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Solar circa 1994: What Has Really Changed? (Remembering Enron’s hoodwink in the age of Solyndra)

[This post reproduces a front-page story in the New York Times business section that excitedly reported a breakthrough with solar energy as represented by a heady energy company named Enron. Formed in the mid-1980s, Enron had just entered into the solar business and was destined to revitalize--if not save--the U.S. wind industry just a few years later.]

“Federal officials, aware that solar power breakthroughs have shined and faded almost as often as the sun, say the Enron project could introduce commercially competitive technology without expensive Government aid.”

Allen Myerson, Solar Power, for Earthly Prices, New York Times, November 15, 1994.

The nation’s largest natural gas company is betting $150 million that it can succeed where the Government has so far failed: producing solar power at rates competitive with those of energy generated from oil, gas and coal.

The Enron Corporation plans to build a plant in the southern Nevada desert that would be the largest operation in the country making electricity directly from sunlight, producing enough to power a city of 100,000 people. It is expected to begin operating in late 1996.

Grand promises in the late 1970′s about the potential of virtually pollution-free, endlessly renewable energy sources like solar energy faded into an embarrassed hush. But several of the nation’s leading solar power experts say Enron’s optimistic goal is probably reachable.

The reason is that during the last decade, the cost of solar power generation has quietly declined by two-thirds. Far from depending on some wondrous breakthrough, the experts say, Enron can offer commercially competitive solar power by inexpensively mass-producing solar panels, and then employing thousands of them in the Nevada desert.

Even the most optimistic supporters of solar power have doubted that they would see commercially competitive production until the next century. The Worldwatch Institute, an environmental group in Washington, said earlier this year that solar cell electricity, now as low as 20 cents a kilowatt-hour, might reach 10 cents by 2000 and 4 cents by 2020.

Yet Enron is pledging to deliver the electricity at 5.5 cents a kilowatt- hour in about two years. That would beat the average cost of 5.8 cents currently paid by the Government for the electricity it uses. The national average retail price is 8 cents.

Several legal and political obstacles remain, and for competitive reasons Enron will describe its technology only in general terms. But solar energy researchers who had consulted with Enron were willing to elaborate on the available technology and the financial calculus.

Enron’s 100-megawatt plant would be more than a dozen times the size of any other that employs photovoltaic, or solar power, cells, which use the energy in sunlight to shake electrons loose from molecules of silicon or other substances. Size is key, according to Sigurd Wagner, a professor of electrical engineering at Princeton University.

“If a good group of people puts a plant of that scale in, it will have a real consequence on costs,” he said. “It’s not going to go down by just a little bit, but by a factor of two.”

To reduce the price further, the company is counting on available tax breaks and inexpensive financing.

As for whether Enron’s goals are realistic, Professor Wagner said, “They’re pushing it, but they’re not far off.”

The company, based in Houston, has already won preliminary backing from the Department of Energy, which tentatively plans to buy Enron’s solar power as long as the rate is truly competitive with the power from conventional sources.

“I’m confident we can make some commitment for a Federal entity to purchase or at least broker some purchase of solar power,” said William H. White, the Deputy Secretary of Energy.

Government officials say Enron’s success will encourage the spread of solar power generation here and abroad.

“If they can do this, they’re going to have lots of business,” said Tony Catalano, director of the Energy Department’s photovoltaic division. “This is going to be very competitive in the U.S. and lots of other places in the world.”

Enron has asked the Government to buy or guarantee a market for its power, with annual increases of 3 percent, for 30 years. It also depends on leasing Government land, receiving Federal tax benefits for renewable energy and financing construction with tax-free industrial development bonds.

Mr. White proposes having the department’s Western Area Power Administration, whose grid connects Hoover Dam and other projects with large public power authorities, buy the power generated by the solar plant. That power would only be available in daylight hours, which are also the hours of peak demand, especially for air-conditioning.

Previous efforts to promote solar power as a clean alternative to fossil fuels have foundered, despite the Government’s spending of hundreds of millions of dollars on solar research. Solar power has remained too expensive, while fossil fuel prices have declined.

While solar cells can economically provide the tiny charges needed by watches and pocket calculators, their larger applications are mostly in remote places beyond the reach of the world’s power grids.

Federal officials, aware that solar power breakthroughs have shined and faded almost as often as the sun, say the Enron project could introduce commercially competitive technology without expensive Government aid.

“This establishes the benchmark we want and restarts a stalled solar industry,’ said Robert H. Annan, the solar energy director in the Department of Energy.

In fact, the solar industry has already grown, with the shipments of solar cells up more than tenfold since 1980, as repeated technological advances have lowered their cost.

Even after Federal officials agree to buy solar power, they will have to formally solicit bids to see if anyone can beat Enron’s offer. Among more than 30 informal proposals so far, no one has.

Enron’s chief strategy officer, Robert C. Kelly, says that producing solar power follows from Enron’s generation of electricity from natural gas, a cleaner fuel than coal or oil. But Enron will not be running a charity. Asked how soon solar power could generate earnings, he said: “Now. We’re a very impatient company in terms of profits.”

Limited production of solar power cells at an adjacent factory, to be run by a partner whom Mr. Kelly would not identify, will keep the $150 million power plant from reaching its full capacity for about a decade.

The necessary technology is on display in Mr. Kelly’s office, where a square glass panel about the size of an art book, its surface shimmering with metallic greens, blues and violets, rests on a gleaming steel rack. He is cautious about saying anything more than that the panel was produced by another company and used what people in the business called a thin-film design.

