NEW YORK -(Dow Jones)- PG&E Corp. (PCG) Thursday said it signed the largest- ever purchase contracts in terms of megawatts for power generated by photovoltaic solar panels.
The utility will buy electricity from a 550-megawatt solar installation to be built by developer and module maker OptiSolar Inc. and a 250-megawatt plant from SunPower Corp. (SPWR). Financial terms of the deals weren’t disclosed.
The SunPower project is expected to start generating power first, in 2010, and to be fully operational in 2012. The OptiSolar project, using thin-film solar panels, is due to begin delivering power in 2011 and to be fully constructed by 2013. Both installations will be located in San Luis Obispo County in California.
The contracts are subject to the availability of the federal investment tax credit, which is due to expire on Dec. 31, and on improvements to the current transmission lines serving the area, according to a statement from the companies.
The announcement catapults the U.S. to the No. 1 spot as a destination for large-scale deployment of solar panels, ahead of Europe, where single-contract installations of solar photovoltaics have been much smaller.
The 800 megawatts that these developers plan to install compare with the 2.8 gigawatts of generating capacity that were installed worldwide last year, 220 megawatts of which are in the U.S.
The deals also introduce solar photovoltaics as a viable source of large-scale power generated in a single plant rather than in a distributed fashion.
“It’s a big deal to see PV making it at the central station utility scale level,” said Julie Blunden, vice president of public policy at SunPower, of Sunnyvale, Calif. “We don’t need a major breakthrough — we’re able to compete against other technologies within a two-year time frame.”
SunPower’s project for PG&E is estimated to produce 550,000 megawatt-hours of electricity a year, while OptiSolar’s project is projected to deliver 1.1 gigawatt-hours of power per year.
The ability to put photovoltaic panels where electricity is needed is often touted as one of its main advantages. But Blunden said that even with the cost of transmission and power loss from moving the electricity from a large solar PV power plant, such projects are still cost-effective. “There are huge economies of scale in going larger in any solar system, or any power plant,” Blunden said.
When asked whether its deal with PG&E means that the company had to offer significant discounts and cut into its margins, Blunden replied: “We don’t believe that we’re in a position where we have to change our message to the Street.”
She cited its recent deal to sell power from a 25-megawatt solar plant to FPL Group (FPL) that SunPower signed earlier this summer and that is due to be operational in 2009. She said that the company’s guidance for next year includes the FPL project and still predicts 30% margins.
PG&E’s approach to solar power is just one of several that U.S. utilities are trying out.
Southern California Edison, for example, plans to install and own 250 megawatts of rooftop solar, while FPL and Xcel Energy Inc. (XEL) are pursuing substation-size PV projects of about a dozen to 25 megawatts each.
These utilities are responding to strict state mandates that impose a quota for electricity generated from renewable sources. California utilities must acquire 20% of their power from solar, wind or other renewables by 2010.
Several U.S. utilities are lobbying the federal government to extend the current investment-and-production tax credits available to renewable-power generators. If the tax credits are not extended, utilities would face a double whammy of still having the renewable power mandates from their states, while not having the federal support which reduces the cost of renewables.
SunPower expects to be able to deliver 250 megawatts-worth of solar panels for the PG&E project during the three-year installation period without expanding beyond its already-announced plans, said Blunden.
OptiSolar, a closely held company based in Hayward, Calif., plans to use solar panels that it will design and manufacture in Hayward and Sacramento, Calif.
SunPower, OptiSolar and Ausra Inc., which has a contract with PG&E to supply electricity from a solar-thermal project, will need to finance an improvement to the local transmission lines, Blunden said. The companies will get their investment back later, according to FERC regulations. Blunden said that available transmission needs upgrades and any regulatory issues slowing such upgrades may cause delays to the project.
PG&E Signs 800-MW Solar Power Deals With SunPower, OptiSolar
Dow Jones
August 14, 2008: 05:00 PM EST
NEW YORK -(Dow Jones)- PG&E Corp. (PCG) Thursday said it signed the largest- ever purchase contracts in terms of megawatts for power generated by photovoltaic solar panels.
The utility will buy electricity from a 550-megawatt solar installation to be built by developer and module maker OptiSolar Inc. and a 250-megawatt plant from SunPower Corp. (SPWR). Financial terms of the deals weren’t disclosed.
The SunPower project is expected to start generating power first, in 2010, and to be fully operational in 2012. The OptiSolar project, using thin-film solar panels, is due to begin delivering power in 2011 and to be fully constructed by 2013. Both installations will be located in San Luis Obispo County in California.
The contracts are subject to the availability of the federal investment tax credit, which is due to expire on Dec. 31, and on improvements to the current transmission lines serving the area, according to a statement from the companies.
The announcement catapults the U.S. to the No. 1 spot as a destination for large-scale deployment of solar panels, ahead of Europe, where single-contract installations of solar photovoltaics have been much smaller.
The 800 megawatts that these developers plan to install compare with the 2.8 gigawatts of generating capacity that were installed worldwide last year, 220 megawatts of which are in the U.S.
The deals also introduce solar photovoltaics as a viable source of large-scale power generated in a single plant rather than in a distributed fashion.
“It’s a big deal to see PV making it at the central station utility scale level,” said Julie Blunden, vice president of public policy at SunPower, of Sunnyvale, Calif. “We don’t need a major breakthrough — we’re able to compete against other technologies within a two-year time frame.”
SunPower’s project for PG&E is estimated to produce 550,000 megawatt-hours of electricity a year, while OptiSolar’s project is projected to deliver 1.1 gigawatt-hours of power per year.
The ability to put photovoltaic panels where electricity is needed is often touted as one of its main advantages. But Blunden said that even with the cost of transmission and power loss from moving the electricity from a large solar PV power plant, such projects are still cost-effective. “There are huge economies of scale in going larger in any solar system, or any power plant,” Blunden said.
When asked whether its deal with PG&E means that the company had to offer significant discounts and cut into its margins, Blunden replied: “We don’t believe that we’re in a position where we have to change our message to the Street.”
She cited its recent deal to sell power from a 25-megawatt solar plant to FPL Group (FPL) that SunPower signed earlier this summer and that is due to be operational in 2009. She said that the company’s guidance for next year includes the FPL project and still predicts 30% margins.
PG&E’s approach to solar power is just one of several that U.S. utilities are trying out.
Southern California Edison, for example, plans to install and own 250 megawatts of rooftop solar, while FPL and Xcel Energy Inc. (XEL) are pursuing substation-size PV projects of about a dozen to 25 megawatts each.
These utilities are responding to strict state mandates that impose a quota for electricity generated from renewable sources. California utilities must acquire 20% of their power from solar, wind or other renewables by 2010.
Several U.S. utilities are lobbying the federal government to extend the current investment-and-production tax credits available to renewable-power generators. If the tax credits are not extended, utilities would face a double whammy of still having the renewable power mandates from their states, while not having the federal support which reduces the cost of renewables.
SunPower expects to be able to deliver 250 megawatts-worth of solar panels for the PG&E project during the three-year installation period without expanding beyond its already-announced plans, said Blunden.
OptiSolar, a closely held company based in Hayward, Calif., plans to use solar panels that it will design and manufacture in Hayward and Sacramento, Calif.
SunPower, OptiSolar and Ausra Inc., which has a contract with PG&E to supply electricity from a solar-thermal project, will need to finance an improvement to the local transmission lines, Blunden said. The companies will get their investment back later, according to FERC regulations. Blunden said that available transmission needs upgrades and any regulatory issues slowing such upgrades may cause delays to the project.