Guest Post by David Middleton
Great News! Siemens will generate an 18% return on a project that will have a negative return on investment (-9%)… All at the taxpayers’ expense!
At first glance, this looked too good to be true…
White Sands breaks ground on Army’s largest solar array
April 26, 2012
By Ms Miriam U Rodriguez (ATEC)
White Sands Missile Range leaders came out to break ground and to commemorate the start of a renewable energy project at the site of the new Solar Photo Voltaic Array Project, the Army’s largest solar array, April 19 on WSMR.
A 42-acre tract of land located about ¼ mile northeast of the Las Cruces Gate next to main post will be the site where 4.115 MW of single-axis vertical azimuth-tracking ground-mounted solar Photo Voltaic panels will be installed.
[…]
In conjunction with the 4.115 MW project, WSMR will also be installing a 350 kW solar PV Carport at the parking lot for the Headquarters Building 100.
[…]
The total cost of both projects is $16.8M with a cost of $3.77 per Watt.
The solar project is being funded within an Energy Savings Performance Contract (ESPC) utilizing an Energy Services Agreement (ESA) that the Huntsville Army Corp of Engineers (COE) has awarded to Siemens on behalf of WSMR. Under the awarded task order, Siemens will maintain and operate the equipment and will provide the energy to WSMR. This agreement is for a period of 25 years. The simple payback is 18.1 years. The energy being provided will cost the same that WSMR is currently paying the local utility company which is a blended rate of $0.08/kWh.
[…]
$3.77 per Watt is less than $4 million per MW. That’s a big deal. Solar PV usually runs from $5 to $8 million per MW of installed capacity and $0.08/kWh is dirt cheap by solar standards. $0.08/kWh is only 25% more expensive than the levelized generation cost of natural gas-fired electricity generation.
On top of all that, the Army didn’t have to pay any of the $16.8 million construction cost. Siemens would recoup its costs by selling the electricity to the Army at the current market rate. What a deal for the taxpayers! Green energy for the same price as dirty old energy!
It turns out that it actually is too good to be true…
Corps of Engineers completes Army’s largest solar array installation
January 22, 2013
By James W. Campbell, USACE
WHITE SANDS MISSILE RANGE, N.M. (Jan. 22, 2013) — The largest solar power system in the U.S. Army is coming online at White Sands Missile Range, N.M., and officials gathered Jan. 16, to mark the occasion with a ribbon-cutting ceremony.
The Energy Savings Performance Contract, or ESPC, project, awarded and managed by the U.S. Army Engineering and Support Center, Huntsville, provides the sprawling desert base with a new 4.465 megawatt solar photovoltaic system…
[…]
Along with being the largest solar project, there’s another first in how the system at White Sands Missile Range was funded.
“We used an Energy Services Agreement for the photovoltaic equipment along with the ESPC concept which was a first for the Army,” said Will Irby, Huntsville Center ESPC Program Manager.
An ESA is an arrangement whereby a third party owns, operates and maintains the power generation system and provides electricity to the customer. This third-party ownership mechanism allowed for a significant tax grant from that reduced the project cost by $6.1M, Irby said.
[…]
The taxpayers paid 27% of Siemens’ construction costs. The actual cost was $5.13 per Watt, $5.1 million per MW. A natural gas-fired plant costs $700,000 to $900,000 per MW. Since the taxpayers footed 27% of the up-front costs, Siemens can generate about an 18% annual return selling the electricity to the Army for $0.08/kWh…
(My return on investment calculation does not apply a discount rate or any other “time-value of money” measures.)
As if the economics of this weren’t bad enough, the 4.1 MW solar PV array covers 42 acres. That’s a generating density of 0.11 MW per acre. Natural gas-fired plants generate more than 6 MW per acre…
U.S. Army Dedicates 4.1 LCPV Solar Power Array at White Sands
By Renewable Energy World Editors
January 18, 2013
New Hampshire, USA — On Wednesday, January 16th, the U.S. Army dedicated its largest solar photovoltaic system at White Sands Missile Range, in a ceremony led by Brig. Gen. Gwen Bingham, White Sands commander. Bingham was joined by Katherine Hammack, assistant secretary of the Army for Installations, Energy and Environment for the ceremony and Judy Marks, president and CEO of Siemens Government Technologies. (see photo at the end of the article.)
