Economics: Funding, Ownership, Operations, Subsidies, Energy Credits, Offsets
As with a lot of topics associated with this project, many economic aspects are unclear. For example, while there is federal money being spent on feasibility studies and presumably start up costs, there is not enough to meet the $7-8 million estimated for the plant. The federal earmarks are supposed to be locally matched, yet there is no evidence of this occurring. Ownership is equally unclear in that NV Energy (the private “partner”) has no contract with Placer County or TRPA regarding the project. While Placer says this is a public-private venture, it appears to be all Placer at this time. Yet, few believe that Placer County wants to own and operate a biomass facility.
Moreover, the technology of such energy production is not as refined as many believe and the poor economic viability of small biomass plants has caused many such plants to go out of business. Indeed, not long ago the Truckee Donner Public Utility District received a grant to build and run a biomass gasification plant at the Truckee River Regional Park. After several years of mixed success with the machine, the district’s biomass experiment was decommissioned. The biomass plant in Carson City (a 1MW plant at the Department of Corrections prison site) opened in 2007 but was shut down in 2010 due to biomass fuel supply and storage problems and huge operating losses that had to be subsidized by the State of Nevada. This plant was to receive forest material from fuels reduction in the Tahoe Basin.
It would be a mistake, however, to conclude that a Kings Beach plant will not go forward, be built, and be operated due to it not “penciling out” economically. There is nothing to preclude Placer County from subsidizing its operation from their revenue base or additional grants. The sad fact is that taxes may be increased to finance the operation of a pollution facility.
Not unlike the earmark funded famous “bridge to nowhere,” this “biomass power plant to nowhere” seems to have a momentum of bureaucratic bungling and nonsensical support that typifies such projects. One should never underestimate the ability of dysfunctional governing agencies bent on going forward with ill-conceived projects that are counter-intuitive, irrational, and defy common sense, from having some success. They have already spent three quarters of a million tax dollars on it. And, much of their propaganda seems to actually be believed by those who don’t notice that is propaganda – which is the point of propaganda.
There are also the unknown issues of cap and trade related energy credits and offsets. Placer is looking into this matter, as would be expected, because through a complex matrix of policies it may actually come to pass that the plant can both earn income via energy credits and offsets in such as fashion so as to reduce the operating costs of the plant while allowing it to pollute in reality but not on paper.
Lastly, Placer County has already discussed the value of the plant as a “pilot program” and a “demonstration project” which we believe automatically suggests the possibility of county subsidies to nurture it for ostensibly educational purposes, which is simply another ruse.
This project is going to have to be killed by thoughtful people who see it for the disaster-in-the-making that it is. It will not die a natural death simply because it doesn’t make sense. The Friends of Lake Tahoe need your support!