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A map of the planned 250 MW solar power plant, showing preserved land (green) and installation area (blue).  (Source: NRG Solar/SunPower)

The plant will be located roughly halfway between San Francisco and Los Angeles, just south of California's Bay Area.  (Source: Wikipedia)
Plant would take around 15-20 years to break even if electricity was sold at coal power rates

If there's one thing critics and proponents of solar power alike can agree upon, it's that solar power, like any commodity, will go down in price when it is produced at a greater volume.  Recently announced plants, like a 280 mega-watt (MW) installation in the Arizona desert go a long way towards achieving that sort of volume increase.

As does a new 250 MW installation in San Luis Obispo County, California which was formally announced this week.  Construction on the new plant will commence next year and is expected to create 350 construction jobs.

San Luis Obispo is a coastal county that is relatively rural and lightly populated by Californian standards.  It's roughly halfway between Los Angeles and San Francisco, two of the state's biggest cities.

The new plant will be a joint venture between NRG Solar, Inc. and SunPower Corp. -- two veteran solar power firms (SunPower, alone, will have installed over 1.5 GW of solar power by the year's end).  NRG Solar is expected to pitch in $450M USD over the four year launch period.  NRG will own the plant, it is basically contracting SunPower to design, build, and operate the plant.

The plant will begin producing electricity in late 2011.  By 2012 to 2013 it is expected to reach full capacity, as construction completes.  The plant is expected to provide enough power for 100,000 households.

The new plant is named the "California Valley Solar Ranch". 

NRG Solar is seeking government loans from the U.S. Department of Energy to initially finance the construction.  While U.S. President Barack Obama recently handed out $1.85B USD in grants to solar power projects, the new installation likely will not receive any of this money.

Securing a government loan is critical to the NRG and SunPower's plan.  States Howard Wenger, president of the utility and power plants business group at SunPower, "The DOE is playing a critical leadership role in supporting renewable energy that provides economic and environmental benefits, as well as a secure, stable energy supply in the U.S."

The project has been in the works for the last two years.  It is expected to be operational for at least 25 years.

Challenges to the plant's success remain.  Currently environmental activists in California are vigorously resisting large solar and wind installations, which they fear will damage fragile ecosystems.  They have filed lawsuits to try to block similar projects.

The California Valley Solar Ranch project may placate these critics, thanks to the 2,399 acres it sets aside as a wildlife habitat.  The plant and associated facilities are expected to occupy 1,966 acres of land.

Another challenge is the underlying economics.  While the California Public Utilities Commission has agreed to buy 25 years worth of power from the installation, likely at an inflated price, it remains to be seen exactly how much money the plant will make.  Coal power costs around $0.06-$0.08 USD per kilowatt-hour, so if the solar plant's power was sold at an equivalent rate, it would take around 15 to 20 years for the plant to break even.  Thanks to large markups to alternative energy power, though, it should break even much sooner, boosting NRG Solar and SunPower.  Nonetheless, some consumers may be unhappy with paying this kind of markup so that their power can be "greener".

Still, it's common knowledge that you have to invest up front to gain access to new technology.  And with large scale installations like this new one in California and the currently developing one in Arizona, the cost per kilowatt hour of solar power in the U.S. should fall over the next few years.


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Math
By rikulus on 12/1/2010 11:51:11 AM , Rating: 2
Just double checking the price comparison math in the article...

0.08 dollars per kw-hour, there are 1000 MW per kw and this plant has 250 MW so makes 0.07*1000*250 per hour of full capacity = $17,500 per hour.
I don't know how they rate it for 250 MW, and how that compares to an average day... but say it averages the equivalent of 6 full power hours per day, then it is producing $105,000 of power per day.
That's $38,325,000 per year.
Just nearly $1 billion over it's lifetime (not $153 million).




RE: Math
By namechamps on 12/1/2010 12:03:41 PM , Rating: 2
Yeah not sure what metric the article is using but it isn't valid.

Solar power in southern CA has about 20% peak capacity factor (~5 hours peak sunglight per day) however that would be no downtime for any other reason (mainteance, repairs, damage, etc). So lets assume 15% capacity factor over life of plant.

In one year the plant would output 250MW * 0.15 * 24 * 365 = 418,500 MWh or 418.5 GWh.

Lets also assume the plants output degrades by 1% annually over 25 years the combined output would be 9.3TWh.

At $0.07 per kWh that ~ $650 million.

However CA utility is likely paying 200% overwholesale for "green power". Solar PV simply doesn't make sense without subsidies. So at $0.20 per kWh the plants gross revenue would be $1.8 billion.


RE: Math
By dirtyfoot on 12/1/2010 12:06:08 PM , Rating: 2
remember the plant is going to cost about 1billion$plus to build. So i believe they mean there will be a net profit of 158million over its life


RE: Math
By namechamps on 12/1/2010 12:14:45 PM , Rating: 2
Even then the numbers don't add up.

1) This plant is going to get market rate of $0.05 to $0.07 per kWh wholesale. It has a signed PPA power purchasing agreement. It has locked in a sweetheart deal of $0.20 per kWh.

2) The interest amortized over 20+ years alone would sink this project without subsidized pricing.


RE: Math
By goku on 12/1/2010 12:21:04 PM , Rating: 2
You're also forgetting that the cost of electricity rises about 5% year over year and has done that for the past 30 years. This solar power plant *should* make much more money than is being calculated in these comments.


RE: Math
By FITCamaro on 12/1/2010 12:24:20 PM , Rating: 2
These comments are also not factoring in maintenance costs of the plant. Which, contrary to one idiots comment, are not small. Maybe smaller than a nuclear power plants. But that doesn't mean they're cheap.


RE: Math
By rikulus on 12/1/2010 1:11:12 PM , Rating: 2
OK, so we add in a reasonable amount of cost for operating and maintenance at the solar plant. Then we should add it to the coal plant cost as well... I can't imagine that would be less than at the solar plant, I'd assume more, but maybe it's a wash.

Here'a a topic nobody has been talking about... coal doesn't just appear in the coal plant. So we need to include the costs and land use required to mine, process, transport, and unload the coal. Plus all the maintenance costs for the mine equipment and trains of course. :)


RE: Math
By rcc on 12/1/2010 5:28:18 PM , Rating: 2
I could be wrong, but I think you'll find that already calculated into the 7-8 cent per kWh rate.


RE: Math
By SandmanWN on 12/1/2010 11:46:18 PM , Rating: 2
Its on your bill. Its been a known variable for a great many decades.


RE: Math
By EddyKilowatt on 12/2/2010 2:40:29 PM , Rating: 2
The cost to dig it out of the ground and ship it to the power plant, sure. The cost to restore the removed mountaintops and acid-killed rivers? Not so much.

This is all about externalities. The betting amongst forward-looking people is that solar has many fewer of them than fossil fuel dug or pumped from the ground with its waste dumped back into air and oceans, or nuclear with all fuel cycle risks accounted for. (Uranium-fueled nuclear at any rate... I think thorium sounds pretty attractive though.)

It is totally legit for society as a whole to decide that these lower externalities are worth subsidizing.


RE: Math
By SPOOFE on 12/3/2010 1:32:24 AM , Rating: 2
quote:
It is totally legit for society as a whole to decide that these lower externalities are worth subsidizing.

It would be legit if the scheme were sold to the public on those parameters. But it wasn't; it was based on lies and deception, clever histrionics and fanciful doomsday claims.


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