Get Smart about Energy™

It is not that easy to understand the practical effects of our Federal and State energy subsidies.

We encourage readers to take a look at this article published by The New York Times - A Gold Rush of Subsidies in Clean Energy Search - to understand how large businesses are taking advantage of our green energy initiatives, in particular building solar farms in California.

I am going refrain from commenting about the role of government here - in practise energy is a regulated business, and the lines between Federal Stimulus, State Stimulus, Utilities, PG&E, NRG, tax payers and public shareholders are blurred indeed.

Here are some exerpts and links from the article:

Halfway between Los Angeles and San Francisco, on a former cattle ranch and gypsum mine, NRG Energy is building an engineering marvel: a compound of nearly a million solar panels that will produce enough electricity to power about 100,000 homes.

Taxpayers and ratepayers are providing subsidies worth almost as much as the entire $1.6 billion cost of the project. Similar subsidy packages have been given to 15 other solar- and wind-power electric plants since 2009.

As NRG’s chief executive, David W. Crane, put it to Wall Street analysts early this year, the government’s largess was a once-in-a-generation opportunity, and “we intend to do as much of this business as we can get our hands on.”

States like California sweetened the pot by offering their own tax breaks and by approving long-term power-purchase contracts that, while promoting clean energy, will also require ratepayers to pay billions of dollars more for electricity for as long as two decades.

“Subsidies and government support have been part of many key industries in U.S. history — railroads, oil, gas and coal, aviation,” said Damien LaVera, an Energy Department spokesman.

NRG’s California Valley Solar Ranch project is a case study in the banquet of government subsidies available to the owners of a renewable-energy plant.

Assisted by another state law, which mandates that California utilities buy 33 percent of their power from clean-energy sources by 2020, the project’s developers struck lucrative contracts with the local utility, Pacific Gas & Electric, to buy the plant’s power for 25 years. 

At the time the contract was awarded, that was about 50 percent more than the expected market cost of electricity in California from a newly built gas-powered plant, state officials said.

 

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