Solar Insanity in California

Today, SCE (Southern California Edison, one of the big three electric utilities in California) switched on a just-finished 5 MW solar PV power plant near Porterville, California - about 50 miles north of Bakersfield in the Central Valley. This act was accompanied by much press, such as at this link, and this link. As I've written elsewhere, California has gone nuts. This is but another example of the insanity that rules here these days.

The power plant is reported to have cost $18 million, and will produce 5 MW of power. Presumably that is the peak power, when the sun is actually out and not obscured by dust or clouds, or rain. They don't get much snow in Porterville. [Update 2-25-2011, correction, they are to receive a rain / snow mix today and tomorrow. It's a big, cold storm. end update RES] The annual average power output is far less than 5 MW, though, much more likely it is around 25 percent of the peak rating, or 1.25 MW annual average.

Why this is nuts has to do with the cost-to-power ratio. At $18 million installed cost, the plant's owners must charge the purchasers 13 cents per kWh just to pay off the capital cost. That is, they would if this plant was built with private money, and no government subsidies. The 13 cents per kWh is based on financing 100 percent of the $18 million for 20 years at 5 percent compound interest. If one figures in the additional cost of maintenance, labor, supplies, and other ongoing costs to run a power plant, plus transmission costs, the sales price would increase to approximately 15 cents per kWh.

But, there are substantial subsidies for a solar-powered plant, and the plant was built. SCE stated they have $875 million to spend on such power plants, that will produce a total of 250 MW. The cost-to-power ratio is approximately the same, at $3500 per kW installed.

It must be understood that such a solar power plant does nothing to reduce the required investment in reliable, gas-fired power plants in California. There are many times when the solar power plant will not produce power so the power must be provided by a natural gas-fired plant.