How a High-Tech Solar Plant Found Its Way to Bankruptcy

Written by Journal of Petroleum Technology on February 14, 2022. Posted in Current News

The 10,000 mirrors arrayed around the Crescent Dunes Solar Energy plant are striking and seem to suggest the concept is on a path to efficient and reliable renewable energy.

But, recently, the plant’s operator threw in the towel and filed for Chapter 11 bankruptcy protection. So, what went wrong?

The photos of the 10,000 mirrors arrayed around the Crescent Dunes Solar Energy plant are striking and seem to suggest the futuristic concept is on a path to efficient, reliable, and cost-effective renewables.

But, after years of accusations of mismanagement and unreliability in providing power, the plant’s operator, Tonopah Solar Energy, threw in the towel on 30 July and filed for Chapter 11 bankruptcy protection, recording about $430 million in secured debt owed to the US Department of Energy (DOE). It is seeking a settlement under which DOE will recover less than half of the original loan, around $200 million, according to documents filed in US Bankruptcy Court District of Delaware.

Signs of trouble became evident last October when the developer of the project, SolarReserve, filed a lawsuit against the DOE and Tonopah Solar Energy, alleging the DOE interfered with its “right to participate in the management” of Tonopah Solar Energy. Just 2 days later, Nevada Energy, the largest electric utility in the state, provided a notice of termination on its 25-year renewable power-purchase agreement (PPA) with Tonopah, which was originally set to end on 31 December 2040, because of “frequent and prolonged outages.”

What Went Wrong?

In 2008, an affiliate of SolarReserve formed Tonopah Solar Energy LLC to develop, own, and operate the plant. In 2011, the DOE issued a $737-million loan guarantee to help finance the $1-billion 110-MW concentrating solar power plant near Tonopah, Nevada. It was described as the first deployment of solar power tower technology in the US to use molten salt as a primary heat-transfer fluid.

More than 10,000 mirrored heliostats concentrate sunlight on a 640-ft-tall central tower and heat the molten salt inside to more than 1,000°F. The superheated mixture is then used to boil water to generate steam and drive steam generators to produce power. The molten salt storage was touted as allowing the project to generate power at full load on call for up to 10 hours without any sunlight.

SolarReserve said the patented storage system can deliver electricity on demand like a traditional coal or natural-gas power plant but with zero emissions, little water use, and no hazardous waste.

The plant was approved by the Nevada’s Public Utilities Commission in 2010 but did not begin commercial operations until 2015.

Less than a year later, in October 2016, repairs to fix a leak in a molten-salt tank took the plant offline for 8 months. NV Energy, the plant’s only customer, said in a June 2019 report that the frequent, prolonged outages at the plant reduced the expected amount of energy and credits by 50 percent in 2019 and 25% in 2020 and beyond.

NV Energy said, “Given the size of the project, Nevada Power simply does not have enough credit reserves nor sufficient new renewable capacity in the pipeline to overcome lasting, multiyear credit shortfalls.”

Custom parts and dozens of staff were required for daily operations and to conduct maintenance regularly on the steam generators and heat exchangers. When the plant finally opened in 2015, solar panels had left the CSP technology in the dust in terms of efficiency and cost.

The high tech was obsolete before it was up and running.

Crescent Dunes was selling its power at about $135/MWh, while Techren Solar II in Nevada’s Eldorado Valley priced its power at approximately $30/MWh.

The death knell sounded last summer with a catastrophic failure of the molten-salt storage tanks that caused ground contamination and required the removal of the solar tower. The DOE sent a formal default notice in September, followed by NV Energy’s termination of its PPA.

SolarReserve contended in its lawsuit that the LLC agreement gave it the right to appoint one of the managers of Tonopah. But, according to the lawsuit, the DOE sent a “notice of default” letter only days after SolarReserve had appointed a new manager. The lawsuit said the DOE wanted to appoint two new members to Tonopah’s board of managers, “which gives the appearance of the (Energy Department) in complete control of Tonopah through its handpicked ‘independent’ directors which comprise the entirety of the Tonopah Board of Managers.”

This precluded any representation of SolarReserve on the board, which meant major decisions requiring a unanimous vote such as bankruptcy proceedings stifled input from the developer, the lawsuit alleged.

The blame game has been in full swing with finger-pointing to and from the developer, SolarReserve, general contractor Spanish company ACS Cobra, and owner Tonopah Solar. Cobra is being blamed for the delay in completing the construction of the plant and the allegedly faulty design of the molten-salt tank.

According to the bankruptcy filings, Tonopah is owned by SolarReserve, the startup that developed the plant; Cobra Energy Investments LLC, a division of Spanish infrastructure company ACS; and Banco Santander SA.

Moving to Higher Tech

NV Energy moved on and signed a 22-year PPA with EDF Renewables North America on 29 July. The power will be generated by the 200-MW Chuckwalla Solar+Storage project to be built by EDF. Located on the Moapa Band of Paiute Indians Reservation, 35 miles northeast of Las Vegas, Nevada, the project will include batteries that can store 180 MW of power for 4 hours. The Chuckwalla Solar+Storage project is expected to come on line in late 2023.

“EDF Renewables is pleased to strengthen our relationship with NV Energy, building on our 2019 agreement to develop and build the Arrow Canyon Solar+Storage project,” said Ian Black, vice president of west region development at EDF Renewables North America.

Arrow Canyon is also being built on the reservation. It will be a 200-MW solar project that includes a 75-MW/5-hour battery storage project and is expected to be up and running in December 2022.

“The battery and solar system work together to provide more energy during the summer evening peak hours, when system needs are the greatest,” Ian Black, a vice president at EDF Renewables North America, said in a statement. “NV Energy can utilize the battery at their discretion in all months of the year, allowing mitigation of demand spikes.”

See more here: jpt.spe.org

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