“I came here about four months ago talking about how White Sands is a national treasure and now we can feel proud that we’re really on the environmental edge,” Bingham said. “It takes passion to do something like this. I’m just excited about the journey that will lie ahead.”
[…]
If “White Sands is a national treasure,” wouldn’t you think that the gov’t might want to reduce, rather than expand, the footprint of electricity generation for the facility?
The new solar PV arrays are expected to provide up to 10% of the facility’s electricity demand at a full cost of $22.9 million and will cover 42 acres of “national treasure.” A couple of 7 MW natural-gas fired reciprocating engines could provide 100% of the facility’s electrical needs at a cost of $5.6 million and probably only occupy 2-3 acres of “national treasure.”
Natural gas prices would have to rise to ~$8/mcf (mmBTU) for the natural gas-fired reciprocating engines’ levelized cost to become as expensive as the solar LCVP installation. US natural gas prices are not expected to rise to any where near $8/mcf by 2020.
Unless the Obama Administration finds a way to shut down fracking and kill the shale boom, the real price of natural gas is unlikely to increase very much at all over the next 10-15 years.
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I’ve spent much time out at WSMR for work with the Army. The base is enormous, some 3200 sq mi. It is also some of the most desolate, god forsaken collection of scrub brush, salt flats, and ancient lava flows one can imagine. Blistering sun, no rain in the valley. Close to nothing. National treasure? Please. The Mojave is a paradise by comparison.
If there’s any place where it makes sense to throw up some solar PV in the US without concern for otherwise useless land, WSMR is the place.
BTW, outside infrastructure like gas lines do not cross the base. If a gas turbine electric plant was to be built on large scale, its fuel supply would have to be continuously trucked-in CNG or propane, or in other words a non-starter. Yes solar PV is expensive but it does not require a pipeline. Why do the common “could have built a gas plant” red herrings always just assume the fuel (or water supply for Rankine cycles) is always and everywhere available, that gas lines lie everywhere just below the ground? No, diesel generators are the Army’s practical go to for remote power needs like WSMR. Diesel electric is expensive now and we only be more so in the future.
BTW2, I suspect the electric load out at the WSMR fixed building sites must be overwhelmingly air conditioning, i.e. high day time loads, especially in the desert. Gets rather pleasant out there at night. There is little or no night time lighting over most of the base. So the demand would likely match the solar output very closely. The Army would know this.
Don Allen says:
January 24, 2013 at 3:59 am
It’s taken you this long for you to notice the pattern?
DaveE.
There’s a CNG fueling station on the post: Compressed Natural Gas Fueling Station White Sands Main Post – White Sands Missile Range, NM
White Sands Missile Range sits right in the middle of the New Mexico Gas Company’s Las Cruces service area in southeastern Doña Ana County.
There’s also a major interstate natural gas pipeline running right into the Las Cruces area. USACE could have easily tied into it.
The current retail price for natural gas from the New Mexico Gas Company is $0.4104 per therm… $4.2 per mcf.
The nearest CNG station with a listed price is in Socorro: $1.25/gge. That works out to $0.04/kWh. $4.20 per mcf also works out to $0.04/kWh. Half as much as the Army will be paying Siemens.
This post reminds me of something I read after Bill Clinton’s inaugeration. One of his supporters was offended that the parade included a flyover by some fighters. To a friend nearby they said there shouldn’t be a military display. The friend replied, “Ah! But remember, those are now OUR planes.”
1. This is 100% funded by the taxpayers.
2. There is only a positive return on the investment if the price of natural gas rises more than anyone expects it to. In that sense, it is like a lot of calculated risks, a hedge against future gas price increases.
3. It is best thought of as another large R&D project, such as for example the failed Sergeant York antiaircraft vehicle. It is not possible to be absolutely correct 100% of the time. With its large scale and timeline, perhaps the Army and Siemens will acquire a lot of information useful to the Army in the future.
