American taxpayers are on the hook
for the Ivanpah solar project out in the California Mojave Desert
close to the border of Arizona. The massive plant received $1.6
billion in loan guarantees from the Department of Energy to build
it, out of a total cost of about $2.2 billion.
The plant went online in December of last year. After operating
for most of 2014, the plant seems to have hit a significant
problem. It’s only producing about a quarter of the power it has
promised. That could present a bit of a challenge paying back its
loan. So what are they doing? Why they’re asking for a federal
grant, of course. That is to say, they are asking for taxpayer
dollars to pay back the loan that they got from the federal
government that is guaranteed to be paid back with taxpayer dollars
should the project fail. Fox news has the details, with some
contributing analysis by Reason Foundation Vice President of
Research Julian Morris:
After already receiving a controversial $1.6 billion
construction loan from U.S. taxpayers, the wealthy investors of a
California solar power plant now want a $539 million federal grant
to pay off their federal loan.“This is an attempt by very large cash generating companies that
have billions on their balance sheet to get a federal bailout, i.e.
a bailout from us – the taxpayer for their pet project,” said
Reason Foundation VP of Research Julian Morris. “It’s actually
rather obscene.”The Ivanpah solar electric generating plant is owned by Google
and renewable energy giant NRG, which are responsible for paying
off their federal loan. If approved by the U.S. Treasury, the two
corporations will not use their own money, but taxpayer cash to pay
off 30 percent of the cost of their plant, but taxpayers will
receive none of the millions in revenues the plant will generate
over the next 30 years.
Indeed, given that these guys are selling electricity to power
companies, we don’t even get the electricity! Taxpayers were
obligated to gamble their money with the loan, may possibly have to
give money to pay back the loan, and then Californians have to pay
for the electricity the company produces.
Fox contacted Morris for their story because the Reason
Foundation (publishers of this website and Reason
magazine) produced a report at the end of 2013 detailing all the
cronyism of the Department of Energy’s renewable energy loan
guarantee project. Read more of their research here.
The plant blames the weather for the underperformance of the
solar plant. It just wasn’t sunny enough in the middle of the
desert, in California, amidst a severe,
record-breaking drought. Okay, perhaps that’s not quite fair.
As a former desert-dweller, I know you could see cloud cover
frequently in the desert without ever getting rain. But as a former
desert-dweller newspaper editor, I also actually met with
representatives of the plant’s developers prior to its construction
years ago. They made no bones about it: This solar project would
not be built without that big federal loan. It would not have
happened. Perhaps private investors suspected their output
predictions were a bit too sunny?
And one final, somewhat amusing note: How is the plant making up
for problems with collecting sunlight to produce energy? It has
gotten permission from the government to
use more natural gas than it had originally planned,
potentially meaning that the biggest solar thermal power station in
the world may depend on fracking to supplement part of its
operations.
Oh, and it murders
birds by the hundreds, possibly thousands. Maybe they can
supplement their losses by opening a barbecue shack next to
Interstate 15?
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