The American Interest
Analysis by Walter Russell Mead & Staff
The Dance of the Unicorns

It’s been a bad year for solar power. Last year’s Solyndra scandal was one of the biggest public relations setbacks the industry has faced in years. And in recent months, more solar companies have been filing for bankruptcy, and even those that remained have had difficulty securing the government-provided loan guarantees they depend on.

Now yet another solar dream is collapsing. Solar Trust of America LLC, which was planning to open an ambitious 1,000-megawatt solar field in Southern California, has declared bankruptcy after transmissions-rights agreements with local utility authorities fell through. The loss of these agreements rendered the project “near, if not completely, valueless,” according to the Wall Street Journal. The company’s other projects had likewise failed to generate revenue, leaving it to rely on infusions of cash from its owners.

I was still in college when the first wave of solar power enthusiasts started selling the world on the vision of cheap, unlimited power from the benign and eco-friendly sun. It was a beautiful idea then and it still is one today. But then as now, there was one tiny little catch: for this beautiful dream to come true, governments needed to give solar companies a lot of money.  It is more than 35 years since I first heard this beguiling promise: time enough for Jesus of Nazareth to be born, crucified and raised from the dead. It was time enough for the personal computer to take the world by storm and for the internet to come out of nowhere and change the way we all live. It was time enough for China to emerge from the shadows of the Cultural Revolution and the abyss of late Maoism and grow into a world class industrial power and to become by some measures the second largest economy in the world. It was time enough for the U.S. Marine Corps to accept openly gay marines. It was time enough for apartheid to give way to multiracial democracy in South Africa.

And solar power is still a beautiful dream with just one tiny little catch.

The prettiest unicorns have a way of dancing so tantalizingly, just out of reach.

Published on April 3, 2012 5:00 pm
  • Marcus V

    I don’t think that WSJ article says what you say it says. A more complete quote from the article is:

    Solar Trust executives had secured what it called “valuable” transmission rights to pump electricity into the grid from that project, which is located on 7,025 acres of Southern California’s inlands about 150 miles from Riverside, Calif. But that project and others haven’t been completed and aren’t generating revenue, leaving its owners as the main revenue source.

    The company filed for Chapter 11 protection Monday, the day after it was scheduled to make a $1 million rent payment to the U.S. Department of Interior for the acreage. Company officials said that the bankruptcy case would also protect the transmission-rights agreements it made with utilities.

    “Without the [agreements], the Blythe Project would be unable to deliver electricity to market and would be rendered near, if not completely, valueless,” said Chief Operating Officer Edward Kleinschmidt in documents filed with the U.S. Bankruptcy Court in Wilmington, Del.

    The rights for Blythe had been secured, and are being preserved through bankruptcy proceedings. Solar Trust’s bankruptcy is due, not to transmission rights, but to financial difficulties farther up the food chain, as the article clearly states.

    (Another smaller project mentioned in the article had not yet reached a transmission agreement, but the only sense in which that deal “fell through” is because of current problem. It is an effect, not a cause.)

    Moreover, your characterization of the whole solar power endeavor as perpetually futile are unfair to the point of being deceptive. In the sunrise of your youth, yes, solar power was entirely unfeasible for any serious power generation. In the intervening 35 years, the technology has advanced remarkably; whether and when grid parity is reached depends largely on the resources (natural, built, and subsidized) in any given region.

    The principle barriers are regulatory and financial, not technical. Pretty writing on your part may convince a few people, but those of us who can do math and design with our own skills, and build things with our own hands are unswayed.

  • Jetzer Tigue

    Solar power can only produce less than ten percent of the energy requirements of the U.S. Meanwhile, the EPA is ensuring the downfall of coal-based power plants which can produce much more energy.

    In addition, this is a two birds in one stone situation for Obama. Not only is he making environmentalists happy he is also enriching his cronies in the solar power industry.

    This is crony capitalism and an incompetent energy policy at the same time. Why can no one see that?

  • http://facingzionwards.blogspot.com/ Luke Lea

    That horse is pretty much dead, thank goodness. BTW, there is a very good argument against solar farms seldom heard: they are ugly.

  • Kris

    1 Kings 18:27

    Unicorns? Look at the bright side; we are not yet talking of sirens.

  • Wayne Lusvardi

    California is the birthplace of home rooftop solar projects made feasible by state subsidies. But states are running out of money. So California Senate Bill 998 proposed to provide for banks to lend money for solar installations and the loan would be paid back in the homeowner’s electricity bill.

