The Biggest Little PV Plant in the East

Commercial scale photovoltaics (PV) comes to Pennsylvania, courtesy of unwitting taxpayers (or, if you prefer, government subsidies). For this post, I'm keeping the original title of a very good article in IEEE Spectrum The Biggest Little PV Plant in the East.

I doubt this will get the notoriety of the old Burt Reynolds - Dolly Parton movie about a Texas "Establishment" of fame and shame - but there is a similarity in how the profits are made. OK, maybe engineers have an odd sense of humor.

Most photovoltaic applications supply electricity for individual home uses - the economics being well suited to dispersed local use rather than concentrated plants that supply the main electric grids. But this plant in Bucks County is the largest east of Arizona and can produce 3 megawatts - enough to power 3000 homes. It spreads over about 7.5 acres of a refuse landfill from which methane gas also is harvested for local use.

Sounds like a green dream come true. But how does it pay for itself?

Well, you have to read the article for the details; but the gist is many taxpayers pay the freight for a few users. And the interlocking corporations involved did not make it easy for the reporter to decipher the details.

The bottom line is that the PV plant can produce electricity at 30 cents per kilowatt hour while the going rate in PA/NJ is 10 cents. That's a pretty large loss on an expensive investment.

But there is more to the story. They don't just sell electricity; they can also profit from Renewable Energy Credits (REC). A dozen states, including Pennsylvania, have mandated that a specified proportion of generated electricity come from solar energy. These "solar carve-outs" are a trade-able commodity and their value is high. In the PA/NJ area, these carve-out RECs sell for as much as $250 and one is "earned" for each megawatt-hour of electricity produced.

So, with RECs included, the PV plant's electricity production cost of 30 cents/megawatt is reduced by 25 cents/megawatt of REC sales. The resulting 5 cents net cost per megawatt is very competitive. Now the investment becomes more attractively profitable.

In essence, the government is providing a regulatory subsidy of 25 cents on a 30 cent production cost - that's us taxpayers and consumers paying for 5/6th of the production costs so some companies can make a profit and seem noble by being "green".

In that old flick, Dolly would tell her "clients" that their pleasure was her business. At least it was a free choice. Nowadays, the government forces us to pay for the pleasure of feeling "green". As Kermit the Frog says "being green isn't easy".