4. In this and other R&D projects, the Army, Navy and Air Force are acting as though a diverse set of energy sources for the future is more important than the cheapest energy now. They seem to be betting that consistent R&D will reduce the prices and increase the utility of alternative sources.
If AGW fanatics have their way, the world will be cluttered with giant windmills and littered with soalr arrays. No more open spaces for wildlife and people. No more open vistas. All because of fanatic obsession over CO2, compounded iwth a bizarre reluctance to use effective technology that actually reduces CO2 without wrecking huge areas of the country.
@Matthew R Marler,
The only R&D going on here is in creative Enron-style accounting: Researching and developing new ways to scam the taxpayers.
There is nothing R&D, state of the art or cutting edge about this solar installation. The gov’t picked the taxpayers’ pockets for a 27% down payment and then neglected to charge it against the cost of the project. This sort of accounting gets you perp-walked in the private sector.
So 42 acres is 170,000 squ metres, and with a whopping 4 megaWatts output power that is a whole 23 Watts per square metre.
Not a bad recovery efficiency from say 1,000 W/m^2 @ur momisugly maybe AM 1.5. yes not bad; simply attrocious !
LCNM is about 32 deg N latitude, so that gives them a latitude obliquity factor of about 85% (0.848)
So let’s say they have only 35.6 acres normal to the sun.
Still bloody awful efficiency.
Well it could be a lot worse of course. If you put up mirrors, and a central boiler turbine system, you simply wouldn’t believe the amount of shadowing inefficiency you have to put up with.
Compared to that Solyndra was a marvel of optical efficiency.
I can’t wait to find out what their local property tax bill will be on that 42 acres of building improvements.
Well it’s all waste desert land isn’t it.
>>>The energy being provided will cost the same that WSMR is currently paying the local utility company which is a blended rate of $0.08/kWh.
How do they get that? Please, someone correct me if my math is wrong.
4.5 MW project @ur momisugly 20% average output = 900 kW average hourly output
900kW * 24hrs/day * 365 days/yr = 7.8 million kW hrs/year
Now what does it cost? 16.8 million.
The power company gets a loan at 6% to pay that off in 20yrs, the life of the project.
The yearly payment is 1.5 Million per year.
The cost per kWhr = 19 cents per kWhr.
Of course, since there will be cloudy days with very little output we have to include the capital costs of the traditional/reliable sources that work on cloudy days. We also have to include maintenance of the panels. Also, include an amount of inefficiency when there are days the sun is coming in and out and the fossil plants are ramping up and down and loosing efficiency.
In actuality, it is not really 19 cents per kWhr, because much of the cost of the project will not be a loan, but the Federal Gov’t will simply take money out of the US Treasury to pay for the project. It’s a game of sleight of hand and funny numbers!
WSMR does have limited natural gas pipeline access, but only to the main post (opposite Las Cruces), close to that CNG refueling station. The line maximum capacity is 0.645 MCFH. Everything else is propane/water/diesel tank storage and trucked in. The Army is wary of placing any more buried utility lines because, as they say, “Vehicular and other types of off-road maneuvers [i.e. tanks] could cause minor to moderate impacts by potentially damaging buried utility structures”
WSMR is some ~140 miles long, N to S. Gas in Las Cruces at the southern end does help much elsewhere.
Trucked in gas with drivers cleared on base will run something *above* $4.20 per mcf / $0.04/kWh, plus the $0.01/kWh for capex/O&M. The Siemens/Bostonia bank price, gouged or not, is the all in price and guaranteed for 25 years. Also gas electric would be running at very low load at night on base, so use something like 50% avg capacity factor in calculating the capex per kWh costs, maybe 30% in the winter.
Fuel supply at 50% avg load for a 14MW, 33% eff gas electric plant would be ~1.7 Mmcf per day, or ~five 375,000 scf CNG-skids on/off base every day. The convoys would have to get well ahead of demand because the base is not infrequently closed to traffic for missile tests, etc.
http://www.wsmr.army.mil/PDF/WSMR_EIS_Volume_I.pdf
Bloke down the pub says: “Let’s see how well the panels stand up to the dusty environment.”
