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March 20, 2012

Dear President: Enron’s 5.5 ¢/kWh Solar Makes DOE Loans Obsolete, Right?

March 20, 2012
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“Federal officials, aware that solar power breakthroughs have shined and faded almost as often as the sun, say the Enron project could introduce commercially competitive technology without expensive Government aid.”

– Allen Myerson, Solar Power, for Earthly Prices, New York Times, November 15, 1994.

It was front page news in the New York Times business section back in 1994—energy giant Enron had announced they could produce electricity from solar power for less than six cents per kilowatt hour. The takeaway was that solar had arrived, and government subsidies could not be needed in the future as they had been in the past.

In light of President Obama’s visit to the 48-megawatt Copper Mountain Solar 1 facility in Boulder City, Nev. trumpeting the future of solar as an infant industry needing just a bit more government help, a look back at the Times article 18 years ago is worth examining. Some excerpts follow:

The nation’s largest natural gas company is betting $150 million that it can succeed where the Government has so far failed: producing solar power at rates competitive with those of energy generated from oil, gas and coal.

The Enron Corporation plans to build a [100 MW] plant in the southern Nevada desert that would be the largest operation in the country making electricity directly from sunlight, producing enough to power a city of 100,000 people. It is expected to begin operating in late 1996.

Grand promises in the late 1970′s about the potential of virtually pollution-free, endlessly renewable energy sources like solar energy faded into an embarrassed hush. But several of the nation’s leading solar power experts say Enron’s optimistic goal is probably reachable.

The reason is that during the last decade, the cost of solar power generation has quietly declined by two-thirds. Far from depending on some wondrous breakthrough, the experts say, Enron can offer commercially competitive solar power by inexpensively mass-producing solar panels, and then employing thousands of them in the Nevada desert.

Even the most optimistic supporters of solar power have doubted that they would see commercially competitive production until the next century. The Worldwatch Institute, an environmental group in Washington, said earlier this year that solar cell electricity, now as low as 20 cents a kilowatt-hour, might reach 10 cents by 2000 and 4 cents by 2020.

Yet Enron is pledging to deliver the electricity at 5.5 cents a kilowatt- hour in about two years. That would beat the average cost of 5.8 cents currently paid by the Government for the electricity it uses. The national average retail price is 8 cents….

Government officials say Enron’s success will encourage the spread of solar power generation here and abroad….

Previous efforts to promote solar power as a clean alternative to fossil fuels have foundered, despite the Government’s spending of hundreds of millions of dollars on solar research. Solar power has remained too expensive, while fossil fuel prices have declined….

“This establishes the benchmark we want and restarts a stalled solar industry,’ said Robert H. Annan, the solar energy director in the Department of Energy.

In fact, the solar industry has already grown, with the shipments of solar cells up more than tenfold since 1980, as repeated technological advances have lowered their cost….

Paul Maycock, a leading solar energy consultant, said a few of the solar cell technologies he had evaluated for Enron could achieve the company’s goals, but only with sufficient production.

“Yes, it can be done,” he said. “It’s the dream we’ve all had: that someone would take the risk of building a very large factory.”

In the end, this  Enron’s project did not get off the ground, and even company insiders wondered where the 5.5 cent per kWh estimate came from.

So what’s new under the sun? Solar is not, and false promises of the competitive viability of solar are not either. Remember this optimism? “Mixed solar/conventional installations could become the most economical alternative in most parts of the United States within the next few years,” stated Barry Commoner in 1976. And twelve years later (in 1987) from the Solar Energy Industries Association: ”I think … the consensus … is after the year 2000, somewhere between 10 and 20 percent of our energy could come from solar technologies, quite easily.”

President Obama needs to rethink the failed energy past of government solar tax credits, cash grants, and loan guarantees. The Solyndra solar failure is part of something bigger, including Enron’s misdirection back in 1994.


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