PG&E to Own Photovoltaic Solar Plants, Could Act As "Green Knight" for Solar

photovoltaicgroundplant1As we predicted, northern California utility PG&E (s PGE) said today it plans to start investing in and owning solar projects in its home state. Under a program that will run five years, PG&E plans to build out solar photovoltaic projects that together will produce 500 MW of power, 250 MW of which it will own outright. The utility says it’s currently focusing on photovoltaic solar projects, instead of, say, solar thermal, because photovoltaics can be deployed more quickly and are “a proven technology.” PG&E submitted the program application to the California Public Utilities Commission this morning.

The program is similar to the one Southern California Edison (SCE) unveiled in March of 2007, which is seeking to develop 250 MW of photovoltaic panels across roughly two square miles (collectively, some 65 million square feet) of commercial building rooftops. But PG&E’s plan is different in a couple of key ways; according to Fong Wan, senior V-P of energy procurement for PG&E, the company deliberately structured it in such a way as to avoid some of the same pitfalls.

While SCE’s program is aimed at commercial rooftop space, PG&E’s solar PV projects will largely focus on ground-mounted systems, allowing the utility to forgo having to acquire rooftop space from building owners. And PG&E is dedicated to working with different independent developers, on projects of 1 MW-20 MW in range, so a variety of contractors will likely be involved. SCE has largely been managing the solar rooftop installation itself.

While PG&E’s solar investments may seem par for the course for a utility, in fact they’re a big deal. As we pointed out earlier this morning, PG&E can use its taxable income to provide much-needed funding for companies to get solar plants up and running. A lot of the solar projects from which PG&E has agreed to buy power are being built by young startups, which by nature can be risky, unreliable, and prone to failure — particularly in these difficult economic times when capital is scarce. Expect to see some of PG&E’s PV solar partners — like OptiSolar — celebrating this news.

PG&E CEO Peter Darbee told the audience at a press event this afternoon to expect more of these types of solar financing methods from PG&E. He said the utility is discussing a similar investing project for solar thermal projects, as well as ways in which the utility can act as a so-called “green knight” for solar projects that are having trouble accessing the capital markets. In the latter’s case, PG&E would focus on solar projects being built with the least risky technology possible, Darbee said.

PG&E plans to spend $1.4 billion in capital expenses on its portion of the solar photovoltaic program, and is expecting a return of at least 8.7 percent. The program needs to be approved by the CPUC, but Darbee said PG&E modeled its plan closely to that of SCE’s and as such expects the approval process to be a swift one.