SunPower (Nasdaq: SPWR) just signed a power purchase agreement (PPA) with California utility Pacific Gas and Electric (PG&E) for delivery of the 100-megawatt (AC) Henrietta Solar Project in Kings County, Calif. The project could create up to 200 jobs during construction and send $72.7 million into the local economy.
The "Advice Letter" from PG&E to the Public Utilities Commission notes that the 20-year PPA price "is below the applicable 2011 Market Price Referent (MPR)."
For a twenty-year PPA with production beginning in 2016, the MPR is $0.104 per kilowatt-hour.
The CPUC defines the MPR as "best reflected by the long-term ownership, operating, and fixed-price fuel costs for a new 500-megawatt natural gas-fired combined cycle gas turbine (CCGT)."
The project uses SunPower's Oasis power block and 435-watt SunPower solar panels with the SunPower T0 Tracker and is located on private land described as "non-prime agricultural land" in Lemoore Station, California. The advice letter notes that "The land is degraded and has low-quality soils. The site is heavily disturbed with very low historical occurrence of endangered or threatened species," adding that "Kings County has a track record of approving solar development."
This contract is subject to approval by the CPUC and SunPower completing all applicable permits. Construction will start in 2015, and the plant will begin commercial operation by late 2016.
GTM Research notes that "the 115-megawatt (DC) Henrietta project adds to SunPower's substantial utility pipeline. With 78 megawatts of projects currently operating in the U.S. and over 1.2 gigawatts contracted, GTM Research ranks SunPower as one of the largest utility project developers in the U.S., second only to First Solar (Nasdaq: FSLR)."
GTM Research publishes a detailed Utility Tracker that monitors utility solar projects. More details here.
Ben Kallo of RW Baird sees the project creating "a significant captive demand channel for SPWR's modules which we favor amid the challenges faced in the solar industry today and the uncertainty surrounding the timing for adequate capacity rationalization to occur to allow for a much-needed market correction."