$1.3 billion in ‘clean energy’ subsidies produce 288 permanent jobs, quadruple cost of electricity in Nevada
LAS VEGAS — As U.S. Senate Majority Leader Harry Reid prepares to host his fifth annual National Clean Energy Summit on Aug. 7, a Nevada Journal examination of Nevada’s renewable energy sector shows that over $1.3 billion in federal funds funneled into geothermal, solar and wind projects since 2009 has yielded and is projected to yield just 288 permanent, full-time jobs.
That’s an initial cost of over $4.6 million per job.
Despite this, Sen. Reid continues to hype Nevada as the “Saudi Arabia of renewable energy,” even though the renewable energy subsidized with federal dollars and mandated under Nevada’s Renewable Portfolio Standard costs consumers and NV Energy, Nevada’s publicly regulated utility company, up to four times as much as fossil fuels, such as natural gas.
Even with these government-granted advantages, the few clean-energy jobs in the state of Nevada are still precarious.
Reid-backed geothermal company near bankruptcy
Auditors for Nevada Geothermal Power, a federally subsidized green-energy firm in Nevada, are raising questions about whether that firm is going to fail.
As of last October, Nevada Geothermal Power had 22 employees in Nevada, and, according to the New York Times, had received $145 million in federal subsidies — composed of a loan guarantee of nearly $79 million for its Blue Mountain geothermal project and at least $66 million in grants to the company itself.
The Times called the company a “politically connected clean energy start-up that has relied heavily on an Obama administration loan guarantee,” and said it “… is now facing financial turmoil.”
Today, three quarters later, the latest company audit again questions the “company’s ability to continue as a going concern.”
The firm’s survival, wrote auditors on March 31, will depend “on its available cash and its ability to continue to raise funds….”
The Times found similarities between the Obama administration’s support for “Solyndra, the now-famous California solar company,” and Sen. Reid’s support of Nevada Geothermal.
Sen. Reid, the story said, “has taken the nascent geothermal industry under his wing, pressuring the Department of Interior to move more quickly on applications to build clean energy projects on federally owned land and urging other member[s] of Congress to expand federal tax incentives to help build geothermal plants, benefits that Nevada Geothermal has taken advantage of.”
The most recent “clean energy” company failure in Nevada occurred three weeks ago when Amonix, a North Las Vegas solar manufacturing plant that had received more than $20 million in federal tax credits and grants, closed after only 14 months of operation.
Hailed upon its opening by Sen. Reid, U.S. Rep. Shelley Berkley and Gov. Brian Sandoval, the 214,000-square-foot Amonix facility had, at its height, employed some 700 individuals. In 2010, even President Barack Obama praised the Amonix plant, saying the “stimulus” tax credits it received had made an “extraordinary impact.”
Today, the company is bankrupt.
Large handouts, few employees
Even the renewable-energy projects that aren’t yet facing bankruptcy aren’t doing much to help reduce Nevada’s 11.6 percent unemployment rate. That’s because most solar photovoltaic plants — plants that convert solar radiation from the sun into electricity — in Nevada employee very few full-time employees.
The Silver State North solar plant, for example, located near Primm, employs only two full-time employees, while the Copper Mountain solar plant in Boulder City employs only five. Combined, these plants have received, or are eligible to receive, up to $92 million in federal loans and subsidies. Copper Mountain is also eligible to received $12 million in tax rebates from the State of Nevada.
That means each supposedly permanent job starts out costing taxpayers about $14.85 million.
Like solar PV plants, geothermal plants benefit from generous subsidies, but unlike them, tend to employ twice as many workers.
According to a report released by Sen. Reid’s office, Ormat Technologies — operating the Jersey Valley geothermal plant in Pershing County, the McGinness Hills geothermal plant in Lander County and currently building a third geothermal plant in Elko — received a $350 million loan guarantee and special “fast-track permitting.”
These plants, says the office, are expected to create “nearly 65 permanent jobs.”
The New York Times reports that Ormat’s Washington lobbyist, Kai Anderson, and top company executive Paul Thomsen are former aides to Sen. Reid.
When Terra-Gen Power, a San Diego-based renewable-energy company that owns two geothermal plants in Nevada, was asked about its full-time employees, subsidies or federal loans, it explicitly stated it “declined to answer.”
In all, the Nevada Journal review found that 12 renewable-energy projects in Nevada that have received $1.339 billion in federal subsidies and loan guarantees since 2009 will only lead to 288 full-time jobs. That’s a cost to federal taxpayers of over $4.6 million per job.
Plant backed by $737 million government loan will have only 50 permanent employees
The Nevada plant that received the biggest government boost is the Crescent Dunes Solar Energy Project, currently being constructed in Tonopah and scheduled for completion by December 2013.
