The $1.6 Billion Eyesore
The Ivanpah solar plant in the Mojave Desert is yet another example of what happens when the federal government interferes in the free market by subsidizing, or rather, artificially selecting “winners” and “losers.”
Last week, we reported on how American taxpayers said goodbye to $2 billion due to the failure of health care co-ops that were heavily subsidized under Obamacare to compete with traditional health insurance companies. Last week, it came out that the massive solar plant subsidized by the Obama administration to the tune of $1.6 billion may be closing due to chronic underperformance, along with other serious issues.
Power generated by Ivanpah costs six times more than electricity from natural gas at $200 per megawatt hour. Because of this, taxpayers are on the hook for this failure, both for the tax dollars wasted to get this project up and running, and for the resulting inflated power bills.
This project, intended to help California get 33 percent of its electricity portfolio from renewable sources, has chronically underperformed year after year. In the months after it opened in 2014, the project produced only one-quarter of the expected output. By the end of 2014, it failed to reach projections by an astonishing 55 percent. Last year was only marginally better at 32 percent below projections.
In addition to the disappointing return on investment, the plant has proven to be an environmental disaster, literally incinerating an unknown quantity of birds, including falcons. Estimates are between 1,000-28,000 birds per year, but no one knows for sure. The plant is also “nearly blinding” to pilots as they fly nearby. As a result, pilots must avert their gaze as they fly over this section of the desert.
NRG Energy, the company running this massive plant, has requested an additional $539 million in the form of a federal grant to help pay down the $1.6 billion federal loan just to stay afloat, and the plant has been open for less than three years.
The American taxpayers picked up the tab to build the largest solar thermal energy facility in the world. And what do we have to show for it? A loss of $1.6 billion dollars (about $5 for every U.S. citizen), higher energy costs and a giant eyesore in the middle of the desert.