The Pacific Gas and Electric Co. is getting its first-ever solar power soon, though the utility won't be able to use it to meet a state renewable energy mandate for a while.
The San Francisco-based utility said Monday it has signed a 20-year agreement to buy electricity from a newly completed, 10-megawatt solar power plant near Boulder City, Nevada. Sempra Generation developed the plant, called El Dorado Solar Energy project, using First Solar's thin-film panels.
PG&E said solar power delivery will start on Jan. 1, 2009, but it has yet to get approval from the California Public Utilities Commission for the power purchase agreement. The commission's next regular meeting is on Jan. 29, and it's unlikely to before Jan. 1 to consider PG&E's application, which is subject to a 30-day public hearing, said Chris Chow, a commission spokesman.
PG&E, which serves 15 million customers in northern and central California, will ask the commission to expedite the approval process, said spokeswoman Jennifer Zerwer. In the mean time, the utility will pay the daily market index price instead of the contract price for the power until after it receives the commission approval, she added.
PG&E is asking the commission to approve the power purchase agreement by May 7, 2009. The utility and Sempra might terminate the contract if PG&E doesn't get the go-ahead by that date, according to a PG&E filing to the commission.
That also means PG&E won't be able to count the contract toward a state renewable energy mandate until it gets the approval. The state requires all investor-owned utilities to get 20 percent of the electricity from renewable sources by 2010. California recently set a new goal and changed the rules to require all public and private utilities to get 33 percent of renewable power by 2020 (see California Approves Climate Change Master Plan).
The 10-megawatt power plant would the first source of solar power to come online for PG&E, Zerwer said. The utility has been busy signing a host of solar, wind and other renewable energy contracts in an attempt to meet the state mandate (see PG&E to Buy 800MW From Optisolar, Sunpower and Ausra to Build 177-Megawatt Solar-Thermal Plant).
Meeting that mandate could be tough for PG&E and other investor-owned utilities in the state. Last year, the California Energy Commission, which approves the power plant development and construction, said roughly a third of the renewable energy contracts signed by public utilities since 2002 had been canceled or delayed.
PG&E has signed enough contracts to meet the 20 percent requirement, but not all of the renewable power will be delivered by 2010. State law allows utilities to count projects under development as long as the power plants begin delivering power by 2013.
Sempra uses thin-film solar panels by First Solar to build the power plant. First Solar, based in Tempe, Ariz., is known to make low-cost panels using cadmium tellurium as the key ingredient for converting sunlight into electricity.
The 10-megawatt power plant used more 67,000 panels, and is located on an 80-acre property southeast of Las Vegas. First Solar (NSDQ: FSLR) will be responsible for maintaining the plant.
A financial analyst from Pacific Crest recently highlighted the project as an example of a solar energy system that is able to deliver power below the average cost of conventional power (see First Solar Reaches Grid-Parity Milestone, Says Report). Solar power has largely remained more expensive than power generated by burning coal.
Sempra Generation is a subsidiary of Sempra Energy (NYSE: SRE), which owns San Diego Gas & Electric. SDG&E won approval last week to build a transmission line from the southeastern corner of California to the coast, a project that the utility said will be used to deliver renewable energy (see California Oks Controversial Transmission Project).