California regulators approve generous contract to multinational corporation at California ratepayer expense

Michael Giberson

Discovering that renewable power mandates can be expensive, California-style: “California Approves Solar Contract Despite High Cost“:

Ultimately, the commissioners voted for Abengoa’s contract mainly because Abengoa already has spent five years and $70 million to develop Mojave Solar and has gotten all the permits and financing to start construction. They noted that getting permits and financing are so tough that many other renewable energy projects had floundered as a result.”

This is their reasoning? So the high-cost contract is sort of a bailout for Abengoa because otherwise they’d take a loss?

A few details about the project are included in the California PUC staff’s recommendation to deny PG&E’s request to stick its customers with this bill. The staff concluded: “approving the PPA would have PG&E’s ratepayers incur significantly higher costs than might otherwise be necessary to meet PG&E’s RPS targets. [PG&E’s own assessment] clearly shows that the contract is not competitive.”

Abengoa takes in billions of Euros in revenue every year – we don’t need to feel bad that a project or two they’ve pursued have turned out to be uneconomic. The company doesn’t need charity from California ratepayers.

Solar PV prices are at least temporarily down sharply from a few years back, but the Mojave Solar project is a concentrating solar power (i.e. solar thermal) project. While other solar thermal projects have switched technologies to reduce cost, not Mojave Solar. Many of the CPUC commissioners viewed this additional technological diversity a reason to make consumers pay extra:

“It’s worthwhile to spend a little more on projects like the Mojave Solar so the (state’s) renewable portfolio doesn’t rely heavily on a single technology. In other words it’ll be more balanced,” said Michael Peevey, the commission president who led the effort to approve the Mojave Solar contract.

Every once in a while I think, “Gee, wouldn’t it be nice to find some small California college near the coast to work for?” And then I go spoil the fantasy by reading about California energy policy.

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