PG&E plans big investment in solar power

Friday, August 15, 2008


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Pacific Gas and Electric Co. announced plans Thursday to buy 800 megawatts of photovoltaic solar power from two Bay Area companies - a giant deal that would provide enough electricity to power 239,000 homes and would create the country's first utility-scale photovoltaic plants.



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PG&E agreed to buy 550 megawatts from OptiSolar, a relatively new Hayward firm that would install thin-film solar panels on 9.5 square miles of ranchland in San Luis Obispo County.

It would buy an additional 250 megawatts of power from SunPower Corp., a solar industry leader based in San Jose that would use an additional 3.5 square miles of San Luis Obispo land.

Energy experts said the purchase could change the face of the renewable energy industry by showing that photovoltaic power can be affordably produced on a large, centralized scale, not just on the rooftops of individual homes and businesses.

"This scale is 10 times larger than what was being talked about awhile ago," said Daniel Kammen, director of the Renewable and Appropriate Energy Laboratory at UC Berkeley.

"This makes large-scale solar an increasingly likely and large part of the energy portfolio in California and the West," said V. John White, director of the Center for Energy Efficiency and Renewable Technologies in Sacramento.

PG&E and California's other utilities are under a state mandate to generate 20 percent of their energy from renewable sources such as solar, wind and geothermal power by 2010.

They now remain far from that goal: PG&E received just 11.4 percent of its energy from renewable sources in 2007, while Southern California Edison and San Diego Gas and Electric got 15.7 percent and 5.2 percent of their respective power from renewables.

Tiny percentage

And solar makes up a particularly tiny share of that - less than 1 percent of PG&E's total power.

However, PG&E has signed a spate of solar contracts over the past year aimed at expanding its supply of renewable energy.

Together with the 800-megawatt deal announced Thursday, these solar contracts would increase renewable energy to 24 percent of PG&E's portfolio by 2013, utility officials said.

"We will continue to explore such innovative technologies as we aggressively work to increase the amount of renewable energy we provide our customers," said Jack Keenan, chief operating officer for PG&E.

The contracts announced Thursday are significant because they involve photovoltaic power, a solar technology that uses silicon-based panels to convert sunlight directly into electricity.

This is the kind of solar power found on the rooftops of homes and businesses. But until now, it has been too expensive for utilities to use on a large and centralized basis - costing about 40 cents per kilowatt hour, compared with 10 cents for natural gas and 12 cents for wind power, according to Severin Borenstein, director of the UC Energy Institute. (A kilowatt hour is the amount of electricity needed to operate a 100-watt light bulb for 10 hours.)

Instead, utilities seeking large-scale solar plants have generally pursued a technology called solar thermal, where concentrated sunlight is used to heat a liquid that generates electricity with a turbine. Solar thermal typically costs about 18 cents per kilowatt hour.

Competitive rates

PG&E officials said their contracts with OptiSolar and SunPower would provide power at rates competitive with other renewables. That would amount to a major reduction in the cost of photovoltaic power.

But officials declined to say precisely what rates they would be paying. They said the contracts would not affect electricity rates paid by consumers.

"If they can get the costs down to the range they're talking about, that would be a real major step," said UC's Borenstein. "But we don't know exactly what the numbers are because they're not being made public. I'm wondering why there isn't more transparency in this."

Economies of scale

OptiSolar and SunPower said they are able to offer power at a lower rate than traditional photovoltaic projects for a variety of reasons, including economies of scale, technological advances and efficiencies in production.

While hailing PG&E's photovoltaic contracts as a potentially big step forward, some industry experts cautioned that there still are some hurdles to cross before those 800 megawatts of power become a reality.

Both of the plants will need approval from state and local government, where they may run into opposition from environmentalists because of the sizable amount of land involved. PG&E will have to develop transmission lines to move the power from San Luis Obispo to its customers. And OptiSolar and SunPower will need to finance construction of all those solar cells.

"A power purchase contract is one thing, but where are the bankers?" said White. "They are going to need hundreds of millions of dollars."

PG&E has said the deals are contingent on Congress reauthorizing several tax credits for renewable energy that are due to expire at the end of this year. Although there is broad bipartisan support for the credits, their renewal has been caught up in the debate over other controversial issues like offshore oil drilling and how to pay for the tax credits.

"This is contingent on the (renewable-energy tax credits) being reinstated," Borenstein said. "If Congress screws up and lets that lapse, this could be put on a shelf."

PG&E's solar deals

ProviderAmount TypeSignedOnline
Cleantech America5 MWphotovoltaic6/072009
Green Volts2 MWphotovoltaic6/072008
Solel553 MWsolar thermal7/072011
Ausra177 MWsolar thermal11/072011
BrightSourceup to 900 MWsolar thermal4/082012
Martifer106.8 MWsolar thermal/biofuel hybrid6/082011
OptiSolar550 MWphotovoltaic8/082011-13
SunPower250 MWphotovoltaic8/082010-12

Source: PG&E Co.

E-mail Ilana DeBare at idebare@sfchronicle.com.

This article appeared on page D - 1 of the San Francisco Chronicle


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Mitchiepoo wrote:
I'm as treehuggin' as they get, but why are these solar arrays being put on ranchland rather than in the desert?
8/14/2008 9:28 PM PDT
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tim78700 wrote:
So we are going to pave over 13 square miles of land to get 800 megawatts, when the san onofre nuclear power plant generates 2200 megawatts on 0.13 square miles. What a joke. Eventually people will get a clue and nuclear power will be in our future but in the meantime we will have to suffer and pay for the pipe dreams.
8/14/2008 8:22 PM PDT
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beh wrote:
Great news. I can't believe that any but a small minority of environmentalists would oppose renewable energy. Please, Congress, renew the tax subsidies for renewable energy -- which are about one-fifth of what goes to oil and gas.
8/14/2008 8:00 PM PDT
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