1 Massive Solar Facility That's Too Big to Ignore

The Ivanpah solar power complex is up and running; it's so big you can see it from outer space!

Mar 4, 2014 at 11:14AM

Using solar power to generate electricity is a hot topic. However, it has some major limitations today, including the fact that solar only works while the sun shines. But that isn't the only issue, and the recently completed Ivanpah power plant shows just how big the other problems are.

A consortium effort
Ivanpah is a massive solar project backed by NRG Energy (NYSE:NRG), Google (NASDAQ:GOOGL), Bechtel, and BrightSource Energy. It's located in California and can generate about 400 megawatts of power. That's not bad and could easily replace an older coal-fired plant. For comparison, Southern Company's (NYSE:SO) high-tech Kemper coal plant, which is still being built and will feature carbon- capture technology, will produce nearly 600 megawatts.

Forget the obvious difference that Southern's new coal plant is expected to run 24 hours a day, seven days a week (making it a reliable base-load plant) and that Ivanpah will only work while the sun is shining. Clearly using the sun is much more environmentally friendly than burning coal, which is why Google decided to kick in around $170 million for the project. The company is looking to get all of its power from renewable sources. Which pretty much sums up the environmental driving force behind Ivanpah and other solar projects.

The entire project, however, cost $2.2 billion, with a $1.6 billion loan guarantee from the Department of Energy. NRG and Google together dumped nearly half a billion dollars into the project. That's a lot of money for a power plant that generates less power than SolarCity's (NASDAQ:SCTY) collection of rooftop-solar installations.

Although government mandates that utilities buy power from their customers with rooftop solar are supporting SolarCity's model, the company gets much of its funding from investors. It expects to have 500 megawatts of power installed by year-end. And, like it or not, SolarCity's model is scalable, Ivanpah's is not.


It's huge
The Ivanpah installation spans 3,500 acres. That's impressively large. In fact, it's so big that it can supposedly be seen from space. And that's the problem; there are only just so many places where you can put one of those. Although a slight exaggeration, SolarCity can slap a solar panel on any roof top that faces the sun.

The more traditional Kemper facility doesn't take up nearly as much room and can produce about 200 megawatts more power. That said, Southern's cost overruns on the Kemper plant, which is using new technology, are massive and have pushed the bill for the plant well beyond the cost of Ivanpah. So cost is, to some degree, a relative issue.

Size and cost, however, aren't the only problem with the giant Ivanpah facility. You'd expect environmentalists to dislike coal-burning Kemper, but they also tried to stop Ivanpah because its vast size reportedly put a species of tortoise at risk. It's hard not to have some environmental impact when your power plant covers 3,500 acres of land.

Happy buyers
Despite the limitations and problems with Ivanpah, it has two very happy customers: PG&E and Southern California Edison, owned by Edison International (NYSE:EIX). Both would much rather buy power from Ivanpah than have regulators force them to pay for power from their customers' rooftops. That's what's happening, and Edison International estimates that it's paying a $0.20 premium per kilowatt hour for the "privilege."

Solar power clearly has a part to play in the United States' energy future. However, power plants of the size and scale of Ivanpah will be hard to duplicate. Companies like SolarCity may be charting a better path toward solar, assuming solar technology advances enough to reduce or eliminate government-mandated subsidies.

But don't overlook the fact that U.S. Secretary of Energy Ernest Moniz was quick to point out the government's investments and commitment to fossil fuels at the opening of Ivanpah. Solar is a great technology, but it still needs reliable base-load power like Southern's Kemper plant to complement it.

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Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Google, SolarCity, and Southern Company. The Motley Fool owns shares of Google and SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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