Headlines have been circulating major news outlets around the impending closure of the Ivanpah Solar Power Facility, a $2.2 billion project that began construction in 2010 and has been providing electricity since 2014, dubbing the solar project a “failure” and a “boondoggle.”
At first reaction, the closure of the Ivanpah plant may appear a worrying signal for the cost efficacy of solar technologies. California utility Pacific Gas & Electric, the primary buyer of the plant’s output, announced early this year it would end its offtake agreement with the plant. Initially, PG&E was scheduled to buy power from Ivanpah through 2039, but it has pulled out due to a lack of cost efficacy.
“Ivanpah is yet another failed green energy boondoggle, much like Solyndra,” Jason Isaac, chief executive officer of the American Energy Institute, an American energy advocacy group, told Fox News.
The project was built with $1.6 billion of its construction cost backed by loan guarantees from the U.S. Department of Energy. Now shuttering operations more than a decade ahead of schedule, the project is no doubt a financial failure.
But Ivanpah’s struggles are not an indication of the lack of bankability of solar, and rather a testament to how rapidly clean energy technologies are advancing and becoming more efficient and cost-effective.
The important distinction here, which may be missed in the headlines, is that Ivanpah Solar facility is not solar photovoltaics, but rather a concentrated solar power (CSP) plant, an entirely different technology with different costs for construction, operations and maintenance.
The Ivanpah facility is comprised of 173,500 software-controlled mirrors called heliostats, which direct sun rays into the facility’s three collection towers. The towers, over 400 feet in height each, contain liquid that is heated and converts to steam, pushing a turbine and creating electricity.
Image: Wikimedia Commons
According to PG&E’s analysis, the CSP plant struggled from high operating costs and lower-than-expected production led the utility to withdraw from its agreement. The CSP plant also relied on natural gas to sustain operations, working against its progress toward decarbonizing the grid.
About 0.06% of the global fleet of solar technology is CSP, according to SolarPACES. The rest is photovoltaic (PV), the namesake of our publication. Unlike CSP, a PV plant directly converts sunlight into electricity by exciting electrons within a PV material, typically silicon, and collecting them in a conductive junction.
Image: Dennis Schroeder / NREL
Since Ivanpah was installed in 2014, the cost of solar photovoltaics has fallen by more than 90%. Rapidly falling costs, fast project deployment cycles, emissions-free power and the ability to distribute solar into the built environment have all supported the staggering growth of PV.
In 2014, when Ivanpah began operations, solar PV was less than 1% of the U.S. energy mix. Now, it leads among all technologies in terms of new-build capacity added each year and has grown to over 12% of the total energy mix. It is forecast by the Federal Energy Regulatory Commission (FERC) to surpass wind as the top renewable energy source in 2025 and shortly after surpass coal as the second-highest capacity contributor to the U.S. grid.
Cost efficacy
While Ivanpah represents a failure in cost effectiveness, solar PV is among the most cost-effective technologies available today. Analysis from Lazard found that solar and wind energy projects have a lower levelized cost of electricity (LCOE) than nearly all fossil fuel projects – even without subsidy (including the federal Investment Tax Credit).
LCOE is a measure of cost-efficiency of generation sources across technology types. The metric is based on lifetime costs divided by energy production and calculates the present value of the total cost of building and operating a power plant over an assumed lifetime.
Lazard’s analysis found that unsubsidized utility-scale solar, without tax credits, ranges from an LCOE of $0.038 per kWh to $0.078 per kWh. Utility-scale solar with energy storage co-located ranges from $0.05 per kWh to $0.131 per kWh, while natural gas peaker plants are far more expensive at $0.138 per kWh to $0.262 per kWh.
Lazard’s analysis found that utility-scale solar plats are cheaper than the lowest-cost marginal cost of fossil fuel, meaning that even the most cost-effective combined cycle natural gas plants that are already built and operating are more expensive electricity generators than new-build solar and wind.
What’s more, Lazard found that gas, coal and nuclear projects are more sensitive to the cost of capital, suggesting that the higher-for-longer interest rate environment further supports renewable energy investment.
“On an unsubsidized $/MWh basis, renewable energy remains the most cost-competitive form of generation. As such, renewable energy will continue to play a key role in the buildout of new power generation in the U.S.,” said the report. “This is particularly true in the current high power demand environment, where renewables stand out as both the lowest-cost and quickest-to-deploy generation resource.”
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The failure in Ivanpah is specific to them and not indicative of a wider issue. The “liquid” mentioned in the article was salt. The salt heat cycling caused cracks in the towers. The solar part of the plant worked great. Moral: Solar electric generation should use chemical energy storage, i.e. batteries. Put it another way converting electrical energy to heat and then back to electricity is inherently inefficient like burning hydrocarbons to boil water to spin turbines.
According to https://www.eia.gov/electricity/generatorcosts/ the generator alone for thermo-electric is $500-$1100/kW construction cost. That’s not including the thermal side of the power plant (think natural gas, coal, geothermal, nuclear, or, in this case, concentrated solar). That same report shows an entire solar/onshore wind plant at $1600-$1700/kW. So that only leaves $1100-$1200/kW construction cost to build the rest of the thermal plant. Not a lot of margin. And, as indicated, solar, wind, and battery continue to drop in price, reducing the margin.
Correction on previous post post – only leaves $500-$1200/kW for the thermal side.