A giant solar plant touted as a symbol of federally financed efforts to fight climate change is on the path to being closed, renewing a debate about the track record of the Department of Energy’s loan program.
In January, PG&E announced a deal with the owners of the Ivanpah solar plant — which covers five miles of federal land in the Mojave Desert near the California-Nevada border — to stop buying power from the facility. That means that two of the plant’s three units may no longer be operational next year, assuming that California regulators back the plan. Ivanpah originally was supposed to run until 2039.
The move is a setback for concentrating solar thermal power, a technology that benefited significantly from DOE loans more than a decade ago and was viewed as a way to have a renewable option with storage that could potentially run around the clock.
“PG&E determined that ending the agreements at this time will save customers money,” the utility said in its statement, adding that photovoltaic solar technology paired with batteries has “raced ahead” in affordability since Ivanpah opened in 2014.
Ivanpah, which is operated by Texas-based NRG Energy, is a very different model from most utility-scale solar farms with rectangular panels. It uses thousands of devices called heliostats that utilize mirrors to reflect heat onto a water boiler on a giant tower to produce steam for electricity. It was the world’s largest concentrating solar plant when it opened after receiving $1.6 billion in loan guarantees from DOE. That money has not been fully repaid.
The 386-megawatt plant lagged in producing promised electricity levels and faced criticism from environmental groups like the Sierra Club because of its associated bird deaths. While estimates vary, some federal data concluded that the plant killed roughly 6,000 birds a year flying into concentrated beams of sunlight.
PG&E’s announcement sparked criticisms of DOE’s loan program, which conservatives have targeted since one of its early recipients — Solyndra — filed for bankruptcy in 2011 after receiving a loan. The program is under renewed scrutiny because of the size of its lending authority and its fate under President Donald Trump, who repeatedly tried to ax the program in his first term.
The DOE loan program is “all cost, no benefit,” said Benjamin Zycher, a senior fellow at the free market think tank American Enterprise Institute, who wrote a post on Ivanpah after PG&E’s announcement. He said it’s an example of the government funding projects that can’t compete in the market and don’t help the climate.
The Las Vegas Review-Journal similarly released an editorial saying Ivanpah would be just another “expensive symbol” of “state and federal central planning gone awry,” comparing it to Solyndra.
But Dan Reicher, a former assistant secretary for energy efficiency and renewable energy during the Clinton administration, said the funding is very different from direct grants that are not repaid. “It is making money,” he said of the loan program.
Like any portfolio of loans, there will be some projects that aren’t as successful, but the overall program is performing extremely well financially, he said. Ivanpah, even though it may eventually close, provided helpful information to utilities a decade ago that had not operated utility-scale solar projects at the time. Any comparison to Solyndra is unfair, as Ivanpah is not going bankrupt, said Reicher, who is now a senior scholar at the Stanford Doerr School of Sustainability.
A letter from Democratic lawmakers last summer similarly argued that DOE’s loan program has a better repayment rate than venture capital firms on clean energy. The program was signed into law in 2005 under President George W. Bush and has helped build major companies, including Elon Musk’s Tesla, that have gone on to pay large amounts of taxes, they wrote. Backers of DOE loans also say that there’s a long history of the federal government supporting the energy sector, including President Dwight Eisenhower’s support of the nuclear industry in the 1950s.
In December, DOE’s watchdog called on the loan office to suspend loans out of concerns of conflicts of interest, prompting Biden administration officials at the time to say the inspector general report was filled with errors.
The future of other concentrating solar plants, meanwhile, is uncertain. There remain several other large operating facilities in the U.S. and in the world, some of which were also financed with DOE loans. Unlike Ivanpah, some like the Abengoa Generating Station in Arizona store heat for later use.
According to DOE, the cost of electricity from concentrating solar power has dropped more than 50 percent in 10 years. Supporters of the technology say it could play an important role in cutting emissions because of its ability to store heat for days and act more like baseload power, as well as replace some fossil-fuel-heavy industrial processes that rely on high heat. With predictions of surging electricity demand in years ahead, it’s important to continue developing new power options, they say. The National Renewable Energy Laboratory in Colorado is among the entities researching ways to bring down costs of concentrating solar.
But Jenny Chase, a solar analyst at BloombergNEF, said the prospect for solar thermal plants like Ivanpah is poor, since existing projects have historically underperformed. Ivanpah never generated more than 75 percent of its planned electricity output in a year, she said. That’s partly because the technology is unwieldy with a lot of moving parts, she said.
Prospects are brighter for another type of solar thermal plant that uses troughs with parabolic-shaped mirrors to harness sunlight, but even that technology may not make it long term because traditional solar panels with storage are more cost competitive with other fuels, she said.
“Batteries are so cheap these days,” she said.
Don Howerton, PG&E’s senior director of commercial procurement, said in a statement it was important to invest in different types of projects like Ivanpah to address climate change.
“It’s not clear in the early stages what technologies will work best and be most affordable for customers. Solar photovoltaic panels and battery energy storage were once unaffordable at large scale,” Howerton said.
NRG Energy said in a statement that the Ivanpah agreement would allow DOE to “maximize the recovery of its loans.” The Ivanpah site could be repurposed with traditional solar panels, it said.
The PG&E deal won’t go through until the California Public Utilities Commission reviews the termination and signs off on it. If the plan is approved, PG&E would exit Ivanpah in January 2026.
Southern California Edison, which has a contract for the third tower at the Ivanpah site, is in “ongoing discussions” with project owners and DOE about a potential buyout of the contract, utility spokesperson Jeff Monford said.
PG&E spokesperson Jennifer Robison said in an email that PG&E would replace any lost generation through its procurement process, but that the company does not anticipate the termination impeding the ability to deliver energy to its customers. The termination is expected to lower costs because customers would no longer have to pay for the purchase through 2039, but could instead rely on cheaper generation sources.
PG&E still has two other CSP contracts: a 25-year contract with the Mojave Solar Project in San Bernardino County, California, and a long-term contract with the Genesis Solar Energy Center in Riverside County, California. Both have been in place since 2014 and have federal support. Robison said. PG&E would continue to evaluate new opportunities to add “many types of RPS-eligible resources to our portfolio,” she said.