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The Almighty Buck Government Power United States News

Obama Awards Nearly $2 Billion For Solar Power 514

crimeandpunishment writes "President Obama says it's time to heat up solar power, and he's willing to spend a big chunk of federal money to do it. Saturday the president announced the government is giving nearly $2 billion to companies that are building new solar plants in Arizona, Colorado, and Indiana. The president says this will create thousands of jobs and increase our use of renewable energy."
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Obama Awards Nearly $2 Billion For Solar Power

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  • $20,000 per home? (Score:5, Insightful)

    by freshfromthevat ( 135461 ) on Saturday July 03, 2010 @10:22AM (#32785568) Homepage

    Abengoa Solar, a unit of the Seville, Spain-based engineering company, will receive a $1.45 billion loan guarantee to build a solar-power plant in Arizona that will create 1,600 construction jobs and 85 permanent jobs, according to White House documents released in conjunction with Obama’s address.
    The power plant will be the first of its kind in the U.S. and generate enough energy to power 70,000 homes, Obama said.

    1.45billion to power 70,000 homes.
    That's $20,000 per home?

    • by stomv ( 80392 ) on Saturday July 03, 2010 @10:37AM (#32785646) Homepage

      What is the total cost of install and operation for 50 years for the solar project? What is it for a nuclear plant? A coal fired plant? The solar power plant likely has a higher construction and installation cost, but it likely has a lower operating cost.

      I don't know the answers to the questions I'm raising -- but I do think that simply asking "That's $20,000 per home?" isn't the question which yields the most useful answer.

      P.S. It's a loan guarantee. $1.45B is the upper limit on how much it will cost the taxpayers. The lower limit is $0.

      • P.S. It's a loan guarantee. $1.45B is the upper limit on how much it will cost the taxpayers. The lower limit is $0.

        It really doesn't take a genius to accurately predict how much it is actually going to cost.

      • by skids ( 119237 )

        Shush. Don't rain on their parade. They want to believe it's a gross injustice. Logic just gets in the way.

      • by je ne sais quoi ( 987177 ) on Saturday July 03, 2010 @11:46AM (#32786144)

        What is the total cost of install and operation for 50 years for the solar project? What is it for a nuclear plant? A coal fired plant?

        Estimates vary widely, depending on who you ask and who is paying those people to give that answer. With nuclear it depends on if you count that you have to monitor the waste for 1 million years or if you just dump it in a hole and forget about it. Most people assume you can forget about it, or reprocess it later to recoup some of your costs.Here's one estimate [sourcewatch.org]:

        Cost in cents per khw

        * Gas peaking: 22.1 - 33.4
        * IGCC: 10.4 - 13.4
        * Nuclear: 9.8 - 12.6
        * Advanced supercritical coal: 7.4 - 13.5 (high end includes 90% carbon capture and storage)
        * Gas combined cycle: 7.3 - 10.0
        * Solar PV (crystalline): 10.9 - 15.4
        * Fuel cell: 11.5 - 12.5
        * Solar PV (thin film): 9.6 - 12.4
        * Solar thermal: 9.0 - 14.5 (low end is solar tower; high end is solar trough)
        * Biomass direct: 5.0 - 9.4
        * Landfill gas: 5.0 - 8.1
        * Wind: 4.4 - 9.1
        * Geothermal: 4.2 - 6.9
        * Biomass cofiring: 0.3 - 3.7

        The cheap price for coal and gas may or may not count the cost of dealing with they myriad environmental and health problems associated with them, such as acid rain, mercury contamination, coal miner occupational hazards (~120,000 coal miners have died on the job since 1850), global warming and associated climate change, water quality degradation due to mountaintop removal, wars in foreign countries to protect oil interests (Iraq, Niger delta), etc. etc. etc. Contrast that to solar power where the only point that real environmental degradation is being done is during the synthesis of the cells (and recycling at EOL) rather than over the entire lifespan as in coal.

        The answer here seems to be that solar is more expensive up front, but should benefit society because of the lower environmental and health concerns associated with it. Note that this makes fiscal sense for the federal government to make these loans because more often than not, it is the taxpayer who pays for the clean up of environmental damage or health risks, not the power company.

