NRG Goes on Solar Buying Spree, Nabs SunPower Project

Over the past two years, a large electricity generator has emerged as a key supporter of solar energy in the U.S.: NRG Energy. Tuesday morning, Princeton, N.J.-based  NRG through its subsidiary, NRG Solar, announced its largest solar ambitions to date, with a plan to spend up to $450 million in equity over four years on a 250-megawatt project being developed by SunPower (s SPWRA).

SunPower expects to start construction on the project — called California Valley Solar Ranch in San Luis Obispo County — in the second half of 2011, and it should start delivering power by the end of 2011, with final completion by 2013. Utility Pacific Gas and Electric already has signed a 25-year agreement to buy the electricity from the power plant.

With the investment, NRG plans to become the sole owner of the power plant. It also hopes to finance part of the project by lining up a federal loan guarantee, which entitles its recipient to borrow money at lower interest rates. The guarantee also means the government would pay back the loan if the borrower couldn’t.

California Valley Solar Ranch is but one of a string of solar power projects that has caught NRG’s fancy. The power producer bought a 21-megawatt project in California from First Solar last year. Back in September, NRG said it would team up with Euru Energy America to build three power projects totaling 45 megawatts in California. These projects will use solar panels as well. In June, NRG said it was buying nine projects under development in California and Arizona from U.S. Solar. The companies didn’t disclose the price; NRG said the acquisition would nearly double its portfolio of solar projects under development to 1.15 gigawatts.

Just last month, NRG Solar said it would invest $300 million in BrightSource Energy’s 392-megawatt solar thermal Ivanpah project in the Mojave Desert of California. That deal made NRG the largest equity investor in the solar thermal project, which also is being financed by a nearly $1.38 billion loan guarantee, which entitles the company to borrow that amount from the U.S. Treasury’s Federal Financing Bank. The total cost of the project will be roughly $2 billion, said NRG Energy’s GEO David Crane last month.

NRG began its first foray into solar electricity generation with its 2009 investment and project development deal with eSolar which, like BrightSource, uses mirrors to concentrate the sunlight to boil water and generate steam for running turbines.

NRG’s solar moves reflect the overall optimism of the U.S. solar market, which some project developers and solar equipment manufacturers hope will become bigger than European countries’ markets, which have largely grown quickly as a result of lucrative government incentives. Germany has been the largest solar market in the world, but some of its lawmakers are looking at scaling back its subsidy program even more than previously planned next year.

The U.S. market currently has about 5 gigawatts of solar panel-based projects that already have lined up utility buyers for electricity, according to GTM Research. Many of the utilities are signing these power purchase agreements in order to meet state mandates for selling renewable energy. For example, California is requiring its utilities to get 33 percent of electricity from renewable sources by 2020.

The country could see about 274 megawatts of utility-scale photovoltaic projects being put in place this year, a 369 percent jump from 2009, though some of the projects appear to be delayed and won’t be done by the year’s end, GTM said. About 5.6 gigawatts of solar power plants could come on-line between now and the end of 2014, GTM said. First Solar (s FSLR) holds more than 40 percent of the electricity sales contracts with utilities (for projects under development), followed by SunPower, Sempra Generation and others. First Solar and SunPower, both solar panel makers, tend to sell the projects they build and then operate the power plants for the owners.

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Photo courtesy of pgegreenenergy