Editorial: Another central planner project goes bust

Central planners always think they can design a better consumer product and achieve a better economic outcome than the invisible hand of the free market can. F.A. Hayek called this The Fatal Conceit.

Another of the products of the central planners is on its death bed.

Back in 2011 a company called Solar Reserve announced it was building a $1 billion solar powered electricity generating project near Tonopah called Crescent Dunes. President Obama’s Department of Energy backed the project with a $737 million federal loan guarantee.

The 110-megawatt solar thermal facility used thousands of mirrors to focus sunlight on a tower containing salt. The heat of the sun melted the salt which was used to turn water into steam, which in turn drove turbines that generated power.

The designers claimed the molten salt would retain heat and enable the facility to continue to generate power up to 10 hours without sunlight, unlike photovoltaic solar panels or solar thermal generators using only water. It was the first of its kind.

Crescent Dunes power plant

According to recent news accounts, the project is on the verge of bankruptcy and its sole customer, NV Energy, has canceled its contract, which was to run through 2040. The power company cited the inability of the facility to meet contracted generating capacity.

Since going online in 2015 the project has experienced mechanical failures, including being offline for eight months due to a leak in a molten salt tank. According to an account by the Las Vegas newspaper, in the past year the plant was able to produce only 50 percent of the contracted power amount and was projected to fall 25 percent short in 2020 and beyond.

What the various press accounts failed to note is that the Crescent Dunes contract with NV Energy negotiated in 2011 called for a beginning wholesale purchase price of 13.5 cents per kilowatt-hour, increasing by 1 percent each year. At the time, NV Energy was selling retail residential power for 11.6 cents per kWh. In the past year, the company has been contracting for renewable energy at wholesale rates less than 4 and even 3 cents per kWh.

Taxpayers picked up construction costs and ratepayers followed suit.

Expect more such boondoggles from the central planners. A year ago, Nevada voters approved a constitutional amendment requiring 50 percent of the state’s electricity come from renewable sources such as solar and wind by 2030. In the legislative session this past spring lawmakers in Carson City went ahead and made that proposition law immediately.

Such market manipulation drives up the cost and retards real innovation.

By the time that constitutional amendment is on the ballot again in a year, we call on the the voters to wise up as to who is footing the bill and demand our lawmakers also relent.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Editorial: Nevada should drop its renewable energy mandate

Spring Valley wind farm

It is high time Nevada dumped its ill-advised, pocket-picking, job-killing renewable energy portfolio standard (RPS).

By Nevada law by 2025 fully 25 percent of all electrical power generated in the state must come from renewable sources such as wind and solar and geothermal, but these power sources are far more expensive than generating power with natural gas and coal.

Nevada is not alone in its decision to warp the power market under the delusion that “cleaner” power will stop the rising seas and delay by a few minutes the frying of the planet — 28 other states and the District of Columbia have adopted RPS laws.

Natural Resource Economics’ researcher Timothy Considine recently delved into the economic impact of these laws in 12 states, including Nevada. The 98-page report has been posted on Nevada Policy Research Institute’s website.

Those 12 states included ones in four regions of the country. — the Northeast and

Mid-Atlantic states of Rhode Island, Pennsylvania, and Delaware; the South Atlantic states of Virginia and North and South Carolina; the Midwestern state of Wisconsin, and five western states, including Colorado, New Mexico, Utah, Nevada, and Oregon.

Of all those states, Nevada has the most stringent RPS and therefore was impacted the greatest in most cases.

Considine notes that RPS requirements not only directly affect power bills, but also everything from job growth to business investment is also negatively affected by more costly power. The benefits of renewable energy are far outweighed by that cost.

“Looking at Nevada specifically,” Considine writes, “the net cost of

renewable standards are striking:

“— Energy prices are expected to climb by nearly 15 percent in 2016.

“— Employment growth will be reduced by more than 11,000 jobs in 2016 due to higher energy costs.

“— Economic growth will be reduced by more than $1.7 billion in 2016.

“The impact of such renewable standards is clearly dramatic — draining vitality out of Nevadans’ efforts to fully recover from years of sluggish economic growth.”

And those impacts are projected to continue, with minor declines in impact, until at least 2040.

That 15 percent increase in power costs was the highest of any of the 12 states examined, and remains among the highest through 2025. The number of jobs killed is also the highest, when calculated as a percentage of the current labor force.

Every job sector in Nevada would see jobs lost due to higher costs, except one, utilities, of course. The service sector, which includes gaming, would be the hardest hit, bearing two-thirds of the job losses.

