PG&E Makes Headway on Utility-Owned Solar Projects


Exactly two years ago, utility PG&E first announced it wanted to invest in and own solar projects in its home state of California. Well, on Thursday, PG&E announced there’s been some progress on that front in the form of three solar photovoltaic projects it says it will develop and own in central California.

The utility says the three projects will total 50 MW, and are the first phase of its plan to own a total of 250 MW of solar projects, with each project ranging in size from 1 to 20 MW. Construction should begin within the next month or so on the three central valley plants, and should be completed close to the third quarter of this year.

PG&E is working with Cupertino Electric and solar panel maker Solon Corporation for the projects, and Solon says it will build a 15 MW solar project in Fresno, Calif. that will be completed by October 2011. Back in 2009,PG&E said it planned 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.

While PG&E’s solar investments may seem par for the course for a utility, in fact they’re a pretty interesting move. Owning and financing plants could help PG&E usher along the solar power that will enable it to reach the state-mandated goal of 20 percent of its electricity generated by renewable energy by 2010, (it didn’t make that, but has three years to comply). PG&E generates billions in taxable income that could provide needed funding.

Another reason to own plants is, quite simply, insurance. Some of the solar projects from which PG&E had agreed to buy power were being built by young startups, which by nature can be risky, unreliable, and prone to failure. For example, PG&E partner Optisolar flamed out and sold its project to First Solar (s FSLR) in early 2009. Another PG&E partner, Ausra, was sold to Areva Solar for an undisclosed amount. BrightSource is working on its solar thermal plant and recently raised funds, but utility-scale solar thermal is still a difficult market for a startup.

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