The huge collecting solar power plant in the California desert near the Nevada border, Ivanpah Solar Electric Generating System, is in distress as an energy producer and as a business deal.
Output in the first eight months of operation is about one-third of what was expected.
Project negotiated a delay of its first two loan payments and is requesting federal grants to pick up the tab for those payments plus one more.
In the accounting world when a borrower doesn’t make payments in accordance with the original loan agreement it is called a troubled debt restructuring. In finance that is called a workout. In banking that is an impaired loan. In politics and the media world we call that a bailout.
9/23 – Wall Street Journal – Ivanpah Solar Project Owners Delay Repaying Loans, Documents Say – NRG, Google, BrightSource Said to Delay Paying Back Loans – Project was built with a $1.6B guaranteed loan as part of the total reported price tag of $2.2B.
Article says the first payment of $132M was postponed until 2/15. The second payment of $159M was postponed from 6/14 to 12/14. A third payment was due two weeks ago; don’t know if that was paid on time.
Amazingly, Ivanpah has applied for a $539M cash grant from Treasury Department to cover the first three payments. That would cover about one-third of the loan.
Ivanpah is owned by NRG Energy, Google, and BrightSource. The following Breaking Energy story says BrightSource owns 20%, NRG 50%, and Google 30%.
In the banking world, renegotiating your first three loan payments would be a sign of severe financial distress. If this was a residential real estate loan, the lender would initiate a first payment default review.
10/30 – ReWire – Controversial Solar Plant Producing Way Less Power Than Expected – The U.S. IEA calculates the Ivanpah facility generated a small portion of its rated capacity of electricity from January through August 2014. Mr. Clarke calculates that the output was probably just over half its expected capacity in September and October. Mechanical problems and not as much sun as expected are the two cited causes. One wag reminded us that California is in a drought – that means we have had less rain (and less rain clouds) than usual.
Remember, intermittency is a feature of wind and solar power. Even though it is also a catastrophic fail for both industries, keep in mind that intermittency is still a foundational feature.
10/29 – Breaking Energy – At Ivanpah Solar Power Plant, Energy Production Falling Well Short of Expectations – Output in 8 months was 254.3K MWh. Expected annual output is over a million megawatt hours per DOE expectation, specifically 1.065M MWh. On a straight-line basis, that is 36% of expected production (254.3K MWh / 8 x 12 / 1,065K MWh = 35.8%).
Rated capacity of the plant is 392 megawatts. Rated capacity per year would then be 392MW x 24 hr/day x 365 dy/yr = 3,433,920 MWh. Round that to 3.4M MWh. Thus the expected output of 1.065M MWh is 31% of the potential output.
Thirty-one percent efficiency. Look at that another way – 31% is roughly equivalent to 100% capacity for 7.4 hours a day and zero for the remainder of the day.
Earlier this year, Ivanpah got permission to use a lot more natural gas to generate steam, which generates electricity, than the original permits allowed. This article provides context – Ivanpah has permission to use up to 1,575 million cubic feet of gas, or 1.6 billion cubic feet. The article says that a natural gas plant would expect to produce 200,000 MWh with that amount of gas. At maximum usage, that would be 20% of the expected 1M MWh output from Ivanpah.
Let me phrase that differently: Up to 20% of the output from Ivanpah could be from natural gas.
Originally the amount of natural gas used to smooth and facilitate production was limited to 5% of the output generated by solar power. If based on the expected output, that would be roughly equal to 50,000 MWh.
Check out the full article. There is a huge amount of data. I’ll be coming back to this article a lot.