[and] if California makes no further investments in renewable energy, this analysis projects that average electricity costs per kilowatt-hour will rise by 16.7 percent in 2020.”
LAT: Critics of CSP solar power towers told the Times that “solar entrepreneurs are getting too much government money.” San Diego-based electrical engineer and power plant consultant Bill Powers called them “a huge waste of money” and ”an old fashioned ripoff.”
BSE: Governments always use incentives to encourage the development of domestic energy resources, BSE replied, including “direct subsidies, tax breaks, market support, technology demonstration programs, research and development (R&D) programs, procurement mandates, information generation and dissemination, technology transfer, directed purchases, and government‐funded regulations.”
The biggest beneficiaries of federal energy incentives over the last 60 years, BSE added, have been oil and gas, with almost 60 percent ($490 billion). Coal got 12 percent ($104 billion). Wind, solar and geothermal got about 10 percent ($81 billion).
LAT: “The incentives allow solar developers to reap annual returns on their investments of 8 percent to 12 percent, as much as tripling their money in a decade. In some cases the returns could go as high as 17 percent,” the Times reported, drawing in “banks and Wall Street.”
BSE: “Subsidies reduce the cost to build a power plant, which in turn lowers the cost of electricity that must be charged to pay for it,” BSE said. In California, “renewable energy is procured through a competitive process, and subsidies are reflected in the bid prices. They do not line the pockets of banks, insurers and utility companies.”
LAT: “To make such projects economically attractive for developers, the government created a mix of federal loan guarantees, grants and tax incentives,” the Times reported. “Taken together, the incentives can provide solar companies with more than half a project’s costs in cash, with the remainder covered by the federally guaranteed loans.” And, it also said, “the low-interest, government-guaranteed loans — more than $16 billion for renewable energy projects so far — pay up to 80 percent of a project’s construction costs.”
BSE: “Lower interest rates (as a result of available loan guarantees) translate to lower energy rates in the same way a low-interest mortgage reduces a homeowner’s monthly payment.”
LAT: “The $2.2-billion Ivanpah Solar Electric Generating System is being built by Oakland-based BrightSource Energy Inc.,” the Times reported. “The Ivanpah plant was made possible by government-backed loans at low rates — 4 percent to 4.2 percent. BrightSource and its corporate investors will receive about $600 million in federal grants once the plant starts producing.”
BSE: “Government-backed loans are paid back with interest to taxpayers, making the loans an investment, not a subsidy. [And] insurance and performance guarantees are required for all power plants to protect ratepayers if something goes wrong. Without those protections, a power plant — renewable or fossil — could not be financed and constructed.” The bulk of the upfront money provided to BSE “will be used to repay a portion of the guaranteed loan with interest,” it said.
LAT: “The California Public Utilities Commission, which approves all rate agreements, won’t disclose the rate for Ivanpah,” reported the Times. But outside experts, it said, “estimate that Ivanpah power is priced at $90 to $130 per megawatt hour — three to four times the cost of electricity in the state last year. BrightSource declined to specify the price but said it was in line with the PUC’s recommended renewable rate of $129 per megawatt-hour.”
BSE: “The returns earned on renewable project investments are comparable to the returns earned on other large infrastructure projects of similar size with similar risk profiles. No more, no less,” BSE responded. “California utilities don’t earn profits on fuel costs, such as natural gas. Instead, they are passed through to ratepayers without a markup. Natural gas is a commodity, its price is volatile and it is projected to increase over time. In contrast, once a solar plant is constructed, the fuel — sun — is free as long as the plant operates.”