In 2013, Nevada generated more than 36.4 million megawatt-hours of electricity, with 68 percent coming from natural gas, 14 percent from coal, slightly more than 7.3 percent from geothermal, and 7.4 percent from hydroelectricity — much of the latter used by California. Solar power accounted for 2 percent of total generation and wind contributed 0.7 percent.

The study calculates that in order to meet its RPS, Nevada must increase its solar and wind power output by more than 87 percent.

“The increases in average electricity costs from new RPS capacity additions are 32.85 percent in 2016, rising to 37.58 percent in 2020, 37.33 percent in 2025, and 21.32 percent in 2040,” Considine relates. “With legacy costs average electricity rates in Nevada increase 14.77 percent in 2016 due to renewable energy portfolio standards. After 2016, rates increase 15.6 percent in 2020, more than 15 percent in 2025, and 9-13 percent from 2030 to 2040.”

The total cost per ton of carbon dioxide avoided in Nevada amounts to nearly $77 a ton. The Environmental Protection Agency estimates the social value of carbon reduction to be about $36 per ton.

Is this trip really necessary?

A version of this editorial appeared this past week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Harry takes newspaper editorialists out behind the woodshed for a thrasing

You have to discount everything that follows a Fox Butterfield-worthy opening line like this one from Harry Reid in today’s morning newspaper: “The Review-Journal editorial board espouses itself as a libertarian haven but its opinions have long been out-of-touch with the state it represents.”

Jame Taranto’s Wall Street Journal opinion piece called Best of the Web has made a practice of tweaking longtime New York Times reporter Butterfield for his non sequiturs, asking in a running feature: “Fox Butterfield, Is That You?”

Taranto notes that Butterfield wrote in 1997, “It has become a comforting story: for five straight years, crime has been falling, led by a drop in murder. So why is the number of inmates in prisons and jails around the nation still going up?” — mistaking a cause-and-effect as a paradox.

After that head-scratcher of an opening line, Reid goes on to berate the paper’s editorial stances that question the value of throwing tax money at green energy projects.

Crescent Dunes solar power plant.

“If the Review-Journal editorial board had its way, the seven acres of wind turbines dotting the skyline in White Pine County would have never been built,” Reid pontificates. “And the 45,000 homes powered by the wind farm? Too bad, find your power elsewhere.”

Elsewhere? At what cost?

Reid neglects to mention that NV Energy is paying about 10 cents a kilowatt-hour for wholesale power from that wind farm, about what residential customers are currently paying for retail electricity. And his screed repeatedly mentions the number of jobs created by renewable energy, but that wind farm has only 13 employees — not sure how many of those jobs involve picking up bird carcasses. Nor does he mention that it is operating at only 18 percent of capacity.

Reid lecturers the editorials about the Moapa River Indian Reservation that “is a short drive from Bonanza Road,” where the newspaper is located, which has solar panels across 2,000 acres of land, generating 250 megawatts of power. He fails to mention that the city of Los Angeles is paying  9.4 cents per kWh at a time when utilities are generating electricity from natural gas-fired turbines for about 2 cents a kWh.

He then suggests a three-hour drive north to Tonopah to discover the tallest solar power tower in the world, which uses molten salt to store the sun’s heat so it can continue to generate power long after the sun sets. NV Energy is paying 13.5 cents per kWh for the privilege of purchasing that power from Crescent Dunes.

Four years ago the PUC released the following prices for renewable power for the first year of the contracts with NV Energy. The contracts allow an annual increase of 1 percent per year.

Tuscarora Geothermal: 8.8 cents/KWh

Waste Management Lockwood: 8.1 cents/KWh

San Emidio Geothermal: 8.975 cents/KWh

Enel Stillwater Solar: 6.9 cents/KWh

Silver State Solar North: 13.2 cents/KWh

Apex Solar: 12.85 cents/KWh

Spring Valley Wind: 9.8 cents/KWh

McGinness Hills Geothermal: 8.6 cents/KWh

Spectrum Solar: 11.1 cents/KWh

Crescent Dunes Solar: 13.495 cents/KWh

Mountain View Solar: 11.605 cents/KWh

Clayton Valley Geothermal: 9.8 cents or 10.3 cents/KWh (Depending on whether the plant qualifies for a production tax credit.)

Dixie Meadows Geothermal: 9.2 cents/KWh

Also, Reid ignores the fact that those higher prices come out of the pockets of consumers who are left with no choice and no competition. These higher prices actually kill four jobs for every one or two the renewable energy plants produce.

But it also cuts carbon emissions and prevents global warming, Reid claims.

“We could grind all economic activity to a halt, hold our breaths forever, and cut carbon emissions to zero in the U.S. — and still wind up lowering average temperatures by no more than 0.2 degrees Celsius by the end of the century,” the Heritage Foundation reports. “And that’s using a climate calculator developed by the Environmental Protection Agency.”

