how do they still turn $3.2 per installed watt into $8.33?
Maybe it is really true that governments, like insurance companies, have more money than they know what to do with.

Harold Pierce Jr

In these remote desert locations, these solar panels are such inviting targets, that vandals will use long-range, high-powered rifles and blast them bits like they do to road signs.
Sand storms are common in deserts and will probably destroy the panels before their rated lifetime. Some types of desert dust are very fine, abrasive and corrosive. I just learned this today from a doc on the History channel about African desert dust.

richardscourtney

Magzan:
At May 4, 2012 at 11:12 pm you say;
“In addition the sun power is free whereas the natural gas operating costs were disregarded.”
I wish greens could understand that
ALL ENERGY IS FREE BUT COLLECTING IT HAS COST.
Total power output cost of a power plant are the sum of
• the costs of collecting the energy,
• power plant capital costs,
• power plant operating costs
• power plant decommissioning costs,
• output power delivery costs.
With the exception of hydropower, the power available from ‘green energy’ is very expensive because the collected energy is very diffuse and, therefore, collecting the energy has very, very high cost. And that is why – with the exception of hydropower – ‘green energy’ was abandoned when the greater energy intensity in fossil fuels became available by use of the steam engine.
(As Scotty said to Kirk, “Ye canna buck the Laws Of Physics, Jim”.)
Richard

mfo

Since the Industrial Revolution in the 18th/19th centuries in England, where coal and iron were concentrated in the north, economic growth has been a direct result of cheap energy. Higher energy prices naturally lead to industrial decline.
In the US I believe there is at least 860 trillion cubic feet of recoverable shale gas and 270 trillion cubic feet of natural gas. Europe has slightly less at around 640 trillion cubic feet of shale gas.
In recent years in the US, the mining, oil and gas industries have created over 500,000 new jobs. Expansion of the US oil and gas industries could lead to an additional 1.5 million new jobs. There is a boom in traditional energy in the US whilst the green sector has lost about 500,000 jobs.
The boom has resulted in the expansion of factories such as a $650 million steel mill in Youngstown making gas pipelines. The growth of US energy production and the industrial developement that follows will begin to redress the loss of 5 million jobs in manufacturing and construction since 2006.
So instead of politicians in Europe and America trying to buck the market with their bankrupt policies of rigging the prices of solar and wind energy caused by their infatuation with the CAGW scare they should be thinking: cheap energy =industrial growth=jobs=exports=
economic recovery=prosperity.
Clever, inventive people will in time develop cheap and truly sustainable sources of alternative energy.

DirkH

Ian of Fremantle says:
May 4, 2012 at 9:54 pm
“Whether or not you believe in CAGW and on this blog most are sceptical as indeed am I, the development of non polluting forms of energy production surely is a plus for the environment. Isn’t it? Everything isn’t always down to the dollars and cents. Is it?”
I would say it differently. Everything is always down to the dollars and cents, Ian, especially environmental degradation. The dropping price of PV means that it becomes less destructive for the environment. It is produced using rather noxious chemicals and loads of coal power with all that that entails. When PV cells become cheaper this means the production process becomes less energy intensive and cleaner (because less of those chemicals are used and lost in the process, more of these not only poisonous but also expensive substances are re-used).

Adam Gallon

Economic madness! $11.5 billion (If my eyes don’t deceive me), to produce a paltry 1788MW. That’s less than the output of a single, coal-fired power station, like Radcliffe-on-Trent, where the Greenies had a protest last year!