By now it’s no secret that I’m not all in on utility-scale solar installations. But the reasons are not just technical, they are very much political in nature. The more I dig, the more entangled I find the green initiatives with progressive Democrat policies and direction. The president calls this effort the “Green New Scam” and the more I explore utility-scale solar, the more I’m convinced it’s the most egregious political scam in history. This started decades ago with Democrats and the energy crisis in the 70’s under president Jimmy Carter (need I say more), when the Public Utility Regulatory Policies Act (PURPA) was passed. This ACT laid the groundwork for renewable markets, which led to the rise of commercial renewable power generation and the creation Renewable energy Certificates as a means of offsetting power generated with fossil fuels. But since that time, Democrats have elevated the importance of the green economy, creating a Gordian Knot of green energy regulations and policies which are virtually impossible to unravel. At a recent meeting, someone asked in jest, “Where do they get the seeds to plant these solar farms?” My answer was quick and simple, “Democrats!”
The Green New Deal in a Nutshell
In 2019, the Green party came up with an initiative to move the United States to 100% clean energy by 2030. Here is the statement directly from their site:
The Green New Deal will convert the old, gray economy into a new, sustainable economy that is environmentally sound, economically viable and socially responsible. It seeks to solve the climate crisis by combining quick action to get to net- zero greenhouse gas emissions and 100% renewable energy by 2030 along with an “Economic Bill of Rights” – the right to single-payer healthcare, a guaranteed job at a living wage, affordable housing and free college education.
So, while green energy was the preface, here’s the kicker; not only would the initiative implement green energy, but single-payer heath care (i.e Obamacare for all), guaranteed living wage for everyone, affordable housing and free higher level indoctrination, I mean education, for all. But the democrats didn’t count on the electorates overwhelming election of a president that was the nemesis of all the things they wanted to do.
Single-payer healthcare for all: Dead!
Guaranteed living wage for all: Dead!
Affordable housing (the Green Party way): Dead!
Free higher level education: Dead!
Most importantly, the Green New Deal: Dead!
The president called the Green New Deal the “Green New Scam,” and that’s exactly what it was. To solidify his agenda, he appointed a new EPA Administrator who has literally gutted the renewable energy funding for the Green New Scam and eliminated the carbon rule that would have forced everyone to purchase electric vehicles and use green energy. The president pushed the OBBB which was passed into law and eliminated much of the IRA Green New Deal funding. The president also fired progressive members of the Tennessee Valley Authority and appointed new members to the TVA which were ratified by the U.S. Senate. In effect, the old Green New Deal members were purged and new responsible energy members were appointed to replace them. Needless to say, this has far reaching implications with regard to renewable energy in Fayette County.
So Why Is Utility-Scale Solar Still a Thing?
Now, even green advocates like Gill Gates are starting to back off the aggressive Green New Deal agenda. Gates recently called for a different perspective in the approach to climate change:
A doomsday outlook has led the climate community to focus too much on near-term goals to reduce emissions of carbon dioxide and other greenhouse gases that cause warming, diverting resources from the most effective things that can be done to improve life in a warming world – Bill Gates
For once, Gates is right. However, if even the climate activists are backing off the “sky is falling” green agenda, why is there still such an interest in putting utility-scale solar in rural farming areas like Fayette County. To understand the reason utility-scale solar (USS) companies are still so aggressive, we must look behind the curtain to see who is driving the requirement for USS.
Utility-Scale Solar Companies
In Fayette County, there are two predominate solar companies. The first is Silicon Ranch, which buys land on which they install USS. The second is Invenergy, which leases land on which they install USS and BESS. There is a third company, Emeren, but they have been rather quiet with regard to projects in Fayette County as of late. Emeren recently became a wholly owned subsidiary of Shurya Vitra Ltd. and is under the direction of a new interim CEO, Julia Xu. Emeren’s model is to establish a utility-scale solar facility, then sell it to another entity for profit. For various reasons, these companies have chosen different models, but the end goal is to use up as much farm land in Fayette County as they possible can to generate renewable energy.
Large Enterprises
But it’s not just the solar companies that push this agenda. Large enterprises like Google, Amazon, Meta, and General Motors are looking to expand their renewable portfolio. Because Tennessee is conservative and has not implemented RPS, the cost of power as well as the cost of taking credit for renewable energy is much lower.
Google and Meta aim to be net-zero carbon emissions by 2030 and Amazon seeks to do this by 2040. This means the demand for RECs will only increase without regulatory intervention. Many companies still adhere to all or part of the Environmental, Social, and Governance (ESG) policies that require companies to be net-zero by 2050. ESG is another heinous policy fabricated by Democrats. Large ETF companies like BlackRock tried to force these policies on companies with the threat of dumping their stock to achieve compliance. BlackRock has suffered huge backlash due to this policy and has shifted toward transition investing. In other words they’re advocating for climate-related investing but not openly threatening companies who don’t participate. But, don’t be fooled, they still have huge ESG portfolios with companies that are invested in ESG.
