PG&E to launch vast solar project

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Pacific Gas & Electric Co. said Tuesday that it would spend $1.5 billion of ratepayers’ money to add 500 megawatts of photovoltaic power in California, one of the largest such deals in the country.

Plans call for the San Francisco utility to invest at least half of that in solar panels placed on commercial rooftops and on ground-mounted modules that PG&E; would own and operate. The other half is earmarked for long-term contracts with private-sector solar companies. Those firms would build medium-size photovoltaic projects, ranging from 1 megawatt to 20 megawatts, selling the power to PG&E.;

If the plan is approved by state regulators, PG&E; would add around 100 megawatts of photovoltaic power annually under the deal, with completion slated for 2015. At full build-out, this patchwork is expected to generate enough electricity to supply 150,000 homes.


The program “will speed the delivery of clean, renewable energy to our customers,” said Peter A. Darbee, chief executive of PG&E; and its parent, PG&E; Corp.

This clean energy comes at a price. Costing about 24.6 cents a kilowatt hour -- about double the price of similar contracts for conventional natural-gas-fired power -- the plan would boost the electricity bill of an average PG&E; ratepayer by 32 cents a month, company officials said.

PG&E; is just the latest California utility to jump into the solar business with a plan to own and operate a vast network of photovoltaic systems. Southern California Edison Co. and San Diego Gas & Electric Co. have large projects awaiting approval with the California Public Utilities Commission. Los Angeles residents will vote next month on whether to allow the L.A. Department of Water and Power to construct 400 megawatts of solar panels on their dime.

Tough state mandates require California utilities to boost their use of electricity from clean sources -- 20% by 2010 for PG&E;, Edison and San Diego Gas & Electric. All are scrambling to meet the targets. Urban projects involving solar panels offer a quick way to boost their totals. The technology is proven. No new transmission is required. Construction can be completed in just months.

The utility-financed deals also underscore the toll that the U.S. credit crisis has taken on the renewable energy sector. Green start-ups are having a tough time getting financing. Analysts expect that some will go bust or will be late in delivering on contracts to provide clean electricity that utilities were counting on to meet their mandates.

Power companies, in contrast, have strong balance sheets and a captive base of ratepayers. PG&E; and others are looking to taking matters into their own hands by constructing their own projects.


“With many renewable projects delayed, we can’t afford business as usual,” Darbee of PG&E; said.

Gov. Arnold Schwarzenegger and solar industry officials praised the deal Tuesday.

However, consumer advocates have criticized these projects as too costly to ratepayers, who already are seeing rates increase for other purposes. Under a three-year deal approved last year by state regulators, PG&E; is allowed to raise rates by $213 million annually through 2010.

Higher rates helped PG&E; Corp. post a fourth-quarter profit that more than doubled to $517 million, the company said Tuesday. A tax settlement also helped boost earnings. For the year, the company earned $1.34 billion, up 34% from net income in 2007.

Some consumer advocates contend that customer money would be better spent boosting residential subsidies to help homeowners install solar panels to cut their utility bills, instead of asking them to pay more for utility-owned solar.

“Are we going to spend ratepayer dollars to build up the utility monopoly?” said Sheila Bowers, a Santa Monica attorney and environmental activist.