Solar Energy That Is Even Less Efficient Than Solar Energy

With so much focus on the inefficiency of solar panels, few are aware of an even more costly solar technology called “thermal solar.” Like solar panels, the Obama Administration has offered billions in loan guarantees for thermal solar projects across the country.

Also like solar panels, the thermal solar projects are starting to fall apart financially. Even those projects that are ultimately successful will have extremely high costs and produce little environmental benefit.

Unlike solar panels, which turn energy from the sun directly into electricity, thermal solar uses heat to create steam that generates energy. The result is that energy produced using thermal solar is even more expensive than energy produced by solar panels. The Energy Information Administration says the projected average cost per megawatt hour (MWh) of energy for photovoltaic solar (solar PV) in 2016 will be $211. For thermal solar, the EIA notes, the cost is projected at $312.20 per MWh, or nearly 50 percent more. As inefficient as solar panels are, thermal solar is much worse.

Some will argue that in the right places, like the desert, it makes sense. The EIA looks at that as well. It notes that the projected minimum cost for thermal solar will be $192 per MWh, with the maximum reaching $642.50. By way of comparison, solar PV’s minimum cost will be $158.90, and the minimum cost for wind energy will be $82.30. Among the “green” energy sources, thermal solar is by far the worst of all options.

Thermal solar’s high cost and low energy production is already leading the technology to bite its supporters and investors.

Forbes reported yesterday that BrightSource, a company that produces thermal solar energy, pulled its initial public offering abruptly due to “adverse market conditions.” Up to this point, Forbes argued, “BrightSource Energy, which is well capitalized and the recipient of a $1.6 billion federal loan guarantee, seemed a likely candidate to be one of the few solar thermal startups left standing.” Now, that appears to have changed.

There are, however, other thermal solar projects that have received federal loan guarantees:

Another thermal solar project that was offered a loan guarantee (but turned it down because it was “too risky”), has recently filed for bankruptcy.

Aside from the financial problems and the high cost of thermal solar, there is also the environmental cost. Assuming that all goes to plan, thermal solar’s high cost also means it is a very poor way to reduce carbon emissions. For example, the Abengoa Solar Solana project is projected to reduce 544,000 tons of carbon emissions per year. Over a 25-year lifespan of the project, the cost per ton of CO2 reduced would be about $125. Compare that to the cost per metric ton in Europe of about $20 over the last few years, or the projected $30 per ton cost under the upcoming cap and trade system in California. Put simply, in the best circumstance, we’re paying the cost of four or five tons of carbon reduction but only getting the reduction of one ton. The SolarReserve project would spent more than $100 per ton of CO2 reduced.

The high cost and low environmental benefit are two reasons thermal solar projects are on shaky ground. The fact that both BrightSource and Solar Trust have both hit financial difficulties is a testament to those problems.

One could say that given the large sums of taxpayer dollars involved in these projects, thermal solar could end up being an even larger financial mess than Solyndra. It would be more appropriate, however, to say that even if these projects work as promised, the high cost to produce small amounts of environmental benefit mean they are guaranteed to be a significant environmental mess.

Comments (8)

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  1. It would be interesting to know if these companies doing thermal solar projects with taxpayer money are owned and or run by major Obama fund raisers as was the case with Solyndra.

  2. Virginia says:

    You would think thermal solar power would be a slam dunk in Texas given our hot summers!

  3. Robs says:

    Thermal solar was ~50% cheaper then solar PV a few years ago, the reason for the current situation is that solar pv has fallen in cost by ~70% over that time so that now PV is cheaper, a trend which is increasing. The only thng your article proves is the massive and rapid fall in costs that are occurring with PV panels.

    • Todd Myers says:

      Actually you left out another key factor: the projected cost of thermal solar actually went up. In the energy outlook released in December of 2008, the cost of thermal solar was projected to be $263 per MWh. Today the projected cost is 312.20.

      Remember also that these loan guarantees were finalized in 2011, not 2009. The uncertainty was clear by then.

      This is the problem with putting taxpayer dollars behind politically determined technologies. Projections change, technologies fail and taxpayers are left holding the bag. There are always excuses about why the investment seemed like a good idea at the time, but there is a reason investors seek taxpayer subsidies: private investors won’t take the risk. If people won’t risk their own money, why should politicians risk ours?

      • Robs says:

        Because there are externalities involved that may make it worthwhile on the balance of considerations to the community enough to warrant public support. Obviously a company looking at a project isn’t all that concerned with externalities unless they are so overwhelming as to affect the companies social licence, they are called externalities because they are not born by the people directly involved. I am not a big fan of significant government interventions but I think there are times where there are benefits to the community in a new technology such that cautious use of public funding to help it over an investment hump is appropriate. I think they are much better if given to end users installing a range of technologies because then it allows the market to pick winners rather than the government picking them, it also means the investment goes towards actual installations rather than being swallowed up in administration and innefficiency.

      • Robs says:

        I’d also point out that inflation would raise the 2008 $263 to $285 in 2012, so $312 is only a 9% change from expectation, well within a reasonable margin of error for early cost projections.

        • Todd Myers says:

          Well, considering that virtually all other technologies fell in price, saying thermal’s increase is only small still makes it the worst performing renewable.

  4. Zac says:

    You have serious problems with the facts

    I can quote you solar thermal right now that costs about the same now and less over time than just getting a standard instant hot water system.

    I can quote you the same number of panels in PV and cost you approximately 50% more. I work in the industry I do it all day your horribly wrong Rob.

    Solar Thermal is a slam dunk, anywhere. Go heat a pool a better way…. I dare you. try it. call someone up and say heat my pool. get a price. call your solar guy and say heat my pool. BAM, instant no brainer. Maybe…. Maybe I’m in a better situation because I am in North Carolina. However, you can depreciate the system, get your tax breaks and achieve an ROI higher than any bank, stock market fund or other standard investment.

    In addition, you will be spending less of the taxpayer cash than if you just kept cranking up the coal fired power. Don’t believe me? go read Tom’s earlier article on subsidies and actually read the document he is using as his “source” and it straight up shows you that solar takes less of your taxpayer dollars than coal despite saying the exact opposite in his article.

    What you should be doing is lining the tops of gas stations with solar panels to try and keep the cost of gas down by eliminating the overhead costs.

    Once again. I am out here in the world, not sitting in a think tank, I do this for a living I see the results it is completely the opposite of this article.

    The solar industry is growing at 33% a quarter according to Bloomberg News *real reporters* the reason is…… it makes sense anyone who actually runs the numbers would want to do it. I’m a conservative and this diatribe does our whole country a disservice. Buffet is doing it, Google is doing it. It makes business sense.

    Get rid of my state-run power monopoly hiking up the power 15% a year and then talk to me about something other than solar. I am going to independent of their BS and saving money doing it. If this really is a free-market think tank you should be behind getting off the grid and controlling your own destiny as much as possible not trying to twist the facts to keep the government-run monopolies in power.

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