The federal government is about to spend billions of dollars on renewable energy. In Part II of our series on the federal stimulus bill, we look at the impact the spending will have on the future of solar power.
Field of dreams: A sprawling vacant lot on the South Side of Chicago could be the site of the nation’s largest urban solar plant. Exelon, a Chicago-based utility, wants to fill 39 acres of the former industrial site with state-of-the-art photovoltaic panels that would produce enough electricity for up to 1,500 homes. The cost: $60 million. Credit: Chris Strong
This is the second of two articles by David Rotman on technology and the federal stimulus package. The first, "Can Technology Save the Economy?," appeared in the May/June 2009 issue and examined the economic consequences of the U.S. government's plans to spend $100 billion on technology.
The abandoned industrial site on the far edge of Chicago's South Side is an unlikely location for a large solar power plant. For one thing, Chicago is not a very sunny city. And the land itself, once a center of postwar manufacturing, has been vacant for 35 years and is now overgrown with trees and bushes, surrounded by a gritty neighborhood of aging houses. But Exelon, one of the country's largest electric utilities, says that by the end of the year it hopes to turn a 39-acre lot into the nation's largest urban solar plant. If it succeeds, row after row of nearly 33,000 silicon solar panels built and installed by SunPower, a photovoltaics manufacturer based in San Jose, CA, will cover the lot to produce 10 megawatts of power--enough for about 1,200 to 1,500 homes.
But there is a big if in this scenario of urban transformation. It will happen only if Exelon receives the generous loan guarantees for renewable-energy projects promised in this year's federal stimulus bill--funds that in this case would cover 80 percent of the project's costs. Barely viable with the loan guarantees and a handful of other federal and state subsidies, the $60 million solar plant would not be possible without such government support. Speaking from the 48th-floor offices of Exelon, nearly 20 miles away in downtown Chicago, Thomas O'Neill, the utility's senior vice president for new business development, is blunt about the economics of the solar plant. "If we can't secure the loan guarantee, we can't go forward with the project," he says.
Even with the federal subsidies, says O'Neill, the solar plant won't offer the double-digit returns usually required by investors in large energy projects. It would cost $6 a watt to build, whereas wind and natural-gas plants cost roughly $2 a watt and $1 a watt, respectively. And its 10 megawatts will contribute an insignificant amount of electricity to Exelon's vast generation capacity of 36,000 megawatts. But, says O'Neill, the project is "tailor-made" for some of President Obama's goals in the stimulus package. It would create jobs (250 people would be needed to construct it), and it would demonstrate that solar power can be "brought to the Midwest and to the inner city."
The proposed plant in Chicago is just one of the many renewable-energy projects that could get built because of the federal stimulus bill passed in mid-February (see "Can Technology Save the Economy?" May/June 2009 and at technologyreview.com). The U.S. Department of Energy is still in the process of choosing the projects that will receive loans and deciding how other newly available subsidies will be spent. But the potential windfall is already jump-starting plans for wind farms in the Midwest, massive solar plants in the deserts of southwest Nevada and southeastern California, and geothermal power plants in the Northwest. According to a recent analysis by the Energy Information Administration, an independent agency within the DOE, the stimulus bill will increase the amount of generating capacity from renewable sources to 156 gigawatts in 2015, up from 114 gigawatts today; renewable capacity would increase only to 118 gigawatts without the legislation.
The EIA report also points to a troubling reality, however: this increased use of renewable energy will have only a slight long-term effect on carbon dioxide emissions (see "Powering Up," p. 48). Even 156 gigawatts would satisfy only a small fraction of U.S. energy needs. And as Secretary of Energy Steven Chu has frequently argued, existing renewable-energy technologies cannot provide the large amounts of cost-competitive energy required to significantly reduce the country's reliance on greenhouse-gas-emitting fossil fuels.