Energy Subsidies

Solar Plant Wants to Pay Off Massive Government Loan with Massive Government Grant

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Burns more bucks than birds.
Credit: Aioannides

American taxpayers are on the hook for the Ivanpah solar project out in the California Mojave Desert close to the border of Arizona Nevada. 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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  1. Hey, they watched Tesla and GM; why not?

    1. Hey, the Fed buys US Treasuries, why not?

  2. Nothing left to cut.

  3. “So uh, will you guys take a check?”

    1. “So uh, will you guys take a check?” “You will, great. Now, will you guys give me a check?”

  4. Do no evil, my ass.

    1. It’s not do no evil, it’s don’t be evil. Interestingly, you can argue that the latter would entitle them to the occasional “freebie”, as a person/organization can potentially do something somewhat evil without necessarily becoming evil.

      Not to say that this isn’t a dick (or “evil” — which isn’t a word I usually use) move.

  5. Solar Plant Wants to Pay Off Massive Government Loan with Massive Government Grant

    Yeah, we know. It has been circulating in the blogosphere and Facebook for a day or so now.

    What makes the case so unintentionally funny is that the company is clearly committing an obvious Ponzi scheme with government money and yet NO ONE in the bought-and-sold media has even bothered to mention this piece of news in passing.

    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.

    Who would’ve know at that time that PHYSICS would be so uncooperative? Maybe the Universe itself happens to be a Global Warming Denier?, too.

    1. This obviously gives lie to the ‘reality has a liberal bias’ meme.

    2. I don’t see how it’s a Ponzi scheme.

      1. It isn’t a pyramid scheme, unless you count the one on the dollar, but it is proposing to use late investment to pay off early investment.

        Interstingly, I was reading an account of Ponzi’s career a while back, which took the position that Ponzi may not have realized that his investment empire was doomed by its structure. He may have been an INADVERTANT fraud.

        Sounds like tye Liberal Environmentalist rank and file to me.

  6. 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.

    Don’t bore us with your economic jargon. Solar power saves mother earth. WHY DO YOU HATE THE EARTH SO MUCH?

    1. The comments in the bird-deaths story in the last link are priceless. Eco-idiots in hilariously tragic denial, twisting themselves into knots to rationalize the ‘unintended consequences’ of their good intentions away.

      1. Isn’t that about par for the course for most of their ideas?

        1. It’s par for most political enthusiasms, Left OR Right, or just plain off the wall. And Monarchies get hit with it at least as often as Republics.

    2. It’s kind of a stupid statement in the first place. Of course they sell their electricity to power utility companies! They run a generation facility, not a distribution network! Then they pay back the loan with the proceeds of the sales to pay back the loan so taxpayers don’t have to step in. Unless you, like author Chicken Little, think someone is going to give them free money. (Just because these somewhat capitalists are asking doesn’t mean they’re going to get it.

      The big source of taxpayer support for private companies and their CEOs is privatization, outsourcing, and the military-industrial-security complex.

  7. something, something stimuluzzzz

  8. Wasn’t this plant touted by Shriek as evidence that solar is viable?

  9. Can we just enjoy for a minute the fact that this plant is failing to produce enough solar-generated electricity because:

    IT’S NOT SUNNY ENOUGH. IN THE MOJAVE DESERT.

    That’s like a rain collector in Seattle not getting enough water, or a swear jar on Bidens desk remaining unfilled.

    1. “Its a big fuckin’ deal!”

      1. Stand up Joe…oh, God love ya…

  10. You cannot really expect these bold entrepreneurs to squander the rewards of their hard work political acumen on stuff like repaying their loans, can you?

  11. The plant blames the weather for the underperformance of the solar plant. […] Perhaps private investors suspected their output predictions were a bit too sunny?

    How dare you insinuate that the greedy private sector would have done anything like this with their profit-motive and wealth accumulation and other yucky and icky things? You see, without the help of the Federal Gunvermin, these innovative and planet-saving projects would not happen at all! And as the little red Marxians have reminded us time and time again, Velcro and Tang happened because we went to the moon and shit(*)!

