Key Takeaways
California built a $2.2 billion solar thermal project in the Mojave Desert in the early 2010s, with 75% of it funded by the Obama administration through loan guarantees.
The project, the Ivanpah Solar Project, is closing next year — 13 years earlier than planned.
Ivanpah has not produced the energy promised, and instead relies on natural gas to keep operating.
In January, Pacific Gas & Electric announced an agreement with the plant’s owners to terminate its contracts, as the technology is being outpaced by solar photovoltaic technology and is inefficient and costly.
Its closure has raised concerns about the efficiency of government-backed renewable mandates and the impact of large-scale concentrated solar power projects on energy reliability.
The Ivanpah Solar Power Facility is set to shut down in 2026 after failing to meet its energy targets. Ivanpah is located near the California-Nevada border, 65 miles southwest of Las Vegas. Despite receiving $1.6 billion in federal loan guarantees, nearly 75% of the facility’s cost, it struggled to generate power and had to rely on natural gas to operate rather than the sun. In January, Pacific Gas & Electric announced an agreement with the plant’s owners to terminate its contracts. According to the Associated Press, if approved by regulators, the deal would lead to closing two of the plant’s three units starting in 2026. Southern California Edison, which buys the rest of the power from the three-unit plant, is in discussions with owners and the U.S. Energy Department regarding a buyout of its Ivanpah contract. The closure has raised concerns about the efficiency of government-backed renewable mandates and the impact of large-scale concentrated solar power projects on energy reliability.
The plant, which features three 459-foot towers and thousands of computer-controlled mirrors, known as heliostats, cost $2.2 billion to build. Construction started in 2010 and was completed in 2014, ranking it then as the world’s largest solar plant. According to the New York Post, the 173,500 heliostats in the facility’s five square miles of desert are adjusted via computer to catch maximum rays. The computer-controlled mirrors reflect light from the sun at temperatures that can reach 1,000 degrees in part of the installation. As the Associated Press explains, the sun, when available, heats water in the boilers’ tubes and makes steam, which drives turbines to create electricity.
In 2011, President Obama’s Department of Energy issued $1.6 billion in three federal loan guarantees. Ivanpah was expected to generate 940,000 megawatt-hours of power per year at the 392-megawatt plant. That power never materialized. According to the New York Post, the closure stems from the site being “outpaced by solar photovoltaic technology” and proving both inefficient and costly. The shutter of the site comes more than a decade ahead of its original 2039 end date, according to the Associated Press. When the power purchase agreements were signed in 2009, the prices were considered competitive. However, technological advancements since then have resulted in more efficient, affordable, and flexible ways to produce clean energy. Clearly, the Obama administration decided to spend taxpayer funds on a technology that was poorly conceived and quickly outdated.
Ivanpah has also not been a friend to wildlife. According to the Association of Avian Veterinarians, the power plant is responsible for at least 6,000 bird deaths each year. The birds can receive severe burns or become incinerated if they fly too close to the towers that concentrate sunlight from the solar panels. Road runners also become trapped along perimeter fencing and get attacked by predators.
In recent years, California has faced increasing problems with solar energy. According to the Daily Caller, in August 2024, major rooftop solar company SunPower filed for Chapter 11 bankruptcy in Delaware after struggling with changes related to California’s rooftop solar subsidy program and high interest rates. California policymakers changed the state’s rooftop solar subsidy program in 2023, reducing payments to homeowners who sell back excess power that their panels generate. The “net metering” law originally allowed rooftop solar homeowners to receive credit for their excess electricity at the retail rate, resulting in non-rooftop solar homeowners subsidizing rooftop solar homeowners. The change in the law resulted in solar companies selling and installing fewer solar systems, leading to layoffs and economic troubles.
Should the Federal Government Provide Incentives to Technologies?
Historically, the government has not fared well at picking winners and losers. A report published by the World Economic Forum indicates that private investors have a better track record. “Unlike public market investors, private equity firms can implement transformative changes through hands-on management and aligned incentives,” the report notes. As Steven Milloy, senior fellow at the Energy & Environmental Legal Institute, told the New York Post, “No green project relying on taxpayer subsidies has ever made any economic or environmental sense.”
Analysis
The shutdown of Ivanpah should come as no surprise to anyone familiar with the different incentives faced by private companies and politicians when investing in technologies. For private investors, focusing on their bottom line leads to a more careful evaluation of the risks associated with investing in energy technologies, with the consequence of low profits and business failure if their evaluation proves faulty. For politicians, the success or failure of a project doesn’t matter as much because those results usually play out in the long run, while politicians are primarily concerned with the immediacy of re-election. This incentive means that politicians can gain political points for investing in projects, even if they end up failing, as is the case with the Obama administration and Ivanpah.
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