Has the nation’s biggest nuclear utility seen the light? Exelon announced on Apr. 22 (what a coincidence—that’s Earth Day) that it will construct the biggest urban solar-power project in the U.S., a 39-acre array of sun panels that will cost $60 million to construct on Chicago’s South Side.
The facility could be producing electricity by year-end, assuming the Chicago-based power company gets loan guarantees from the federal government under President Barack Obama’s economic stimulus plan. If so, the 10-megawatt site would almost triple Exelon’s solar-power output: The company generates just 6 megawatts from the sun today.
I don’t want to be an Earth Day party pooper. But this does not look like the future.
Chicago, for one, is not an ideal place for solar power. On average, skies are overcast half the year, ranking Chicago as one of the nation's cloudiest cities. "We're not 360 days of desert sunshine a year," acknowledges Tom O'Neill, Exelon's senior vice-president of generation development. (Of course, power plants of any type need to be close to customers, so Exelon's geographic options are limited.)
The bigger issue is economics. While photovoltaic generators cost almost nothing to operate and maintain, they are expensive to construct. O'Neill tells me that the all-in costs of nuclear power are about $3,000 to $4,000 per kilowatt. Natural gas and wind power are cheaper still. Solar, by contrast, runs about $6,000 per kilowatt.
Without federal loan guarantees, which will back 80% of Exelon's investment, O'Neill says the project won't be built. "It's as simple as that," he tells me. That's not all Exelon needs from the government. The company can claim a 30% tax credit on its investment under the stimulus bill. No tax break, no project. The tax credits expire at the end of 2009.
Add it all up, and Exelon says it will earn back its outlays in 2021. Not too many investors will wait 12 years for a return.
Exelon does deserve a pat on the back IMHO. The solar facility would put a vacant industrial tract to use again. It would produce no emissions that contribute to global warming. It might help lower the pricetag of photovoltaic panels, by giving supplier SunPower of San Jose greater economies of scale. And at least Exelon is risking some money on alternative energy.
But, to mix metaphors, this project is a drop in the bucket. In 2010, if the facility goes online, Exelon will be generating 16 megawatts of electricity from the sun. It will be generating 16,000 megawatts from atomic power.
Happy Earth Day.
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