Concentrated solar energy – power towers using vast fields of mirrors to focus heat from the sun on a water-filled target, making steam, generating electric power and also liquefying salts to provide thermal energy storage – was a hot (excuse the pun) technology a few years ago. Today, it may be a dead end, as the $2.2 billion, 377-MW Ivanpah project in the California desert continues to underperform.
Last month the California Public Utilities Commission gave Ivanpah (POWER’s 2014 “Plant of the Year”) a reprieve to live up to its contract to supply power to Pacific Gas and Electric. If the plant can’t perform, it faces the possibility of a shutdown. The plant’s owners – BrightSource Energy, NRG, and Google — agreed to pay PG&E an unspecified amount to compensate for Ivanpah’s underperformance. In return, PG&E won’t declare that the power purchase agreement is in default.
Consumer interests wanted PG&E to nix the contract or negotiate a lower price. According to the Motley Fool investment website, Ivanpah got 20 cents/KWh in the summer of 2015 for the project’s electricity and 13.5 cents the rest of the year. That compares to the average solar system in California booking 5 cents/KWh for new contracts.
Enthusiasts and investors once touted power towers as the gold standard for sun power. The ability to store heat to make power to the grid when the sun wasn’t shining was the heart of the technology. It promised to overcome a key problem with solar electricity: it can’t be dispatched to follow load.
The $2.2 billion plant, noted the Riverside, Calif., Press Enterprise newspaper, has received a $1.6 billion loan from the U.S. Department of Energy and $535 million in tax credits from the U.S. Treasury. That suggests that the private investors have no real skin in this solar game. The newspaper editorialized, “With so much taxpayer money involved, we have certainly hoped the investment would pay off. To date, that has not been the case, as the plant has yet to produce more than two-thirds of the energy expected from it.”
Solar power-tower technology is a product of 1970s-1980s Department of Energy research and development. The Solar One power tower in 1981 made 10 MW of power and operated until 1986. Reconfigured as Solar Two, with an additional ring of mirrors aimed at the power tower, the project added a molten salt (60% sodium nitrate and 40% potassium nitrate) component to store excess heat for up to three hours. The participants included DOE, the Los Angeles Department of Water and Power, and Southern California Edison. The Solar One/Two project ended in 1999.
MIT’s Technology Review magazine said last March, “When it first came online in late 2013, the massive Ivanpah concentrated solar power plant in the California Desert looked like the possible future of renewable energy. Now its troubles underline the challenges facing concentrated solar power.”
The chief challenge – facing not only solar but almost every other electric generating technology – is the price of natural gas. Rock bottom gas prices have rendered new and much existing generation from nuclear, coal, and renewables simply unprofitable.
While BrightSource says the plant is on the path to reaching its production requirements, and startup technologies are often fraught with problems, the MIT magazine said that the “troubles at Ivanpah have joined the delay or cancellation of several high-profile projects as evidence that concentrated solar could be a fading technology.”
In 2015, BrightSource pulled the plug on a 500-MW concentrated solar project in California’s Inyo County. The Technology Review article noted that the Inyo cancellation “followed the 2014 decision of French nuclear giant Areva, which acquired an Australian concentrated solar startup called Ausra in 2010, to exit the solar business after losing ‘tens of millions’ of dollars. And the Spanish company Abengoa, which has developed several large concentrated solar projects and received $2.7 billion in loan guarantees from the U.S. Department of Energy, is in talks to restructure its debt and is in danger of becoming Spain’s largest-ever bankruptcy.”
A Spanish court has given Abengoa seven months to work out a deal with creditors and avoid bankruptcy, according to Olive Press, an English language news service covering Spain. Abengoa has some $10.6 billion in outstanding debt, and recently sold off four solar photovoltaic plants in Spain to cut its debt burden.
The Motley Fool analysis concluded, “The disappointing production from Ivanpah, combined with other failed solar technologies, shows why investors should look more for known technologies than new technologies to disrupt the industry. Because the history of these promising breakthroughs leaving holes in investor’s pockets is a bad one.”