    Problem is that the homeowner wouldn’t benefit with any significant reduced utility bills, but banks and solar contractors would benefit. Only low income homeowners could be duped into such loans. Does this sound familiar?

    It’s the same model as subprime loans. Apparently we haven’t learned anything since the Mortgage Market Meltdown and Bank Panic of 2008.

    Read about it here:
    http://www.calwatchdog.com/2012/03/30/greens-want-energy-bubble-loans-from-cpuc

  • Jacksonian Libertarian

    If it’s a sound financial opportunity, it doesn’t need government subsidies, tax credits, or loans. The fact is these so called Green energy projects are all expensive boondoggles which the free market would never have backed because they will never be economical or profitable.
    Environmentalists hate People and want us all dead, and we the People should hate them right back. They should really be called Enviro-Misanthropes.

    “The Humano-Centric ecology is Mother Nature’s finest creation” Jacksonian Libertarian

  • bob sykes

    There are, in fact, two unsolvable technical issues that vitiate any prospect of wide-spread solar power.

    Even in the best of locations, on an annual basis solar panels produce power less than half the time. This means that every kW of installed solar power must be backed up by one kW of fossil fuel power, almost always natural gas. So instead of one power generating system, you have to build two, each with the same capacity.

    At present, solar power systems avoid this expense, because there are so few of them that they can be subsidized by the excess capacity of the current system. If solar were to expand, that excess capacity would disappear, and the solar companies would be required to build backup natural gas systems.

    The second technical problem is also related to solar’s intermittency, that is network instability. Think of the Northeast power black out of several years ago, which was caused by network instability. European experience shows that once solar/wind amounts to about 4% of total capacity, the inherent on/off nature of solar/wind tends to shut down the network they feed into. This problem has already happened to the Czech power network, which gets power from Germany’s wind/solar systems. The Czech Republic is currently threatening to shut down its connections to the German grid.

    Oh, about the “financial” issues. Solar costs anywhere from 10 to 30 times as much as coal per kWh. It is by far one of the most expensive ways to generate electricity. Only wind competes with it for cost.

    Solar, wind and biomass (including algae and ethanol) are essentially frauds. They are in fact the power systems that were in use up until the industrial revolution. The only people who benefit from these frauds are the fraudsters, the companies that make and install these systems and their political allies.

  • Marcus V

    Bob, it turns out that the engineering community is aware of the phenomenon colloquially known as “sunset,” and have painstakingly included it in their calculations

    The table of cost estimates put together by the government very explicitly factors that into pricing calculations. They have also developed daytime solar plants that efficiently store the energy until nightfall. You will see it show up in the column called “Capacity factor.” The last column, by the way, directly contradicts your “ten to thirty” factor comparison for coal.

    More like “two or three” depending on the particular types of coal and solar plants being compared.

    It’s still a reasonable question to ask, “Why pay two or three times as much?” if you can let go of your “ten to thirty” factor. So I’ll answer:

    1) It’s cleaner. Forget about global warming and just think about the awful particulate pollution.

    2) It’s safer. My god, man, have you been in a coal mine?

    3) It’s healthier. My god, man, have you been in a coal miner’s lungs? Or the lungs of anyone around one of those filthy plants? We’re better than that.

    4) <a href="http://en.wikipedia.org/wiki/Solar_Power#Economics"Prices fall. But prices don’t fall by magic, they fall by economies of scale and the investment of time and money in the process of learning to build things.

    Moreover, no one is talking about running 100% of everything on solar tomorrow, or even next year. Sensible people are talking about trying to get to somewhere between 10 and 30% over the next few decades. This is more than enough time to rework the grid to address any possible network instabilities (and the grid needs to be reworked anyway, for other reasons.)

    Jacksonian, your point is well taken. I will eagerly await your calls to end subsidies in all the other power generation areas. Especially petroleum.

  • Joe

    Marcus, (not that either of us is likely to come back and check on this discussion)

    1) The table you linked to refers to power plants coming online in 2016. ‘Coming online’ is the key point. We already have a large installed coal capacity in this country. This is not the case for solar. So, to make sense, the TOTAL cost per kWh for solar (210.3, best case) has to exceed the OPERATIONAL cost per kWh for coal (42, worst case). Still not a factor of 20-30, but it is a factor of 5. Noteworthy.

    2) Your definition of ‘capacity factor’ is dead wrong. A capacity factor of ‘.25′ for solar means that California’s 1 MW plant mentioned above would produce, on average, 250 kW of power. It’s just a ratio of ‘actual output vs. maximum output.’ It has nothing to do with storing energy overnight, which is still a huge problem for large-scale solar projects.

