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Summary:

The biggest barrier to building all these solar thermal power plants in the Mojave desert is, unsurprisingly, cost. At this week’s Fortune Green conference the CEO of California utility PG&E, Peter Darbee, said he’s had discussions about using PG&E’s deep pockets to buy their own solar […]

The biggest barrier to building all these solar thermal power plants in the Mojave desert is, unsurprisingly, cost. At this week’s Fortune Green conference the CEO of California utility PG&E, Peter Darbee, said he’s had discussions about using PG&E’s deep pockets to buy their own solar thermal power plants. It’s a big deal because utilities don’t traditionally own solar power-generating systems, and PG&E’s $36 billion in assets could potentially provide much-needed funding for solar startups to get these plants up and running in California.

“There are some very compelling financial reasons for utilities to own solar plants,” explained
PG&E spokesperson Keely Wachs. “One reason that Peter highlighted is the fact that utilities can leverage their assets to get relatively less costly access to capital.”

But PG&E says there are some hurdles standing between it and the solar power-generation business, namely the Investment Tax Credit (ITC). The ITC, a tax credit for 30 percent of a solar investment, has helped to reduce the costs of building solar systems for numerous solar companies. But as Wachs notes, it doesn’t extend to the utility industry — at least not now.

PG&E would obviously like to share in this credit, so much so that Darbee said he is actively trying to get the regulation amended so that utilities could qualify. But if it’s not, he says the company will look into creating a subsidiary that would qualify, ultimately giving PG&E access to the credit.

ITC or no, PG&E still wants to own solar plants. “I wouldn’t say that a lack of the ITC would prevent us from pursuing ownership of solar plants,” Wachs told us.

Utilities are increasingly being subject to state renewable portfolio standards, which means they have to make sure a certain percentage of their energy comes from renewable sources. This is likely driving utilities to become more aggressive in getting into the power generation business.

While some utilities have started acquiring wind projects, very few have moved to own solar thermal plants. Though Southern California Edison will own its distributed photovoltaic rooftop plan, which it announced back in March. And if PG&E does decide to own a solar plant, it won’t be the first time in its history that PG&E will generate power. Wachs explained that “prior to deregulation, the corporation did own other generating entities. The company was forced to sell these assets under deregulation.”

The solar startups building these plants in the desert would certainly support the idea of PG&E’s ownership plans. Some, like the CEO of solar thermal startup Ausra, Bob Fishman (our interview with him here), said, are expecting it. “I see utilities stepping into the space and becoming owners of plants,” he said at the Fortune conference.

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  1. Nanosolar Promises “Fabulous Residential” Solar « Earth2Tech Thursday, April 24, 2008

    [...] executive reading this and are worried that municipal power will put you out of business while PG&E outflanks you by buying up those solar thermal plants in the Mojave, Roscheisen invites you on a solar Euro [...]

  2. PG&E still owns the Diablo Canyon Nuclear Power Plant, the Helms hydroelectric plant, the Gateway Generating Station and and various other fossil and hydro generating facilities. They were forced to sell a lot during deregulation, but not everything.

  3. reference FPL ENERGY, LLC part of FPL group.

    currently largest thermal energy producer in USA. committed to several more facilities in FLA, CALIF with expenditures committed to several billion $$. now producing from two CALIF sites. future work involves AUSRA and others. sites now in MOHAVE.

  4. E2T Video: PG&E CEO Paints the Future of Utilities « Earth2Tech Wednesday, April 30, 2008

    [...] Energy, Yahoo! Buzz PG&E CEO Peter Darbee recently caught our attention in a big way when he said that he’d like to use PG&E’s deep pockets to buy and own solar thermal plants. [...]

  5. Solel Sells $250M of Solar Gear to Spanish capability Companies | Monday, May 26, 2008

    [...] a lengthy permitting process and a huge upfront cost, both difficult propositions for a startup. PG&E has told us it wants to own its own solar potential plants, so perhaps it could work with Solel to buy the [...]

  6. eSolar Scores 245MW Solar Deal in SoCal « Earth2Tech Tuesday, June 3, 2008

    [...] Northern California utility PG&E aso already has several deals in the works with solar thermal startups Solel, BrightSource Energy and Ausra. Heck, PG&E might even build and own its own solar thermal power plants. [...]

  7. PG&E inks deal with Martifer to buy 106.8 megawatts of solar-biofuel hybrid power » VentureBeat Friday, June 13, 2008

    [...] Earth2Tech reported that CEO Peter Darbee has expressed interest in using PG&E’s considerable assets, around $36 billion, to purchase solar thermal plants outright in the future. For now, however, its ability to do so is constrained by the lack of an investment tax credit (ITC), a 30 percent tax credit for solar investments that doesn’t extend to the utility industry. [...]

  8. PG&E inks deal with Martifer to buy 106.8 megawatts of solar-biofuel hybrid power | Me Too! Sunday, June 15, 2008

    [...] Earth2Tech reported that CEO Peter Darbee has expressed interest in using PG&E’s considerable assets, around $36 billion, to purchase solar thermal plants outright in the future. For now, however, its ability to do so is constrained by the lack of an investment tax credit (ITC), a 30 percent tax credit for solar investments that doesn’t extend to the utility industry. [...]

  9. Report: Solar to Power 10% of the U.S. by 2025 « Earth2Tech Tuesday, June 17, 2008

    [...] But utilities will have to work with solar startups and energy regulators, each of whom has their own part to play. For startups, the goal is to “bring installed solar systems costs to $3 per peak watt by 2018,” according to the the report. Meanwhile, regulators need to fashion policy that allow utilities to develop large-scale solar projects. [...]

  10. PG&E inks deal with Martifer to buy 106.8 megawatts of solar-biofuel hybrid power | Mostly Related. Thursday, July 10, 2008

    [...] Earth2Tech reported that CEO Peter Darbee has expressed interest in using PG&E’s considerable assets, around $36 billion, to purchase solar thermal plants outright in the future. For now, however, its ability to do so is constrained by the lack of an investment tax credit (ITC), a 30 percent tax credit for solar investments that doesn’t extend to the utility industry. [...]

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