    (*)No, really. I was talking to some Argentinian idiot (sorry for the pleonasm) on Facebook, who could not stress enough the point about how it was government that gave us Sputnik and databases and the Internet and other magnificent projects that improved our lives. Except, I told him, Sputnik improved no one’s life in Russia, except maybe the lives of those involved in the project itself; and the Internet only became a viable tool after Government stopped appropriating it.

    1. But that Tang! MMMMMMMMMMMMMMM, boy!

      1. And Velcro. Don’t forget Velcro. Tony couldn’t wear shoes without it. Oh, and Teflon too.

      2. The Power Screwdriver; Tang made with vodka instead of water. Tastes like candied orange peel, produces a hangover that registers on the Richter scale……

    2. …Velco?

      MY GOD I’VE BEEN WRONG ALL THIS TIME!!?
      (runs to Salon to pen essay on how Velcro convinced me to be a socialist)

      1. Made for TV movie; Stuck on Socialism: The Gilmore Story

    3. How come I can’t get no Tang round here?

      1. Someone wanted ‘Tang?

        POOTY-TANG!

      2. cause it’s not the 60’s anymore

  12. …in the California Mojave Desert close to the border of Arizona.

    Actually, it’s close to Nevada. It’s pretty far from Arizona.

    1. Oh god dammit. It’s not like I didn’t know that. Fixing.

      1. Jesus Christ man. did you even *play* New Vegas?

        1. My first thought was that without $1 billion in taxes spent on this boondoggle we wouldn’t have that cool subplot in Fallout 3 New Vegas.

    2. Not Arizona
      What does it matter?

  13. Sounds legit

  14. There actually was an article on this thing in the local rag several months back (before the tin-cup act).
    It seems not only does it fricassee birds, but they had to move X desert tortoises and some other fauna to build the damn thing, and the construction alone released enough CO^2 that it’s going to take years to cancel that out, presuming it works (which it obviously doesn’t).
    If there is some small detail in this project that isn’t totally screwed, it’s escaped my attention.

    1. It’s a boondoggle. But it’s a pretty neat one.

      1. Without this and some giant lasers, how are we going to stop the Kzin?

    2. I think it may actually just be a massive reflective signaling system that is sending morse code (or whatever was included with voyager) into deep space asking for young, healthy aliens to sign up for Obamacare to prevent it from becoming insolvent.

  15. Research is one thing; perpetual subsidies for businesses that can’t compete are something else altogether. I don’t particularly like the former much, either, but the latter are nothing more than theft.

    1. Yep, at least with research there is a chance that the process will become economical.

      Subsiding business that can’t compete just gets you more business that can’t compete and only pennies on the dollar at most going to improving the process

      1. Look at manned spaceflight. Without It being basically monopolized in the U.S. by NASA, largely as a jobs program, we’d likely have private, manned access to space.

  16. ” 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”

    Is that kind of spending already authorized under the “Department of Energy’s renewable energy loan guarantee project”, or do they have independent authority to throw that kind of money around at will?

    The question is = is this sort of thing, the continuance of these kinds of projects, at all dependent on congressional approval? I missed the part where there was a vote to throw tens of billions at crony green tech projects.

    it would be nice to see a full accounting of the money spent as well, rather than just getting an occasional story about the grander-failures every now and then. While nice, they don’t entirely clarify the scope of Suckitude that has gone on.

    It would also be nice if the new congress made some efforts to actually trim the fat in places, notably like corn-Ethanol. I know it is nearly untouchable because future presidents want to win Iowa, et al, but for fucks sake, the gravy train can’t run forever. If they planted seeds of its demise now, they would win back a shade of credibility on issues of ‘wasteful spending’.

    1. …”or do they have independent authority to throw that kind of money around at will?”…

      “Something, something, intent of law, something, typo, something”
      Thank you, Chief Justice Roberts!

      1. “I’ve got a pen and a phone” – Barack Obama

        1. Constitution’s Good Intentions clause

  17. Oh, and I think they’re now pushing for approval on a twin of this debacle; gimme a minute….

    Yep:
    “New solar plant nears approval in California desert”
    […]
    “Despite serious environmental concerns, the California Energy Commission has given a preliminary green light to a second big solar project in the California desert by BrightSource Energy of Oakland.”
    http://blog.sfgate.com/nov05el…..ia-desert/

    1. BrightSource Energy: We Can Crony Too!

    2. i support increasing the water rates in Detroit to help fund the grant portion of version 2.0.

