PG&E Signs Massive Solar Deal With BrightSource

brightsourceThe northern California utility PG&E has announced one of the largest solar thermal contracts to date, with plans to buy a potential 900MW of power from five large solar thermal plants built by Oakland-based startup BrightSource Energy. BrightSource’s Senior VP of Marketing and Business Development, Charles Ricker, tells us that building the five plants will cost between $2 billion to $3 billion and that Morgan Stanley will lead the financing of the first plant.

PG&E signed contracts for “options” for about 400MW of the nearly-a-gigawatt of solar power, so we’ll see how much the utility decides to go through with. The plants will use BrightSource’s central power tower design, which includes an array of mirrors that reflect the sun’s light onto a central receiver full of water, creating steam and powering a turbine. The plants, the first of which could come online as early as 2011, are to be built in the Mojave Desert.

Ricker tells us the company needs to raise project financing for each of the plants, four that will be 200MW and one that will be 100MW. While BrightSource has secured Morgan Stanley as the lead financier on the first plant, the company is also talking to Goldman Sachs, JP Morgan and all the big name project finance institutions.

However, the biggest barrier to getting the projects done will be securing transmission lines to deliver the solar-generated power. “Transmission lines are the first, second and third most significant factor,” when building solar thermal projects, Ricker told us.

But BrightSource isn’t alone out in the Mojave, nor are they alone in selling solar thermal power to PG&E. Last July PG&E agreed to buy 550 megawatts of solar power from Solel’s Mojave plant and in November signed up to buy 177 megawatts from Ausra’s plant near San Luis Obispo, Calif. Both deals pale in size compared to this most recent deal with BrightSource.

PG&E is working hard to make sure it meets California’s goal of having all major utilities generate 20 percent of their power from renewable sources by 2010. In addition to these solar thermal interests, PG&E has been brokering deals in wind and geothermal as well. But PG&E has been stung in the past when its first geothermal deal (and first-ever renewable energy deal) fell apart. We’re hoping these solar plants fare better. PG&E estimates that by the end of 2008 a full 14 percent of its delivered energy will be from renewable sources.

Image courtesy of BrightSource.
Katie Fehrenbacher contributed to this report.