Solar power getting cheaper but still not really competitive

Solar power has now become competitive with fossil fuels.

That’s what Bloomberg Business quoted SunPower Chief Executive Officer Tom Werner as saying after NV Energy announced new contracts with two solar power projects at the lowest prices yet.

“Power generated from solar plants is cost-competitive with power from traditional, fossil fuel burning plants, and becoming more cost-competitive every day,” Werner said in an e-mailed statement.

Crescent Dunes Solar Project

NV Energy agreed to pay 3.87 cents a kilowatt-hour for power from First Solar’s Playa Solar 2 with a 3 percent a year escalating charge — which pencils out to about 5.2 cents over 20 years — and 4.6 cents a kilowatt-hour with no escalator for power from SunPower Corp.’s 100-megawatt Boulder Solar project, according to filings with the Public Utilities Commission of Nevada filings.

Bloomberg’s July 7 story said this past year the utility was paying 13.77 cents a kilowatt-hour for renewable energy. That would be the price for power from the Crescent Dunes project near Tonopah.

“The rapid decline is a sign that solar energy is becoming a mainstream technology with fewer perceived risks. It’s also related to the 70 percent plunge in the price of panels since 2010, and the fact that the project will be built in Nevada, the third-sunniest state,” Bloomberg noted.

Both are to be completed by December 2016, according to the Las Vegas Review-Journal today.

What Bloomberg nor the Las Vegas newspaper noted is that at the end of December 2016 the federal investment tax credit for solar power drops from 30 percent to 10 percent. Both sides at the negotiating table know that.

Nor does the cost calculation take into account that most solar projects are built on vast tracts of federal public land that is provided at cut rates.

The R-J did point out that the cheaper solar power will still cost the rate payers millions more:

In their first year of operation in 2017, the facilities would result in about $25 million in costs to ratepayers. But they would also replace $18 million worth of natural gas that the utility would have to buy if they were not built, resulting in a net cost to customers of $7 million.

Tell me again how competitive solar power is. Take at the tax credits, other subsidies and inexpensive land and it still doesn’t pencil out to the rate payer’s advantage.

If it is for the sake of going green all is forgiven

When you’ve engaged in a lengthy writerly career you all too often find yourself saying: Darn I wish I had written that.

That was precisely the feeling when I read this in an Investor’s Business Daily editorial today:

“If as many birds being burned by solar power farms built in the U.S. were to wash up on our beaches soaked in crude oil from a leaking offshore well, the outrage would be deafening.

“But as with the wind turbines that now cover acre upon acre of former ‘pristine’ countryside, what amount to avian Cuisinarts slicing and dicing everything that flies, including endangered species, only the crickets are chirping.”

The news was reported about a week ago in a couple of online places, but not widely reported.

During a four-hour test on January 14 of the sun reflecting mirrors at the Crescent Dunes solar thermal power plant near Tonopah, 130 birds were incinerated in a solar flux, the focal point of the mirrors which eventually will be used to melt salt and drive a turbine to generate electricity. This is similar to the plant in Ivanpah, which uses water to drive turbines and also has been incinerating birds at an alarming rate — at least alarming to some.

According to Basin and Range Watch, “several biologists on the project site during surveys reported seeing the birds fly into the solar flux, ‘turn white, and vaporize.’ No remains were found.”

This happened a month before another golden eagle was found dead at the Spring Valley wind farm near Ely. A golden eagle was killed there two years ago. The so-called allowable “take” for eagles at the wind farm is one. With this second death a Technical Advisory Committee is supposed to meet and recommend what mitigation to take, which could curtail operation of turbines or even shut down turbines.

The outcry has largely been deafening silence.

A company representative for SolarReserve, the operator of Crescent Dunes, said that apparently the bird deaths occurred during something called “standby” where the mirrors were focused and formed a visible bright spot in the sky above the tower during testing. The company says that once the mirrors are focused on the tower, it appears that the brightness and solid structure is enough to scare away the birds.

The solution they came up with for standby, which during normal operation will be for a few minutes each day during the early morning, is to spread out the mirror pointing in more of a distributed shape covering hundreds of meters just above the tower so that no single point in the sky has too high of a concentration.

The representative said this change appears to have corrected the problem as the company reports zero bird fatalities since they implemented this solution approximately 30 days ago, despite being in the standby position as well as focused on the tower for most days over the past few weeks. They said this is being monitored by an independent environmental consultant, who is carefully watching the area around the tower with high powered binoculars at all times during testing.

The Crescent Dunes Solar Energy Project in February 2014 | Photo: Matt Hiontsa/Flickr/Creative Commons License