The Tennessee Valley Authority
The largest contributor to the renewable energy effort is the Tennessee Valley Authority. The TVA has plans to force the use of green energy on everyone. Hopefully, the new members of the TVA board will curtail this push, but as of this point in time, there are still aggressive goals to move TVA to renewable energy as stated on their website tvasites.com:
TVA has plans to add 10,000 megawatts (MW) of solar by 2035. We’re already part way there, with more than 2,400 MW of in-Valley solar commitments. Companies and Institutions like Facebook, Google, General Motors, Vanderbilt University and Jack Daniel’s have partnered with TVA regarding commitments for nearly $3 billion in solar investments in the Valley.
When you look at this statement, the implication is that deals, such as the 2019 Yum Yum Solar project, are already in the works. If so, can the new TVA board unwind those deals? I certainly hope so, but if there are contracts in place that may be difficult to accomplish. That being the case, we have to assume that a large portion of the utility solar will be implemented. We may also assume, based on the TVA statement of direction, that TVA is all in on renewable power generation which will result in an increase in cost for power. That cost increase will be shifted to the consumer.
Shifting the Cost to Consumers
Real Clear Energy published an in depth analysis of how USS produced power enters the grid and how that cost is offset in the grid. Here is the real story of how utility-scale solar generation works compared to the cost of natural gas generation:
When solar electricity is driven into a local grid, natural gas generation must be reduced to make room for the solar electricity. Reducing natural gas generation will save fuel but it will not save capital cost because the capital cost is sunk and cannot be changed by the grid operator. The fuel cost in a modern combined cycle natural gas plant is approximately $20 per megawatt hour. The cost of the solar electricity is set by contract with the solar developer. Without federal and state subsidies the solar cost would be about $150 per megawatt hour. Because there are subsidies, the utility pays about $40 per megawatt hour, and the remaining $110 per megawatt hour is paid by the taxpayers and electricity consumers that finance the subsidies. The difference between the $40 paid by the utility and the $20 savings from reduced natural gas generation requires an additional subsidy that will be paid in the form of increased electricity rates.
While Real Clear Energy is using a generic example and the average price of renewable energy is actually more than $40 per megawatt, this is how the process works in general. So, without subsidies, grants, low interest loans, and tax credits, utility-scale solar power would not be cost effective. The taxpayers are, in essence, paying for solar power twice. But perhaps it’s not really twice, but three or four times. There are infrastructure subsidies, power generation subsidies, grants, and low (no) cost loans, all are ultimately paid for by the taxpayers. Does anyone remember Solyndra under Obama? That failed boondoggle cost taxpayers more than 450 million dollars.
With TVAs goal of moving to renewable energy, it should be noted that utility-scale solar only produces for a few hours in the middle of the day. Transmission line capacity must be managed by reducing and ramping up power generated using fossil fuels as the USS power generation increases and decreases. This creates a scenario where fossil fuel power generation becomes less profitable because its utilization is reduced during peak hours where prices for power are the highest. USS power production also drives the cost of power higher during peak hours because the lower cost power from fossil fuels is reduced.
Subsidized Trickery at Taxpayer Expense
With solar installations, not only do the solar companies receive federal and state subsidies, grants, investment tax credits, production tax credits, and low-interest loans (like Solyndra, which went bankrupt at the taxpayers’ expense), they also receive rebates, and performance-based payments, all of which help reduce installation costs. But that’s not all; manufacturers who produce products like mounts, fasteners, solar panels, and other equipment domestically also receive some or all of these incentives. The bottom line is that solar companies are able to install these facilities at a fraction of the actual cost. Once these incentives dry up across the board, the cost of utility-scale solar will increase dramatically, particularly for Agrivoltaics, which use special mounting systems that track the sun. But perhaps the most heinous of these subsidies is Renewable Energy Certificates(RECs). The gift that keeps on giving!
Renewable Energy Certificates
Renewable energy would collapse almost overnight if the Public Utility Regulatory Policies Act (PURPA) hadn’t allowed states to create energy markets with things like Renewable Portfolio Standards (RPS) and Clean Energy Standards (CES) which force renewable energy to be installed in those states. 30 states and the District of Columbia have some form of these energy markets with Renewable Portfolio Standards. Many have implemented goals that would force transition to renewable energy by certain percentages within certain time-frames and some will require 100% renewable energy by 2050 or sooner. In the states that have RPS or CES, there are markets for what is called Renewable Energy Certificates (RECs). In these markets, companies compete to buy credit for the any renewable energy that comes online. Currently, the average price for an REC in these markets is $35-$40 per REC or more.
