By Al Rosen, Director, Absolutely Solar Inc.
Starting this month, the Los Angeles Times published the first two articles in an occasional series about the impacts of large scale-solar projects on California’s desert. This most recent article, published last week, covers rising expectations for growth and its potential for inflated prices, with plenty of room for disappointment. Here’s our take on it.
Like so many land rushes and bubbles of the past (including the recent housing bubble and crash), the current solar land rush isn’t going to last. In bubbles, people invest based on half-truths, lack of information, rumors and the powerful emotions of crowds–essentially, enough hot air to leave that market vulnerable to a sudden burst.
It’s true that land in the sunny deserts of Southern California have great sun exposure, more technically known as “insolation” or “DNI” (Direct Normal Irradiation). But that’s only a small part of the story. There are many other requirements beyond sunshine to make a land parcel solar ready. Interconnection issues are the most difficult to determine and resolve. Studies are expensive and take a long time and are often inconclusive. The capacity of projects already in the various queues must be counted as if those projects were already built and interconnected. Most substations are already at capacity. Almost all new projects are likely to face costly transmission upgrades that will take many years to complete. Environmental and local permitting issues are also serious barriers. In short, sunny land isn’t necessarily “solar land.”
Even in those areas where interconnection and land use issues don’t kill projects, the (already oversubscribed) utility programs offer low power prices and are barely feasible. There simply isn’t room in the business model for high land prices.
In short, the escalating price of sunny land is unsustainable and prudent land speculators should look elsewhere for sound investments.
Los Angeles Times article: Land Speculators See Silver Lining in Solar Projects
Remote, inhospitable desert land gains new value as developers seek sites for renewable energy. Industry observers caution that not every owner is going to make a fortune.