  18. What we need to do, to get this country back on track, is this; raise the top marginal tax rate to 94%, and then offer generous R&D and investment tax breaks. If we smoke the hoarded money out of its hiding places, the economy will boom.

    It worked in the fifties, right?

    1. And for the Soviet Union.

    2. Why stop there. Let’s raise it to 500% then the feds can gives us free money and no one needs to work.

  19. MY GOD I’VE BEEN WRONG ALL THIS TIME!!?
    (runs to Salon to pen essay on how Velcro convinced me to be a socialist)

    *sings loudly and off key*

    I once was looooooost,

    but now am fouuuuuuuuuuund!

    1. Maybe you’d be a better fit at Vox.

      1. Needs more color graphs.

  20. One of the saddest parts of living in Southern Arizona is listening to all the whackjobs pushing solar power on us.

    ‘Oh but it’ll work here. You have so much sunlight!’ No motherfuckers, it doesn’t work here, it just works *better* here than in the rest of the country. IOW, it doesn’t lose you money here as fast as it does in New Jersey.

    If it *worked* (produce electricity competitively with other means) then we’d already be doing it.

    1. …but it’s a DRY sunlight…

    2. And you can use the endless power generated to run your light-rail and convention center! Can’t you see how it all comes together? We’re approaching Nirvana!

  21. I am more and more convinced that shorting any company getting a loan from me via the DOE is the only way to make my money back.

  22. Solar Plant Wants to Pay Off Massive Government Loan with Massive Government Grant

    Seems legit.

    1. Almanian!|11.11.14 @ 11:55AM|#

      Sounds legit
      .
      .
      .
      *glares at Rev*

  23. If a congressperson opposed this grant scheme I bet the attack ad against them would accuse them of ‘being against solar energy!’ Because not subsidizing=opposing.

  24. Certified Public Asskicker will be joining us after he recovers from his stroke.

    Government accounting must truly be a surreal experience. “Alright, remember everything you learned about GAAP for the past 6 years? Well fuck that”

      1. CPA is an actual CPA. And issuing a grant to repay a loan that is already secured by the grantor is the kind of thing that just doesn’t happen anywhere but government.

        1. Okay. i was wondering if you knew the dude personally and that he suffered an actual stroke.

          1. It’s all so semi-clear now.

      2. CPA is an actual CPA. And issuing a grant to repay a loan that is already secured by the grantor is the kind of thing that just doesn’t happen anywhere but government.

  25. I’ve seen this thing. It throws off a glare you can see for miles. Very scifi looking.

    1. It is an impressive facility. The eerie glow from the sodium cube at the top is mesmerizing. That doesn’t mean I want to pay for it (or make anyone else pay for it) but it does look fascinating.

  26. Not to worry, Tony will show up in this thread a couple days after it dies and rebutt the shit out of everyone.

    1. Tony may be all solar now. So it may take a few days for the clouds can clear before he responds.

  27. Someone forgot to mention the solar plant uses 60% more natural gas when the sun goes down to produce electricity than was originally planned.
    Another greenie FAIL FAIL FAIL!

    1. But it isn’t a fail because the natural gas doesn’t kill birds like the solar plant does. So ha! It IS green.

  28. It would also be nice if the new congress made some efforts to actually trim the fat in places, notably like corn-Ethanol.

    You slay me.

  29. If we construct a shell of solar panels around the Sun between it and Mercury, and just run a long extension cord from there to Earth, we’d solve all of our energy problems forever plus eliminate solar-caused skin cancer!

    I’ll take my Nobel Prize now, TIA.

    1. It’s in the mail Mr. Dyson.

    2. And eliminate Global Warming!

      I think that’s at least two Nobel Prizes.

  30. These bird cookers produce electricity too!? Awesome! But if you want to ignite some birds I can do it for a lot less than 5 billion.

    1. Shouldn’t we surround it with windmills to dice the birds before they get cooked?

    2. Well if there’s one ray of sunshine in this story, it’s that Thanksgiving is approaching and they could cook the Nation’s turkeys. Make some extra cash.

