Study Finds High Failure Rate for Renewable Energy Projects

Published April 1, 2006

Renewable energy projects fail more than often than they succeed, according to a new study released by the California Energy Commission. The study defines failure as “failure to achieve scheduled commercial operations,” either because they do not meet their timetable for going online or never go online at all.

The study surveyed the success rates of renewable energy projects in California, other U.S. states, and the European Union. Renewable energy projects including wind power, solar power, and other so-called “green” power sources tended to fail for a variety of reasons, including market difficulties, negative environmental impacts, and immature technology.

According to the report, failure rates varied from 37 percent to 78 percent in projects in northeastern U.S. states such as Massachusetts, New Jersey, New York, and Pennsylvania. Failure rates reached 63 percent California. In Europe, failure rates varied from 67 to 78 percent. The report did not attempt to collect data to establish a national rate for the United States; it gathered data only on the states mentioned here.

Little Improvement Expected

The California Energy Commission expects experimental technologies, such as the technology envisioned to power a proposed 500 MW solar collector in the California desert, could lead to a greater than 50 percent failure rate for future renewable power projects in California.

California law requires power companies to purchase 20 percent of their power from renewable sources by 2010, and Gov. Arnold Schwarzenegger (R) has proposed to impose a requirement of 33 percent renewable power generation by 2020.

“The state as a whole has fallen behind schedule in meeting its aggressive renewable energy targets, and few new renewable energy projects have achieved commercial operations over the past several years,” warned the study. “The risk of contract failure could cause serving entities, and the state as a whole, to fall short of their renewable energy targets.”

— James Taylor

For more information …

The California Energy Commission’s 53-page report, Building a “Margin of Safety” into Renewable Energy Procurements: A Review of Experience with Contract Failure, released in January 2006, is available online at