Tonopah Solar, Crescent Dune’s parent company, received a $737 million federal loan — the largest single loan received by any Nevada entity from the American Reinvestment and Recovery Act (ARRA), commonly referred to as the “stimulus” bill.
The loan — combining “stimulus” and DOE funds — is over $200 million larger than the loan received by Solyndra, the infamous California solar manufacturing firm that filed for bankruptcy last year.
Andi Plocek, a spokeswoman for Tonopah Solar, told Nevada Journal the company has every intention of paying back the loan once the plant is operational.
She said 100 workers are currently working on construction of the plant, while 600 workers are expected during peak construction times later this year.
While Tonopah Solar was cautious about giving a final number for full-time jobs since the plant is still under construction, a 2009 Plan of Development written by the company estimates 40-50 full-time jobs at the plant following its completion.
Feds fast track renewable-energy project, block oil development
Sen. Reid’s report, titled “Playing to Win in Clean Energy,” outlines an expedited permitting process for clean-energy plants developed in 2009 by Sen. Reid and Interior Secretary Ken Salazar.
Since 2009, the BLM has fast-tracked 13 renewable-energy projects in Nevada: four solar, one wind and eight geothermal projects.
Salazar, in a July 24 conference call with reporters, touted the fast-track process and announced the BLM had “identified” 17 zones across six Western states, including Nevada, for future solar-energy development.
“We stand at a proud moment in American history,” said Salazar. “There was nothing happening in renewable energy before January 20, 2009, and now we’ve provided a roadmap for solar energy and increased our efforts to make smarter, faster permitting so solar developers win.”
Although loans and fast-tracked permitting increased under the Obama administration, the solar-energy loan guarantee programs were included in the Energy Policy Act of 2005 passed during the Bush administration. The 2005 Act laid the groundwork for failed subsidized solar manufacturers like Solyndra and the recently closed Amonix plant in North Las Vegas.
In contrast, Salazar and the Obama administration have worked to stall leasing on federal lands containing oil shale, even though experts estimate the United States’ oil shale deposits contain up to five times the amount of the oil reserves found in Saudi Arabia.
Paying twice: Subsidies lead to higher energy prices
In Nevada, consumer energy rates climb higher and higher. According to the Energy Information Administration (EIA), Nevada now has the highest residential electricity rates in the Intermountain West region.
Moreover, so long as present government policies — such as the state’s Renewable Portfolio Standard — remain in place, rates will continue upward.
While Sen. Reid helped Salazar fast-track government-approved renewable projects in 2009, he also used his influence as Senate majority leader to delay and ultimately kill a coal power plant planned for White Pine County.
Coal-powered plants produce electricity at a much lower price than do renewable-powered plants, according to the EIA and NV Energy.
Currently, NV Energy pays 3 to 5 cents per kilowatt-hour for natural gas and coal-fueled power, 8 to 10 cents per kWh for geothermal energy and for wind energy and 11 to 13 cents per kWh for solar photovoltaic energy. Wind and solar photovoltaic energy also require backup power for “intermittency issues.”
The higher costs from renewable-energy production are passed on to Nevada ratepayers in the form of residential electricity rates that are 26 percent higher than those of other Intermountain West states and 7 percent higher than the national average, says the EIA.
In June, with six solar facilities operational in Southern Nevada, NV Energy, the state’s utility monopoly, proposed another rate hike for Southern Nevada ratepayers.
Nevada’s Renewable Portfolio Standard requires NV Energy to purchase the higher priced power. The RPS mandates that utility companies must today derive 15 percent of their energy production from renewable-energy sources, derive 18 percent by Jan. 1, 2013, and increase steadily, over the next decade, to derive 25 percent in 2025.
Geoffrey Lawrence, deputy policy director at the Nevada Policy Research Institute, the free-market think tank that publishes Nevada Journal, observes that the RPS is a “regressive tax,” hitting low-income families and small businesses the hardest by driving up their energy costs.
“Nevada’s RPS has made and will continue to make electricity in Nevada much more expensive than in neighboring states,” says Lawrence. “This damages state competitiveness and is a stumbling block to corporate investment and job growth.”
The stated purpose of Sen. Reid’s National Clean Energy Summit is to “discuss how to empower the public with tools to promote the clean energy economy; increasing jobs and our energy independence.”
The summit is cosponsored by the Center for American Progress, a left-leaning, Washington, D.C.-based think tank, by the University of Nevada, Las Vegas, and by MGM Resorts International.
The summit will be held at the Bellagio Hotel and Resort. Former President Bill Clinton is scheduled to give the keynote address.
Kyle Gillis is a reporter for Nevada Journal, a publication of the Nevada Policy Research Institute. For more in-depth reporting, visit http://nevadajournal.com/ and http://npri.org/.
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