    • That's right, energy costs money! For example, a single automobile that lasts 150,000 miles and gets 20 mpg of $3 gas will cost $22,500 over its lifetime.
    • by Ecuador ( 740021 )

      The solar power plant does not cost much to run, so almost all of the energy cost is the installation. So that is $20000/home for many years of power, plus the jobs...

    • Re: (Score:3, Interesting)

      Erm... you and title = fail.

      How the hell is a LOAN = "gives money to" ?

      The bank loaned me half-a-million to buy my house, they sure as hell didn't GIVE me half a million and if I don't make my payments on that loan you can bet your short-and-curly's they'll take my house.

      Government loans to help large projects with long-term profitability get founded is not unusual in the world and has on many occasions been critical to getting projects done. Corporations have a massive problem justifying a short-term larg

    • by RingDev ( 879105 ) on Saturday July 03, 2010 @10:57AM (#32785800) Homepage Journal

      1.45 billion is a LOAN. If the Spanish company takes the money and runs, the feds are on the hook for it. If they take the money and default after they complete the project, the feds are on the hook for the money, but we get the project. If they don't default, the feds are on the hook for $0.

      The 1.45 billion is not part of the budget, it is not being paid by tax payers at this point, it is a loan from a bank (not the feds) that the feds are insuring.

      Increased power consumption is a fact of life in the US today. You can either invest in Nuclear (assuming you could get it okayed) for $3-5 billion; a coal solar park for $1.45 billion; or a coal plant for about $1 billion even. In any case, the feds are going to have their ass on the line for the project, and IMO, increasing the risk by 450 million is well worth it for not having to deal with the ramifications of yet more coal plants.


    • Re: (Score:2, Informative)

      by gorgonite ( 79857 )
      yes, and at an interest rate of 3% (lets just assume that, we have a low risk loan here) that's $50 per month and home. That's still a large number, but if you add the other positive effects like job creation and technology build-up this not a "drunken sailor" invest. Just as a remainder: Iraq and Guantanamo for example, these are drunken sailor activities.
    • It's a $1.45B LOAN GUARANTEE, not cash money. Unless they default on the loan it only costs imaginary money.

  • Good: I'm in favour of vastly increasing the proportion of solar in the energy mix.



    • by bondsbw ( 888959 )

      I am too, but 70,000 homes is not "vastly increasing" anything.

      And why isn't the government paying my electric bill? I don't live in any of those states.

      • Re: (Score:3, Insightful)

        by Vinegar Joe ( 998110 )

        And why isn't the government paying my electric bill? I don't live in any of those states.

        Who did your state vote for in the 2008 election?

  • What a mistake (Score:5, Interesting)

    by WindBourne ( 631190 ) on Saturday July 03, 2010 @10:41AM (#32785672) Journal
    The 2 billion SHOULD HAVE GONE TO GEO-THERMAL AND SOLAR THERMAL. Look, one of the smartest things that Obama can do is to increase AE, as well as push for electric cars. That is good. The problem is that AE, in wind and solar PV, already has massive backing. OTH, Solar Thermal has some real potential. In particular, collectors should be added to thermal systems. That would allow these to be used 100% for dropping the use of coal/natural gas. OTH, when building a new solar thermal plant, half to 2/3 of the collectors are used for during none sun times. But that adds a lot of expense to solar thermal.

    Likewise, Geothermal has minor amounts of funds. Yet, we are on the edge really getting it cheap. Why? Potter drilling and Foro Energy. Both are working on spallation approaches to drilling (hydro and laser). In addition, there is a REAL simple and relatively inexpensive way to get to geo-thermal. Basically create tax breaks, or even subsidies, to continue drilling down on dry wells. Many wells are exploratory and will be dry wells. These are typically at around 8-10K feet. But, we offer up breaks/subsidies to continue down to hot areas so that the well is not a total bust for the drilling company. Most of the Geo-thermal area is around 12-16K. That is expensive if you are starting from the surface. But if you are starting from a well at 5-10K, then it is relatively cheap. And from the drilling companies POV, they would very much like to make money in places that they drill. If they can not have oil/natural gas, they will be excited to have 10-50 MW geo-thermal power.
    • Government cann't just throw money at an idea - there needs to be an offer, a company that has the base work and created a viable design and a business plan. It would also be good to have a pilot in place and working. So - go fund a company, get some VC funding, get smart people together, make a design, a business plan and a pilot and THEN go to both banks and government and VCs for the big lump sums for the actual construction funding. That is what the solar companies did.

