Tuesday, July 22, 2008

Mysterious cheap electricity generated in Nevada

There is a strange violation of economics going on on the Nellis Solar Power Plant wikipedia page. It asserts that the US air force are paying 2.2 c per kWh for electricity from a solar PV farm that happens to be on their land. This sounds far too cheap. The article says the '14MW' farm cost $100M to build (that's 7 dollars per watt, peak) and will generate 25M kWh per year. That means it will generate an income of $0.55M per year for the owners of the farm (who paid $100M, remember). That corresponds to a pay-back time of 180 years. So what's going on? Is it a strange Nevada phenomenon? Did aliens subsidise the farm? Or did wikipedia get the numbers wrong?


Patrick said...

if the difference of 6.88 cents saves the Air Force a million dollars, then the Air Force is only buying about 15M Kwh from them, leaving the utility about 10M+ Kwh/yr to resell at 9 cents/Kwh.

The value of the electricity generated might actually be higher if they can get a 'green' premium for it. Or they may expect the price of electricity to rise

MaysonicWrites said...

The owner of the plant(MMA) is also selling the "green credits" to Nevada Power for an undisclosed(as far as I could see) amount. Nevada Power is required by state law to produce a certain percentage of renewable energy.

MaysonicWrites said...

Note: there are also 30% federal tax credits involved.

Patrick said...

per wikipedia green credits went from $0.005 to $0.09 per Kwh in 2006 (after adjusting the units).

At the higher end of the price spectrum, and assuming that electricity prices will rise (to pay for the cost of green credits if nothing else), this project starts to make sense (cost paid off within the useful lifetime of its solar panels)

Also, based on sunpower's claim that it needs 1.8-2.4 Hectares per megawatt, it looks as if they are 'leasing' more land than they need, and have the room to install 50-100% more panels if economic conditions warrant.

Bill said...

It also says that, as part of the deal, the company "is leasing the land [from the Air Force] at no cost"; I don't know what it would have cost to lease an equivalent plot, but that's part of the payment the company is getting from the Air Force.

MaysonicWrites said...

Yeah - the fact that the "land" is clay-capped landfill, which couldn't be used for anything for surface construcion without extensive cleanup, was a big factor

paul said...

Dear David,
Perhaps we could all look at long last at:
Hydrogen Power Stations.
The only place on the web that
I know exists is:


Is Cambridge lagging behind the USA?
Are there any other Hydrogen Scientists?
Paul Coxon

Richard said...

Paul, the UK patent office refused black light's patent application because their technology is widely regarded as false.


It might be interesting to find a physical explaination of their observations, eg. if two hydrogen atoms make a 2p->1s transition whilst they are within an optical wavelength of each other (subject to a constraint on angular momentum), the atoms can decay coherently to produce a single photon of high energy, rather than two photons of the "usual" energy.

The high energy photon is detected by "black light" and incorrectly attributed as evidence of a new state of matter.

Wookey said...

Actually the patent office doesn;t care whether a technology works or not - that is not its remit (there are patents for Faster-than-light travel engines and perpetual motion machines on the books).

This patent was refused on the grounds of it being 'excluded matter' - i.e. not something that qualifies for a patent, such as a scientific discovery or a computer program (the patent appears to be some combination of these).

Al said...

According to the Air Force Times (http://www.airforcetimes.com/news/2007/11/airforce_nellis_solar_071119w/, also referenced in the Wiki article), the Air Force is definitely only paying 2.2 cents per kilowatt-hour, so no error in Wiki there.

As for the business case: if MMA can fully use the 30% tax credit, their net investment drops to $70m. Selling the renewable energy credits to Nevada Power yields another $2.25 million/year. If Patrick's estimates hold true, then electricity sales provide another $2.6 m/year.

Net return (on the $70m) is about 5%, without taking into account any other subsidies that may apply. (Payback is therefore in about 20 years).