How Green Was My Bankruptcy? “Roadmap for Solar Energy Development on Public Lands” Edition

The agency has already approved 17 large-scale solar energy projects on public lands that are expected to produce nearly 6,000 megawatts of electricity, enough to power about 1.8 million homes. The department estimated the resource potential of the newly identified development zones at 23,700 megawatts, enough to power seven million homes, by 2030.

Wow! 23,700 megawatts! That’s a lot of megawatts! Right?

No. It’s not…

If all 285,000 acres were covered with solar PV arrays, the “Hot Spots” could have a generating capacity of about 40,000 MW at a cost of about $252 billion.If the same 285,000 acres were covered with natural gas-fired power stations, the “Hot Spots” could have a generating capacity of about 1.8 million MW (1.8 Terawatts) at a cost of about $1.5 trillion.

To put this in a little better perspective…

US electric utilities added an average of 22,734 MW of generating capacity per year from 2001-2010. If the “Hot Spots” acreage was devoted to that annual capacity growth…

Solar PV would consume all 285,000 acres in 21 months at a cost of $143 billion per year.

It would take 80 years for natural gas-fired plants to cover the 285,000 acres at a cost of $19 billion per year.

If every acre of the newly designated Federal land was developed for solar power, it would cover less than two years of the average annual incremental growth in US generating capacity.

It really is ironic that President Obama thinks that, “Even if we drilled every square inch of this country right now, we’d still have to rely disproportionately on other countries for their oil,” while his administration crows about setting aside 285,000 acres of public land for solar power development that can’t even match our average incremental generation capacity growth for two years.

I wonder if the people who oppose developing ANWR because, by itself, it might only cover a few years of our total oil consumption, are simply giddy about “Boot” Salazar’s latest boondoggle…  

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2 Responses to “How Green Was My Bankruptcy? “Roadmap for Solar Energy Development on Public Lands” Edition”

  1. David Middleton Says:

    @Falstaff,

    Yes, the covering of “every square inch” with both types of power plants was a bit of sarcasm.  However, the power densities are simple calculations.  Natural gas plants deliver about 6 MW/ac and solar PV plants deliver about 0.15 MW/ac.

    As far as gas prices go… I find the oil & gas for a living… Been doing that for more than 30 years.  I learned a long time ago that price predictions, beyond inflation estimates, were little more than guesses.

    While wellhead natural gas prices are unlikely to remain as low as they are forever… Many shale plays are subeconomic at $7/mcf gas producers will drill and produce as much gas as they can and LNG exports won’t be significant for decades, if ever.  Most of the LNG market is in Asia, LNG tankers are too big for the Panama canal and there are no LNG terminals on the west coast (and unlikely to be any due to rampant mental greent@#dation in CA, OR & WA).

    US LNG Terminals

    All of the LNG terminals were built to import LNG, except Kenai AK.  Kenai exports Cook Inlet gas to Japan.   Prior to the shale boom we were consuming more gas than domestic production could provide.  Only one LNG terminal in Louisiana has been approved for conversion to an export facility.

    There will be more *proved* reserves of natural gas in the ground 30 years from now… A lot more.  The resource potential will also be much greater.

    Proved natural gas reserves in the US have grown by more than 50% since the shale gas boom took off in the late 1990’s.  These are proved reserves…

    US Natural Gas Proved Reserves

    The proved reserves have actually grown as US natural gas production has increased…

    US Natural Gas Production

    Even at $10/mcf, the levellized 30-yr cost of natural gas-fired electricity is only 11-12 cents/kWh. Solar PV is ~21 cents/kWh. Plus, almost all of the cost of solar is up front. It not only costs more; but you have to pay for it years before you use it. Almost all of the cost of gas-fired generation is incurred as the power is generated. Apply a standard discount rate to the solar CapEx and the economics fail even worse.

    Cold winters, hurricanes, economic booms and other unusual events may trigger short term price spikes, but the only way that US natural gas prices are likely to rise to the point of making solar competetive would be through regulatory malfeasance regarding fracking. And this will likely be the case for at least the next 20-30 years.

  2. David Middleton Says:

    The oil “subsidies” total about $4.4 billion industry-wide. They consist of tax deductions that are the resource extraction equivalent of depreciation.

    In 2011, ExxonMobil, the largest US oil company invested $413 billion to earn $73 billion in pre-tax profits. They paid $31 billion in Federal, State, local and foreign income taxes, leaving them with a $42 billion net profit (9%). ExxonMobil paid $8 in total income taxes for every $1 of “subsidies” to the entire industry.

    Between Solyndra and Solar Trust of America, the current occupent of the White House guaranteed more than $2.6 billion in taxpayer-backed loans to companies that never earned a profit and went bankrupt trying to manufacture a product in an industry that would be insolvent without massive corporate welfare.

    The tax “subsidies” to the oil & gas industry are of the most benefit to small independent companies operating in the US. Major oil companies are not eligible for the most “expensive” deduction: the percentage depletion allowance. These “subsidies” lead to more production of domestic oil and natural gas. In 2007, the sum total of Federal energy subsidies was $16.6 billion. That included direct expenditures, tax breaks, R&D expenditures and electricity programs like the TVA. About $2.1 billion of the 2007 subsidies went toward natural gas and petroleum liquids, $3.4 billion went for coal and $5 billion went toward renewables and conservation.

    In 2007, ExxonMobil paid $29.9 billion in total income taxes, including $4.5 billion in US Federal income tax. ExxonMobil’s 2007 Federal US income taxes were twice as much as the entire industry’s “subsidies.”

    In 2007, subsidies to the oil and gas industry amounted to ~3 cents per million BTU of energy produced. Solar and ethanol/biofuels received $2.82 and $5.72 per million BTU…

    Subsidies/BTU

    A barrel of oil yields ~5.6 million BTU. Oil subsidies amount to ~17 cents per barrel… Less than 1% of the cost of a barrel of oil. Currently closer to 0.1%.

    In 2007, solar and wind subsidies amounted to $24.34 and $23.37 per MWh…

    Subsidies/MWh

    The average US electricity rate is ~$0.12 per kWh ($120 per MWh). Solar and wind subsidies amounted to 20-21% of the cost of a MWh of electricity.

    The levelized cost of solar PV is ~$211/MWh over a 30-yr plant lifetime. That’s more than twice the cost of coal ($95/MWh) and more than three times the cost of natural gas ($66/MWh).

    $211/MWh is $0.21/kWh. A utility company would have to charge 21.1 cents per kWh just to break even. The average retail rate in the USA is 11-12 cents per kWh.

    Subsidizing a source of electricity that costs $66 per MWh to the tune of $0.25 per MWh gets you a little more $66/MWh electricity.

    Subsidizing a source of electricity that costs $211per MWh to the tune of $24.34 per MWh gets you some $211/MWh electricity added into the mix.

    Why in the Heck would a sane person choose to pay more for electricity? Much less subsidize the more expensive source two orders of magnitude more than the cheap source?

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