PG&E Exits Ivanpah Solar Plant Deal Over High Costs, Low Output
PG&E has decided to withdraw from its offtake agreement with the Ivanpah Solar Power Facility, a $2.2 billion concentrated solar power (CSP) plant that began operation in 2014. The utility giant cited high operating costs and lower-than-expected production as the reasons for its decision.
The Ivanpah plant, which relies on natural gas for operations, has struggled to align with PG&E's goals of decarbonizing the grid. The plant's high operating costs and lower production have made it less cost-effective than other renewable energy sources. Meanwhile, solar and wind energy projects have shown a lower levelized cost of electricity (LCOE) than nearly all fossil fuel projects, even without subsidies. Unsubsidized utility-scale solar ranges from $0.038 to $0.078 per kWh, while natural gas peaker plants range from $0.138 to $0.262 per kWh.
The Ivanpah plant's financing was initially supported by U.S. Department of Energy loan guarantees. However, after the withdrawal of these guarantees, private investors including NRG Energy, Google, and BrightSource Energy took over. Despite this, the plant's costs have remained high, leading to PG&E's withdrawal from the agreement. This decision comes as renewable energy continues to be the most cost-competitive form of generation, with solar photovoltaics (PV) leading in new-build capacity added each year and accounting for over 12% of the total U.S. energy mix. Since 2014, the cost of solar PV has fallen by more than 90%.
PG&E's withdrawal from the Ivanpah plant's offtake agreement highlights the ongoing shift towards more cost-effective renewable energy sources. As solar and wind energy projects continue to decrease in cost, utilities are increasingly turning away from less competitive sources like CSP plants that rely on natural gas. The Ivanpah plant's closure marks a significant step in the transition towards a cleaner, more cost-effective energy grid.
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