  • Loan vs. Grants. (Score:5, Informative)

    by WindBourne ( 631190 ) on Saturday July 03, 2010 @10:49AM (#32785730) Journal
    These are loans, not give away money. I am fine with that. Obama's 1'st years and W' 8 years did trillions of give away dollars all based on deficits. This is the feds lending the money at a low rate. The 2 billion loan will probably cost us around 100 million long-term. In fact, the smartest thing that Obama/congress can do is to lend the money to state and local entities to build out projects. Had they done that originally, then we would have a pretty low debt down the road (though with the potential to have much higher).
    • If I understand how this works (this is similar to federally backed student loans and small business loans I'm assuming), I'm okay with offering a company loan backing (though I'm not okay with the misleading title). But, aren't there U.S. companies that can do this kind of work? Using Abengoa as a consultant would be fine--you know, teach a man to fish and all that--but to build the plants? Are they required to use Abound as the panel provider? And when the plants are built, who owns and runs those plants?
  • ... but can we spare a couple hundred mil for a real [energyfromthorium.com] alternative?

  • by Chakra5 ( 1417951 ) on Saturday July 03, 2010 @11:21AM (#32786004)
    Folks are making points about the money spent, or loaned actually, but what is saved is just as valuable. Less $ on oil wars, oil cleanup, medical costs associated with pollution, retraining for lost jobs due to spills ruining livelihoods. And then there's the savings that are less about money but perhaps even more important. Like fewer fouled beaches, saved species, oh and that global climate change thing. The calculations for this kind of investment really need to be more wise and less driven by simpleminded ideology if you ask me.
  • Jobs created? (Score:5, Interesting)

    by Krahar ( 1655029 ) on Saturday July 03, 2010 @11:23AM (#32786006)
    I'm always puzzled at this notion that if you allocate money to some project, and as a result that project hires somebody to do a job, then you've created a job. I suppose it is true if we compare what you've done to keeping that money in a mattress. However, if you put it in a bank then the bank is going to invest the money which will move that money into the hands of someone who is doing something with it. That "doing something" is likely going to entail hiring someone at some point. So it mostly doesn't matter how you allocate money: it's mostly always going to create jobs. The government is taking money from people through taxes, thereby preventing those people who originally held the money from putting that money somewhere where it could create jobs - like putting it in the bank, investing it or perhaps just buying sodas. So the government doesn't directly create jobs by allocating money to a project, since jobs would have been there anyway by not collecting that money through taxes in the first place.

    Now the economy is not a zero sum game, so it may still sometimes be a good idea to have the government redistribute money to projects that will benefit the country or humankind in the long term, e.g. where those projects wouldn't obtain funding otherwise because the benefits of the project are external and won't be enjoyed directly by the person undertaking the project. Perhaps this project will do that, and perhaps in benefiting us all it will even indirectly create many more jobs than those that are directly necessary for carrying out the project. What I'm puzzled by is just the idea that the direct employees of the project represent "jobs created" when a similar number of jobs would likely exist anyway if the project never existed. I guess the most you can say is that jobs have been created in one state/town/place by removing a similar number of jobs from other states/towns/places, and that is a benefit to the place that is receiving those jobs. So a politician presenting such a project will want to focus on the benefit of jobs created in one place and downplay the harm of removing those jobs elsewhere.
    • Re: (Score:3, Informative)

      by dachshund ( 300733 )

      However, if you put it in a bank then the bank is going to invest the money which will move that money into the hands of someone who is doing something with it. That "doing something" is likely going to entail hiring someone at some point.

      In 2010 the bank is going to loan it right back to the Treasury, since institutions currently perceive private investments to be too risky. Aren't you aware that we're experiencing terrifically low rates of private investment and a historically low rate of return on US go

Research is what I'm doing when I don't know what I'm doing. -- Wernher von Braun