  31. One quarter the amount of power predicted?? I can see them being off by 10% or something, but that’s absolutely incredible. Weather records are pretty complete, and are usually consulted when planning buildings, so you think they would do that when the $2.2 billion project depends on the weather. Some people need to have their professional degrees taken away. I can’t see this being some sort of intentional, gigantic scam, but the thought does cross my mind.

    1. Weather records are pretty complete, and are usually consulted when planning buildings, so you think they would do that when the $2.2 billion project depends on the weather.

      They probably based the projections on IPCC models.

      1. “They probably based the projections on IPCC models”

        That’s COLD! (if you’ll forgive me…)

        1. Ouch that burns!

          1. I’m slowing warming to your comment.

    2. These actually operate at higher efficiencies as tidal electric systems. But somehow the sea level rising models were off.

  32. This is not meant to condone government waste, but I’d rather see us getting fleeced by seeding improvements in infrastructure than other types of projects. Further, developing alternative forms of energy are at least as important to American energy independence as keeping ISIS from grabbing Iraqi and Syrian oil…and no one has to die to achieve it.

    1. Energy independence is only a goal for economic illiterates and neocon morons. Division of labor is always a good thing.

      The vast majority of our oil doesn’t come from the Middle East anyway.

      1. What’s the point? Do you actually think that congressional expenditures are based upon literate policy? That’s cute.

        1. Eric|11.11.14 @ 2:36PM|#
          “What’s the point?”

          The point is you’re an econ ignoramus who ought to be embarrassed with what you posted.
          Is that clear?

          1. Let me clarify my comment so that a highly intelligent person such as yourself can understand Sevo:

            Say I’m a prisoner condemned to death. I have the option of choosing either firing squad or lethal injection. I choose firing squad for my own reasons.

            Now, does that preference mean that I’m happy about being executed, or that I like execution?

            1. “I’d rather see us getting fleeced by seeding improvements in infrastructure than other types of projects”

              But this is not an example of any ‘improvement in infrastructure’ at all.

              This is an example of a shitty-alternative managing to siphon off disproportionate amounts of capital resources because of political popularity (i.e. cronyism)

              The energy grid is worse off for the fact that this thing ever came into being, regardless of the cost. The fact that it was the government who funded the project just adds insult to injury.

              Further, developing alternative forms of energy are at least as important to American energy independence”

              ‘energy independence’ is a bullshit concept on par with ‘inequality’

              (e.g. which is better? highly ‘equal’ Haiti, or very ‘unequal’ USA? It means nothing without considering economic standards of living or economic opportunity)

              Why is ‘energy independence’ at all economically desirable? If it raises costs significantly, and reduces our long term growth, it is a net loss. The so-called ‘security’ benefits are meaningless

              Even were one to accept that ‘independence’ is a desirable or achievable goal (it isn’t) – why would ‘shitty solar’ be the thing we’d want, versus, say, “nat.gas or nuclear or [insert other] far more cost-effective sources of energy that are abundant”?

              It makes no economic sense, and it fails to provide any even-marginal side-benefits other than to possibly dissuade future similar boondoggles.

              1. To clarify, I wasn’t touting energy independence, but rather saying that home grown alternative energy should be as important as foreign fossil fuels to those who push for it.

                But thank you Gilmore for engaging me intelligently and earnestly.

            2. Eric|11.11.14 @ 3:24PM|#
              “Let me clarify my comment so that a highly intelligent person such as yourself can understand Sevo:”

              Let me clarify my statement so YOU can understand:
              Your statement is is a non-sequitur and you’re still an econ ignramus.

              1. I guess analogies could appear as non-sequiturs to a team loving libertarian backbencher like you Sevo.

                1. Eric|11.11.14 @ 5:25PM|#
                  “analogies”

                  Ha, and ha.

    2. Eric|11.11.14 @ 2:02PM|#
      “This is not meant to condone government waste, but I’d rather see us getting fleeced by seeding improvements in infrastructure than other types of projects.”

      No one is stopping you from footing the bill.

      1. I am footing the bill, and so is every American taxpayer.

        1. Eric|11.11.14 @ 2:31PM|#
          “I am footing the bill, and so is every American taxpayer.”

          Yeah, well, quit stealing from me for your ignorant fantasies.

