BIG CALIF SOLAR POWER PLANT DEAL - IF...

The biggest photovoltaic power purchase deal EVER, ANYWHERE, was just announced. Financial terms not disclosed – except one item: No federal investment tax credits (ITCs), no deal.

One other little item: No available transmission, no deal.

The solar companies involved will finance the new transmission. They'll get their investment back in fees, according to FERC regulations. All they need is clearance from regulators.

It’s so perfect: These 800-megawatts would catapult the U.S. into the world leadership for solar photovoltaic (PV) power production – IF U.S. political leaders and regulators are willing to demonstrate their worthiness of world leadership by passing an extension for the ITCs (they expire December 31) and approve the new transmission the nation so urgently needs.

It’s like somebody came to you and said, “Look, we’ll guarantee you an Olympic Gold Medal if you’ll commit to doing the training. That’s it. A guaranteed Gold. Just do the work.”

Yet this Congress, on 13 separate occasions in the last year, has said, "What? Work for the Gold? Not us."

The interesting thing about these people blocking the extension of the ITCs (and the wind industry’s production tax credits (PTCs) and the other New Energy incentives) is they’re not exactly bad people. They’re just stuck in a way of thinking about energy that was born in the 1950s and died in the 1970s, a belief that if it isn’t fossil fuels, it isn’t really energy.

Is 800 megawatts of solar PV real energy? 2.8 gigawatts of new solar were built in the entire world in 2007. 800 megawatts is almost 1/3 of that and the U.S. gets it in ONE set of deals.

It is just these kinds of deals that will drive solar industry expansion and drive down the costs that are already becoming competitive.

Julie Blunden, vice president of public policy, SunPower: "There are huge economies of scale in going larger in any solar system, or any power plant…"

This pair of deals is indicative of a trend in solar power plant development. Utilities are doing big solar deals all over the U.S. (Ex: Southern California Edison will install and own 250-megawatts of rooftop solar. FPL Group and Xcel Energy are developing multiple 12- to 25-megawatt installations.)

The utilities are driven by state Renewable Electricity Standards (RESs) requiring them to obtain specified portions of their power from New Energy sources like solar, wind and biomass by a specific date.

California’s RES requires PG&E to obtain 20% of its power from New Energy by 2010. PG&E and the other California electricity providers will be hard-pressed to meet that requirement if Congress’s failure to extend the ITCs and PTCs prevent deals like this one from going through and keep New Energy companies from building capacity.

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PG&E Signs 800-MW Solar Power Deals With SunPower, OptiSolar
Yuliya Chernova, August 14, 2008 (Dow Jones via CNN Money)
and
Utility Announces Two Photovoltaic (PV) Plants Equivalent to Almost Double the Amount of Current U.S. Grid-Coonected PV Capacity
August 14, 2008 (Solar Electric Power Association)

WHO
PG&E Corp; SunPower (Julie Blunden, vice president of public policy); OptiSolar; Solar Electric Power Association (SEPA) (Julia Hamm, executive director)

WHAT
PG&E, SunPower and OptiSolar completed the biggest power purchase agreement ever made for photovoltaic (PV) solar panel-generated electricity, 800 megawatts.

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WHEN
- 2010: The 250-megawatt SunPower installation is expected to start producing electricity.
- 2012: The SunPower installation is expected to be complete.
- 2011: The OptiSolar project will begin producing power.
- 2013: The OptiSolar project will be fully constructed.
- 2007: The U.S. built a total of 220-megawatts of new solar.

WHERE
- Both installations will be in central California’s San Luis Obispo County.
- Single contract PV installations in Europe are typically much smaller.
- SunPower is based in Sunnyvale, Calif.
- OptiSolar is based in Hayward, Calif.

WHY
- PG&E will buy the power generated by OptiSolar’s 550-megawatt thin-film PV facility and the power generated by SunPower’s 250-megawatt PV panel facility.
- The thin film installation will be cheaper but produce fewer megawatt-hours per panel. The SunPower PV-silicon panels will be mounted on trackers to maximize megawatt-hour production.
- SunPower’s project: 550,000 megawatt-hours of electricity/year.
- OptiSolar's project: 1.1 gigawatt-hours/year.
- SunPower did a similar 25-megawatt deal with FPL Group. It predicts 30% margins on both deals.

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QUOTES
- Julie Blunden, vice president of public policy, SunPower: "It's a big deal to see PV making it at the central station utility scale level…We don't need a major breakthrough -- we're able to compete against other technologies within a two-year time frame."
- Julia Hamm, executive director, SEPA: "PG&E's announcement represents the largest single photovoltaic commitment from an electric utility anywhere in the world…It represents the pinnacle in a series of large and innovative U.S. electric utility solar projects that have been announced in the last six months."