"Developers question whether they can finish projects in time to qualify for key federal subsidies. Expiring tax credit may have doomed Palen project."
A rendering of the Palen solar project that was scrapped Sept. 26.
The Obama administration's push for big solar plants and other renewable energy projects on public lands has started to stall as developers question whether they can finish projects in time to qualify for key federal subsidies.
Just days after U.S. Interior Secretary Sally Jewell came to Palm Springs to trumpet the success of these projects in combating climate change, Oakland-based BrightSource Energy abruptly scrapped its plans to build a solar "power tower" project on about six square miles of desert between Indio and Blythe in eastern Riverside County.
The company's Sept. 26 decision was especially surprising because the project was expected to be approved next month by the California Energy Commission.
Joe Desmond, a BrightSource vice president, acknowledged last week that he didn't believe the Palen project, featuring a 750-foot boiler tower heated by mirrors, would be built in time to qualify for a subsidy that would have Uncle Sam pay nearly a third of the cost.
Desmond was referring to a 30 percent tax credit for completed renewable energy projects that's scheduled to drop to just 10 percent Jan. 1, 2017.
Getting the tax credit essentially means getting the financing to build, said Mike Taylor, the research director for the Washington, D.C.-based Solar Electric Power Association.
But now financiers "can't assume the tax credit will be available when the project is done," Taylor said. "They have to assume a worst-case scenario."
Too many things can go wrong for anyone to count on a large-scale solar tower project being built in two years, Taylor said.
Officially, however, BrightSource officials did not blame the subsidy situation for its Palen retreat. The company's official statement said the firm needed to bring forward a different project "that would better meet the needs of the market and energy consumers."
On Monday, company officials declined to discuss the decision.
"We do not have additional comments beyond our statement," said BrightSource spokeswoman Jennifer Rigney in an email.
Taylor, however, said the tax credit is worth hundreds of millions of dollars to Palen Solar Holdings, a partnership consisting of BrightSource and Abengoa Solar in Spain that was formed to build the Palen solar project.
The partnership did not release a cost estimate for the Palen project, but BrightSource's Ivanpah Valley project using similar technology cost about 2.1 billion. That plant, which took about three years to build in eastern San Bernardino County, began operating at the end of 2013.
Sen. Barbara Boxer, D-Calif., heads the Senate's environment and public works committee and staunchly supports extending the renewable energy tax credits. She is backing a Senate bill that would extend the 30 percent tax credit to energy projects that have started construction before the end of 2016.
"Utility-scale developers are already beginning to find it difficult to attract investors willing to invest billions of dollars on projects because of the risk that they will not be completed and placed in service before the end of 2016," said a letter dated March 11 in support of the bill. It was signed by Boxer and 33 other senators, mostly Democrats.
The bill has made it to the Senate's Finance Committee. If it goes further, it is expected to face resistance from several Republicans who have rallied against loan guarantees that have benefited the renewable energy industry.
The Palen project would have put about 85,000 mirrors on the ground to focus heat onto a boiler mounted atop the tower. The boiler heats water to make steam, which then turns a turbine to make electricity.
Construction was expected to employ between 600 and 1,200 people, according to a state Energy Commission statement.
The project faced contentious public hearings because this technology was found to burn and kill birds at the Ivanpah plant. The Palen project also would have raised objections from Native Americans, who consider the site to be sacred.
David Lamfrom, the California Desert Program associate director for the National Parks Conservation Association, opposes the Palen project. He said no more tower projects should be approved until more is learned about how Ivanpah is affecting wildlife and other natural resources.
Source: http://www.pe.com/articles/project-751058-energy-palen.html