Silicon has been the film of choice, but several companies are achieving much higher efficiencies, and lower costs, with other substances or more than one silicon layer. A partnership between Energy Conversion Devices Inc. of Troy, Mich., and the Canon electronics company of Japan plans to open the world’s largest thin-film solar cell plant in Newport News, Va., next year. Their cells will have two layers of silicon and one of germanium. The Enron and Canon ventures together would double the nation’s output of solar cells.

Zoltan J. Kiss, the founder of Energy Photovoltaics Inc. of Princeton, N.J., said he had been negotiating with Enron about the production of copper indium diselenide cells, which he said had triple the efficiency of single-layer silicon cells.

Enron, which has built one of the world’s largest gas-fired power plants in Britain, says it can also realize economies in the rest of the solar power plant’s design.

Paul Maycock, a leading solar energy consultant, said a few of the solar cell technologies he had evaluated for Enron could achieve the company’s goals, but only with sufficient production.

“Yes, it can be done,” he said. “It’s the dream we’ve all had: that someone would take the risk of building a very large factory.”

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13 comments

1 Alex Epstein { 09.20.11 at 1:52 am }

As always, history is a great teacher. Journalists should read the back issues of their own publications.

2 john { 09.20.11 at 11:28 am }

Nice one and the wind article is something I personally remember very well. Over the weekend I could not access masterresource and wonder if it was a technical glitch or hackers? In the meantime this site seems to have gone down.

http://www.cohoctonwindwatch.blogspot.com/

3 Rob Bradley { 09.20.11 at 11:39 am }

John:

MasterResource was down during the weekend, and we have tried to get the lost material from Friday back up. Sorry for the inconvenience!

4 john { 09.20.11 at 12:41 pm }

From late last year.

Congress Votes to Extend Tax Grants for Solar and Wind Energy

http://blog.greenpointpartners.com/green-energy/renewable-energy-green-energy/congress-votes-to-extend-tax-grants-for-solar-and-wind-energy/

This Wednesday the Wall Street Journal reports that the U.S. Senate passed a one-year extension of the Department of Treasury Section 1603 tax grant as part of the tax bill compromise. Senators Cantwell, Feinstein, Ensign and LeMieux pushed to extend the grant program, which hopes to stimulate growth in the solar industry in the last year.

5 Ray { 09.20.11 at 12:43 pm }

“As always, history is a great teacher.” People at DOE obviously don’t study history or they believe in miracles. Solyndra demonstrates why you don’t want the government trying to pick winners.

6 Kermit { 09.20.11 at 1:19 pm }

It seems like this project was only to get a foot in the door of the Federalies’ (thus our) pocketbooks.

“Enron has asked the Government to buy or guarantee a market for its power, with annual increases of 3 percent, for 30 years. It also depends on leasing Government land, receiving Federal tax benefits for renewable energy and financing construction with tax-free industrial development bonds. “

7 john { 09.20.11 at 3:22 pm }
8 Trey { 09.20.11 at 8:11 pm }

Did the plant in the southern Nevada desert ever get built?

[RLB: No, it did not. Government chickened out at one or more levels, it appears.]

9 john { 09.21.11 at 10:21 am }
10 Michael Lynch { 09.23.11 at 6:56 am }

Tsk, tsk, if we just pour enough money into the hole, it will fill up sooner or later!

11 john { 09.23.11 at 6:30 pm }
12 john { 09.24.11 at 9:29 am }

The House passed CR 2012 (Continuing Resolution 2012) before going home to their districts for a week.

This latest CR is needed to fund the government until November 18.

On Friday (Sep 23) the Senate voted NO complaining the bill took DOE loan guarantee money to fund FEMA disaster relief. DOE loans guarantee Solyndra and your local wind projects.

WHAT DOES THIS MEAN

The Senate’s ‘NO VOTE’ WAS NOT ABOUT DISASTER RELIEF

The Senate’s ‘NO VOTE’ WAS ABOUT KEEPING DOE’s LOAN GUARANTEE PROGRAM FUNDED

– even after the SOLYNDRA debacle –

From: Cohocton Wind Watch

13 john { 09.25.11 at 11:21 pm }

Merger may impact nation’s first offshore wind farm

http://bangordailynews.com/2011/09/25/business/merger-may-impact-nation%e2%80%99s-first-offshore-wind-farm/

[snip]

A pending merger between NStar and Northeast Utilities has become a possible pressure point to get NStar to buy Cape Wind power.

Since the merger was announced last year, regulators added a requirement that such deals must advance the state’s clean energy goals, which include developing offshore wind. The state also made a request, still pending, to stay proceedings for a review of the merger’s effect on rates — a lengthy process that could lead to a merger-killing delay.

The moves are obvious attempts to pressure NStar to buy power from a favored private developer, said Republican state Rep. Brad Jones, minority leader in the Massachusetts House.

“[It’s] the great administration shakedown of NStar,” he said.

In The Wall Street Journal, environmental attorney Robert F. Kennedy Jr. accused Gov. Deval Patrick’s administration of “trying to hold hostage the proposed NStar-Northeast Utilities merger unless the two electric companies agree to buy Cape Wind’s power.” ….

…….No other state utility has since signed on, and NStar is the only one large enough to buy a significant chunk of Cape Wind’s output.

Without committed buyers for all its power, Cape Wind is unlikely to find financing for the full $2.6 billion project, which it plans to begin operating in 2013.

It could try to move a smaller project forward. But if Cape Wind builds 110 turbines or fewer, National Grid must pay more for the power, according to its contract.

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