Central planners always think they can design a better consumer product and achieve a better economic outcome than the invisible hand of the free market can. F.A. Hayek called this The Fatal Conceit.
Another of the products of the central planners is on its death bed.
Back in 2011 a company called Solar Reserve announced it was building a $1 billion solar powered electricity generating project near Tonopah called Crescent Dunes. President Obama’s Department of Energy backed the project with a $737 million federal loan guarantee.
The 110-megawatt solar thermal facility used thousands of mirrors to focus sunlight on a tower containing salt. The heat of the sun melted the salt which was used to turn water into steam, which in turn drove turbines that generated power.
The designers claimed the molten salt would retain heat and enable the facility to continue to generate power up to 10 hours without sunlight, unlike photovoltaic solar panels or solar thermal generators using only water. It was the first of its kind.
According to recent news accounts, the project is on the verge of bankruptcy and its sole customer, NV Energy, has canceled its contract, which was to run through 2040. The power company cited the inability of the facility to meet contracted generating capacity.
Since going online in 2015 the project has experienced mechanical failures, including being offline for eight months due to a leak in a molten salt tank. According to an account by the Las Vegas newspaper, in the past year the plant was able to produce only 50 percent of the contracted power amount and was projected to fall 25 percent short in 2020 and beyond.
What the various press accounts failed to note is that the Crescent Dunes contract with NV Energy negotiated in 2011 called for a beginning wholesale purchase price of 13.5 cents per kilowatt-hour, increasing by 1 percent each year. At the time, NV Energy was selling retail residential power for 11.6 cents per kWh. In the past year, the company has been contracting for renewable energy at wholesale rates less than 4 and even 3 cents per kWh.
Taxpayers picked up construction costs and ratepayers followed suit.
Expect more such boondoggles from the central planners. A year ago, Nevada voters approved a constitutional amendment requiring 50 percent of the state’s electricity come from renewable sources such as solar and wind by 2030. In the legislative session this past spring lawmakers in Carson City went ahead and made that proposition law immediately.
Such market manipulation drives up the cost and retards real innovation.
By the time that constitutional amendment is on the ballot again in a year, we call on the the voters to wise up as to who is footing the bill and demand our lawmakers also relent. — TM