PG&E has signed a spate of solar contracts over the past year

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Energy experts said the purchase could change the face of therenewable energy industry by showing that photovoltaic power can beaffordably produced on a large, centralized scale, not just on therooftops of individual homes and businesses.
"This scale is 10 times larger than what was being talked aboutawhile ago," said Daniel Kammen, director of the Renewable andAppropriate Energy Laboratory at UC Berkeley.
"This makes large-scale solar an increasingly likely and large partof the energy portfolio in California and the West," said V. JohnWhite, director of the Center for Energy Efficiency and RenewableTechnologies in Sacramento.
PG&E and California's other utilities are under a state mandate togenerate 20 percent of their energy from renewable sources such assolar, wind and geothermal power by 2010.
They now remain far from that goal: PG&E received just 11.4 percentof its energy from renewable sources in 2007, while SouthernCalifornia Edison and San Diego Gas and Electric got 15.7 percentand 5.2 percent of their respective power from renewables. Tiny percentage
And solar makes up a particularly tiny share of that - less than 1percent of PG&E's total power.
However, PG&E has signed a spate of solar contracts over the pastyear aimed at expanding its supply of renewable energy.
Together with the 800-megawatt deal announced Thursday, these solarcontracts would increase renewable energy to 24 percent of PG&E'sportfolio by 2013, utility officials said.
"We will continue to explore such innovative technologies as weaggressively work to increase the amount of renewable energy weprovide our customers," said Jack Keenan, chief operating officerfor PG&E.
The contracts announced Thursday are significant because theyinvolve photovoltaic power, a solar technology that usessilicon-based panels to convert sunlight directly into electricity.
This is the kind of solar power found on the rooftops of homes andbusinesses. But until now, it has been too expensive for utilitiesto use on a large and centralized basis - costing about 40 centsper kilowatt hour, compared with 10 cents for natural gas and 12cents for wind power, according to Severin Borenstein, director ofthe UC Energy Institute. (A kilowatt hour is the amount ofelectricity needed to operate a 100-watt light bulb for 10 hours.)
Instead, utilities seeking large-scale solar plants have generallypursued a technology called solar thermal, where concentratedsunlight is used to heat a liquid that generates electricity with aturbine. Solar thermal typically costs about 18 cents per kilowatthour. Competitive rates
PG&E officials said their contracts with OptiSolar and SunPowerwould provide power at rates competitive with other renewables.That would amount to a major reduction in the cost of photovoltaicpower.
But officials declined to say precisely what rates they would bepaying. They said the contracts would not affect electricity ratespaid by consumers.
"If they can get the costs down to the range they're talking about,that would be a real major step," said UC's Borenstein. "But wedon't know exactly what the numbers are because they're not beingmade public. I'm wondering why there isn't more transparency inthis." Economies of scale
OptiSolar and SunPower said they are able to offer power at a lowerrate than traditional photovoltaic projects for a variety ofreasons, including economies of scale, technological advances andefficiencies in production.
While hailing PG&E's photovoltaic contracts as a potentially bigstep forward, some industry experts cautioned that there still aresome hurdles to cross before those 800 megawatts of power become areality.
Both of the plants will need approval from state and localgovernment, where they may run into opposition fromenvironmentalists because of the sizable amount of land involved.PG&E will have to develop transmission lines to move the power fromSan Luis Obispo to its customers. And OptiSolar and SunPower willneed to finance construction of all those solar cells.
"A power purchase contract is one thing, but where are thebankers?" said White. "They are going to need hundreds of millionsof dollars."
PG&E has said the deals are contingent on Congress reauthorizingseveral tax credits for renewable energy that are due to expire atthe end of this year. Although there is broad bipartisan supportfor the credits, their renewal has been caught up in the debateover other controversial issues like offshore oil drilling and howto pay for the tax credits.
"This is contingent on the (renewable-energy tax credits) beingreinstated," Borenstein said. "If Congress screws up and lets thatlapse, this could be put on a shelf."