It’s even better than that, because the winds coming over the Organ Mountains just to the West of where this was set up are quite fierce. There have been several times, that I know of, where the wind doesn’t just become a dust storm, but actually picks up gravel and small pebbles. People have had the windshields and windows of their cars broken, and numerous small dents all over the metal bodies of their cars. Then there are the critters that will seek haven beneath the panels, which will include not just the cute rabbits, but also the not-so-cute rattlesnakes. And once the rabbits have shown up, the buzzards will start roosting on the panels, watching for the rabbits, and doing what birds do as they sit anywhere. This could become quite a circus.
Janice says:
January 24, 2013 at 7:37 pm
Bloke down the pub says: “Let’s see how well the panels stand up to the dusty environment.”
It’s even better than that, because the winds coming over the Organ Mountains just to the West of where this was set up are quite fierce. There have been several times, that I know of, where the wind doesn’t just become a dust storm, but actually picks up gravel and small pebbles. People have had the windshields and windows of their cars broken, and numerous small dents all over the metal bodies of their cars. Then there are the critters that will seek haven beneath the panels, which will include not just the cute rabbits, but also the not-so-cute rattlesnakes. And once the rabbits have shown up, the buzzards will start roosting on the panels, watching for the rabbits, and doing what birds do as they sit anywhere. This could become quite a circus.
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People talk about “The Law of Unintended Consequences”. This sounds like “The Law of Don’t Care About the Consequences as Long it Sounds Good”.
There is a significant problem here in the Power density calculation, Solar cannot reach 0.11 MW per acre (~0.25 MW/Hectare) or 25W per square meter on any baseload equivalent basis. I’d assume a sleight of hand has been used and this is the peak generating energy density, given an average of 5 generating hours per day, one must scale this to compare with Gas which operates 24 hours, so this would be 5/24*25 = 5.2 Watts per meter squared (about what I’d expect) or about 0.052 MW per hectare, or something like 0.023 MW Per Acre on a fair comparison with gas.
Even if the solar collectors survive the desert, will the millions of junctions (most between dissimilar materials) hold-up?
I wonder if they are going to use “smart meters” on the base?
Sun Spot’s comment was, simply, “Military Intelligence.” I disagree,strongly. INSCOM (Intelligence/Security Command), also based in New Mexico, would never leave such an obvious — and “soft” — target out in the open. Would that military minds were actually in charge of such projects. Col. (later Brig. Gen.) Leslie Groves was placed in charge of building the Pentagon in 1941 and it was dedicated in January 1943 — ahead of schedule and under budget. Gen. Groves, of course, was also assigned to oversee the Manhattan Project, if you want to talk about ROI.
Your math is correct. The cost to the taxpayers is far higher. The only way to get $0.08/kWh is to ignore the cost of capital and the taxpayer-funded 27% down payment. The $6.1 million tax credit would cost the taxpayers $10 million over 25 years at a 2% interest rate.
So I took 42 Acres (170,000 sq m and 85% latitude factor), and I covered 3 out of each four square metres with solar cells of 20% conversion efficiency, leaving 1/4 of the space to go around and maintain stuff, and I got a peak output power level of 21.6 MegaWatts.
So at 4 megaWatts, the army is being gypped by whoever pulled this scam.
@georgeesmith:
This is a tracking installation. Trackers need a lot more node to node spacing to avoid self shadow. If the owner has a lot of useless land to spare, and the Army does here, why not? They stand to gain more power at off peak hour and off peak season.
I think the thing check here is the actual area of PV installed, not land.
@Falstaff,
The current pipeline has an excess capacity of 0.6 mcf/hr. This is sufficient for a 70 kW generator. This would have delivered as much electricity as the 300 kW parking garage array.
The EIS doesn’t say if the limiting factor on the pipeline is diameter, gas supply or compressor capacity. A 3″ high pressure line could easily the deliver 200 mcf/d needed for 14 MW. The pipeline would run about $14 million. It would probably cost a lot less because the ROW was aleady secured for the existing pipeline. A natural gas plant, capable of generating 100% of WSMR’s electricity, including a new pipeline, would have cost about the same as the solar PV, capable of generating 10%.