In general an REC represents 1 MW of certified green energy. These RECs can be purchased to offset the use of energy created with fossil fuels. Another way to think of it as taking credit for the production of renewable energy with the purchase of RECs. As I mentioned in Part 1, once power enters the grid, it becomes amorphous with no defined path to any source of renewable energy. When a company, like Google, wants to offset their fossil fuel power use with renewable energy, they purchase RECs for that purpose.
Renewable Energy Certificates, in Tennessee?
Fortunately, Tennessee has not implemented draconian policies like Renewable Portfolio Standards (RPS) or Clean Energy Standards(CES). Since the state doesn’t have Renewable Portfolio Standards, there is not much of a market for RECs, per se. But there is still the ability to buy into renewable energy with TVAs Green Invest. At the moment TVA offers a voluntary Green Invest program which allows businesses and power companies to purchase renewable energy credit in blocks of 200 KW for $3.25 per block, with a minimum purchase of 2 MW. So, a 2 megawatt block of Green Invest (2 RECs), would cost $32.50.
Now let’s apply to our 1 MW utility-scale solar example from Part 1. If 1 MW of utility-scale solar produces 2,146 MW per year that equates to 10,730 (2,146 ÷ .2) 200KW blocks. At $3.25 per 200KW block, the result would be $34,872 per year. In Part 1, we showed a formula for calculating the yearly production for 1MW of utility-scale solar at an average price for Agrivoltaics solar power. Let’s review that discussion:
Agrivoltaics costs roughly $1.20 per watt, so 1 MW would cost $1,200,000 to install. That 1 MW installation will produce about 2,146 MW hours per year. Power companies pay roughly $52 per MWh, so a 1 MW utility-scale solar installation will generate $111,592 per year (2,146 x 52). Return on Investment (ROI) is calculated using this formula: (income ÷ investment) x 100. So (111,592 ÷ 1,200,000) x 100 = 9.3. That means the ROI for 1 MW of utility-scale solar is 9.3%. Normally, with equipment purchases, the expected ROI is 15-25%, and anything less than 10% is considered a poor ROI. So a typical good equipment investment with break even in 4-7 years. Utility-scale solar takes more than 10 years to break even on the investment.
Now let’s add in the Green Invest value for the RECs and calculate the ROI again (111,592 + 34,872): ((income + RECs) ÷ investment) x 100. So (146,464 ÷ 1,200,000) x 100 = 12.2. This puts the 1 MW of utility-scale solar closer to the expected ROI range of 15-25%. These RECs are produced every year truly making them the gift that keeps on giving. Before OBBB, the subsidies and incentives equated to about 30% of the cost of utility-scale solar, further improving the ROI.
Power Purchase Agreements
The previous example is for illustrative purposes because in truth, it doesn’t exactly work that way in Tennessee for companies like Google, Meta, and Amazon. In Tennessee, companies who plan to consume large amounts of power use what is called a Power Purchase Agreement (PPA). A PPA is a long term, all inclusive, agreement to purchase power and the credit for the renewable aspects of that power (RECs). PPAs also include such things as direct investments as well as other undisclosed financial provisions. And that is the problem, PPAs are proprietary in nature, so they aren’t disclosed to the public. Consequently, how much do companies like Google, Amazon, and Meta pay per megawatt for renewable energy in a PPA? Who knows? But if it weren’t profitable, the solar companies simply couldn’t do business in Tennessee. That being the case, it is plausible to consider the ROI example we used earlier to be within reason for solar company’s to achieve a viable return on investment.
Part 2 Wrap-Up
It is important to note that neither the Inflation Reduction Act (IRA) nor the One Big Beautiful Bill (OBBB) addressed the issue of RECs. While the IRA, Executive Orders (EOs) and the EPA expanded grants, loans, rebates, tax credits and more for the Green New Deal, the OBBB, EOs, and the EPA unwound them just as fast. But, no one has considered unwinding RECs which adds the most value to renewable energy production. RECs are, in essence, a way for progressive companies like Google to buy their way to renewable compliance then thumb their nose at conservative counties, like Fayette County, where the renewable power is actually generated. So, truly, the seeds of the solar farm really do come from Democrats. We’ll see much more about that in Part 3, where we delve into the solar companies themselves.
Part 2 TVA Amendment
At this time the TVA websites have not been changed, however, the new TVA board has decided to take the following actions:
Closing Coal-fired power plants by 2028 has been dropped
Announced plans to build natural gas power plants
Renewable energy requirements have been dropped
Strategic commitments to diversity, equity and inclusion abandoned
In a recent Knox News article director Wade White made the following statement:
Over the past several years, the TVA board has faced pressure to make decisions based on stringent environmental regulations that were targeted to reduce the economic viability of important generation resources, like coal.
As mentioned in the section “Shifting Cost to the Customers,” as utility-scale solar ramps up production, other production technologies must be decreased. It seems that TVA now recognizes this and has taken action to address the cost of power for TVA customers.
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