  • Wayne Lusvardi

    Reply to Marcus V

    It is highly questionable whether wind and solar power are cleaner.

    The off/on nature of green power causes conventional power plants to cycle up and down to accommodate the incoming green power to the electric grid. This cycling causes inefficiency. It is like hitting the pedal on the gas on your car then backing off over and over. Or turning the thermostat up an down constantly in your house. What you end up with is higher gas mileage costs or higher heating bill.

    Read more about it here:
    http://www.calwatchdog.com/2011/10/13/windmill-gate-scandal-blowing-in-the-wind/

  • Marcus V

    Joe,

    Unfortunate phrasing on my part. The part about storage for night was intended as an aside, and should have been parenthetical.

    The point remains, capacity factors (which are relatively low for solar plants precisely because it gets dark out from time to time, and even in broad daylight the sun changes angles and the atmospheric absorption changes) are included in the cost calculations already.

    Meaning, the economic comparisons are not being artificially inflated by a factor of 2 or 3 or more just because the sun goes down. It’s included in the calculations and always has been.

  • Jim.

    Putting the repeal of “keep your private life private” in the same thought as the rise of China is bad enough — putting it in the same sentence as the resurrection of Christ is disgusting.

    Is this really what you would have us do to “ingratiate” ourselves, Napoleon-style, in the pursuit of power? All of your ancestors back to the first barbarian to convert to Christianity must be rolling in their graves at what you’ve reduced yourself to.

    Have you at long last no shame?

  • ChicagoXile

    Nobody’s heard what’s happening to solar in Germany, which “doubled down” in subsidizing and pushing it?

    “Bankruptcies Have German Solar on the Ropes (Der Spiegel)” – http://bit.ly/HkQHhx

    “Germany Cuts Subsidies to Floundering Solar Industry” – http://bit.ly/GOYJmo

    “Germany Singing A Requiem For Its Solar Industry” – http://bit.ly/GMxGZ5

    Expect Obama to subtly stop mentioning solar as part of “all-of-the-above.” But if he keeps pushing solar, even some on the Left might scratch their heads over his embrace of the envirowacko agenda.

  • Joe

    Well I’m glad we’ve straightened that out, then. For my part, I’ll buy a set of roof panels for my house the very instant I can afford them (not anytime soon), but I don’t see solar as having a place in the national energy market.

    What we need are thorium reactors, nuclear’s best-kept-secret. Hopefully they don’t stay that way too much longer.

  • Jim.

    Let me (uncharacteristically) come to the defense of Solar.

    Call it “too expensive” if you like. It’s certainly more expensive than coal. But the fact that it doesn’t work at night is, surprisingly, a solvable problem.

    On-orbit solar power stations (only about 3x more expensive than their on-the-ground counterparts) can provide solar power to any point on Earth, any time of day or night. If you’re willing to go in for mega-engineering projects on the ground, you can even design them to work when it’s completely clouded over or fogged in.

    Think about it… a set of power stations — peaker power stations — that drift around the world, providing spot-market energy whenever and wherever it’s needed most.

    Perhaps another unicorn. Perhaps not.

  • Tom

    Marcus V, in #8:
    You’re wrong about it being cheaper. I have looked into adding solar panels to my house in the northeast. After incorporating any government credits and amortizing installation costs and expected upkeep over 30 years, it still was an enormous premium over my relatively expensively priced utility, and that doesn’t include unexpected upkeep.

    You’re also wrong about the hazards of coal and coal mining. This isn’t the 19th century, in case you didn’t notice.

    As an angel investor who’s looked at and passed on “green energy” investments, they all require substantial subsidies from the government for a long time, and/or count on a monumental jump in effeciency that’s far from theoretically certain, let alone at proof of concept stage.

    From what’s readily available about economies of scale for solar, don’t hold your breath. At this point there are no reliable indications that will be the answer to the problem. Maybe that will change in the future, but to put assumptions with those levels of uncertainty into a business model is foolhardy. Especially as the fossil fuels available with current technologies in North America dwarf our needs for generations to come.

    I do hope that universities will keep tinkering with solar, because maybe someone, someday will find a way to make it economical. But we are far more likely to be able to afford tinkers of this nature if we aim for the cheapest energy available now to run our economy.

    It is very foolish for the solar industry, government and other true-believers to let their marketing get this far ahead of their technology and finances. You are making fools of yourselves and destroying your credibility.

    Joe, I am intrigued by what I’ve read about the thorium reactors. My understanding is that their primary obstacle is regulatory fear and inertia.