          1. You’re seriously one of the dullest regular posters here Sevo. I guess even libertarians have to have a far left side of the IQ bell curve.

            1. Eric|11.11.14 @ 3:28PM|#
              “You’re seriously one of the dullest regular posters here Sevo.”

              From someone as stupid as you? Well, thanks.

              1. Eric : “Well played Sevo…Well played”

    3. This isn’ an “alternative form of energy”. This is a boondoggle that is failing to meet its projectikns by 25%. If this was new technology, and in the testing stage, there might be some ghost of an excuse. It isn’t. The claim, since the 1970’s, has been that solar is a mature technology that is being blocked by Big Business. The counterclaimhas always been that the numbers presented to the piblic have no basis in reality. Well, the Government funded this project to allow solar to prove itself, and it has proven to be a scam.

      Everybody involved in the approval process, right up to the highest levels (I’m looking at YOU, Mr. President) should be put on trial for defrauding the public, and whatever other charges are appropreate.

      And I am going to have to be very careful, or the next one of my Lefty in-laws that spouts off about “alternative energy” is going to get my foot in their behind.

      1. Gods, but I must be more tired than I thought. I read it as they were misisng their goals by a quarter, which is bad enough. To be only producing one quarter….is it just me, or does it sstrike other peope that that’s not a believable mistake, that’s willful fraud.

  33. “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.”
    They just need to recoup their lobbying expenses and campaign contributions. Seems fair to me.

  34. The owners’ claim is, literally, not believable. The National Renewable Energy Laboratory publishes a solar PV calculator based on decades of solar irradiation data. I’ve used it a number of times and it’s remarkably reliable within a reasonable range. While there can be quite a bit of solar variability in many locations, it’s sufficiently predictable that certain investors will write solar swap contracts to hedge this risk, and in any event will revert toward the mean over the extended period of most PV projects (generally 20+ years). It may be interesting to note the NREL has a notice on its website that it is updating the model in a way that will show a 7-10% increase in generation versus what it had previously predicted. Amazing.

    1. This is what I was talking about. How in the world could the solar irradiation data calculations for a $2.2 billion solar plant be off by 400%?

      1. because they wanted Free Money?

      2. “This is what I was talking about. How in the world could the solar irradiation data calculations for a $2.2 billion solar plant be off by 400%?”

        I think this part pretty much covers it: “received $1.6 billion in loan guarantees from the Department of Energy”

        1. It seems like a stupid plan: trick the government into giving you lots of money to build something you know won’t work? And then spend the money building it? And with Google involved? The feds know where these people live. They aren’t going to be able to split for Paraguay or something.

          1. “It seems like a stupid plan: trick the government into giving you lots of money to build something you know won’t work?”

            No, the power plant does work. It just produces a lot less power than “predicted”. That doesn’t mean that the private investors can’t make a decent ROI, assuming they get the taxpayers to cover the losses.

            It’s classic cronyism.

  35. Seems legit. Is there a kickstarter?

  36. So the agreement is: STFU about NSA back doors and you got your grant?

  37. “…they are asking for taxpayer dollars to pay back the loan that they got from the federal government…”

    This is exactly what the auto industry did. The left hand gave them guaranteed loans and the right hand gave them grants to pay off the loans. This process even produced a “profit” for the taxpayers. The only thing that could be better if somehow you could print your own money…oh wait, they already are doing that.

  38. This is the utility version of social passing.

  39. Free fried chicken for everybody!

    1. All ya gotta do is go out there with a butterfly net and wait!

  40. my roomate’s sister-in-law makes $86 /hour on the computer . She has been fired from work for 9 months but last month her payment was $13610 just working on the computer for a few hours. check…..

    ?????? http://www.payinsider.com

  41. Its the sun spots. No wait, its proof of global warming.

    Comments on this thread have been great, good way to start my morning. 1.6 billion to give me a laugh at 7:30am, seems worth it.

  42. Google: Our Giant Bird Incinerator Needs More Free Federal Funding

    ‘Fuck the taxpayers, This. Is. Green. Energy!’

    http://wp.me/p31sf8-1nh

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