SAN DIEGO, April 13, 2011 /PRNewswire/ -- San Diego Gas & Electric (SDG&E) today announced that it has entered into two, 25-year solar power purchase agreements for a total of 80 megawatts (MW) and revised its agreement with renewable energy developer NaturEner to buy power from the company's Rim Rock wind farm project in Montana.
The first of the solar agreements is a 25-year contract with subsidiaries of Sol Orchard, LLC to purchase as much as 50 MW of locally produced solar energy. The agreement calls for 21 individual, ground-mounted photovoltaic plants that would be built mainly in rural communities in San Diego County over the next two years. Most will be 2-MW projects, but some will be as large as 4 MW.
"This project is a unique, innovative concept that takes the idea of 'rooftop solar' to a new dimension," said Michael R. Niggli, SDG&E's president and chief operating officer. "Sol Orchard has found a way to make solar power available to customers in even the remotest areas of our service territory, while helping us to achieve our goal of adding as many local renewable resources as possible to our energy mix."
"We worked closely with SDG&E to design a series of small, self-contained units located near existing utility sites that can be built quickly and efficiently, some of which will be operational as early as next year," said Jeff Brothers, president of Sol Orchard.
"All of us probably are familiar with the idea of solar trees, but what we've come up with is a virtual 'solar orchard' for neighborhoods around San Diego County."
The second new solar power purchase agreement is with subsidiaries of Soitec Solar Development, LLC, a renewable energy company managed by Soitec (Euronext Paris). The agreement includes three contracts with the combined capacity of 30 MW of solar energy to be generated at three solar power plant sites in San Diego County. The plants will use Soitec Concentrix™ technology and the concentrator photovoltaic (CPV) technology modules will be manufactured at a new Soitec factory to be built in the San Diego area. The projects will deploy a ground-mounted, dual-axis tracking CPV solar power system, which uses lenses to concentrate sunlight onto very small, extremely efficient solar cells that convert the light into electrical energy.
"SDG&E is committed to using all the tools in our renewable toolkit to meet our voluntary commitment to obtain 33 percent of the electricity we deliver to customers from clean renewable resources," said Niggli. "This project with Soitec will help to develop more local renewable resources and further the efforts to improve the overall job picture in San Diego and Imperial counties."
This agreement follows the recent announcement of another proposed solar energy purchase power agreement that calls for up to 150 MW from a project to be built near El Centro, Calif., in the Imperial Valley. The Soitec factory will provide the CPV modules for both projects.
"We are extremely pleased to deploy our Concentrix™ technology for these solar power plants in San Diego County," said Andre-Jacques Auberton-Herve, chief executive officer and chairman of the board of Soitec. "Our CPV systems are perfectly suited for projects close to well-populated areas as the high system efficiency of CPV minimizes the amount of land needed for a given amount of electricity production. As a CPV leader, we are committed to the U.S. market and look forward to increasing our presence in the San Diego community with all of our San Diego operations."
Soitec will implement capacity investments and pursue options for related financing to build its San Diego-area factory. At full capacity, Soitec's San Diego-area operations will generate up to 450 direct jobs and more than 1,000 indirect jobs.
SDG&E also announced it has revised its agreement with renewable energy developer NaturEner to buy power from the company's Rim Rock wind farm project in Montana, after successful settlement talks with the Division of Ratepayer Advocates (DRA), an independent branch of the California Public Utilities Commission (CPUC), and the consumer group, The Utility Reform Network (TURN).
SDG&E initially filed an advice letter in May 2009 for CPUC approval of the contract, which includes "tradable renewable energy credits" (TRECs) for a proposed wind farm near the Canadian border. SDG&E can count the "green attributes" of the wind power toward its renewable energy requirement.
SDG&E received regulatory approval of the contract Nov. 20, 2009 and proposed a unique tax equity investment on behalf of utility customers in July 2010. The settlement with DRA and TURN includes several changes from what was originally filed, including:
SDG&E contract size: Changed from 309 MW to 189 MW
Capital cost in rate base: Limited to $250 million or 64.99 percent of the project cost, whichever is less
NaturEner contribution: Increased to at least 25 percent of project costs
Sempra shareholder contribution: At least 10 percent of project costs
As part of the agreement, DRA and TURN will have, among other things, the opportunity to actively participate in the due diligence process leading to construction financial closing. Subject to the project reaching commercial operations, SDG&E has agreed to refrain from procuring additional TRECs that are not either connected or deliverable to California through Dec. 31, 2017 -- if those contracts would make up more than 25 percent of its renewable energy requirements.
The utility's authorized rate of return that will finance the rate-based portion of the project is expected to be considerably lower than the cost of financing with a financial institution. The lower financing costs will be passed on to customers through a lower price for the wind power. Customer costs associated with financing the investment should be offset by the tax benefits and cash flows generated by the project, so, as a result, customers are expected to be "rate neutral" to this investment.
"These kinds of contracts have a very positive environmental impact on the states that make up the western area of the nation's power grid," said Niggli. "California has a real opportunity to drive the development of renewable energy throughout the region by providing the flexibility for utilities to invest in resources in the best locations," Niggli added. "We believe there are other opportunities to use this innovative financing vehicle to reduce customer costs for wind projects located here in California."
"This is a good agreement for everyone involved," said Bill Alexander, NaturEner's vice president of development. "It shows how states can cooperate to bring renewable energy benefits across state borders to move our country closer to energy independence."
SDG&E has signed five renewable contracts over the past three months, boosting its renewable portfolio by nearly 550 MW, and increasing its total amount of renewable resources under contract to more than 29 percent of forecasted retail sales by 2015. These latest contracts still need CPUC approval.
SDG&E is a regulated public utility that provides safe and reliable energy service to 3.5 million consumers through 1.4 million electric meters and more than 850,000 natural gas meters in San Diego and southern Orange counties. The utility's area spans 4,100 square miles. SDG&E is committed to creating ways to help our customers save energy and money every day. SDG&E is a subsidiary of Sempra Energy (NYSE: SRE), a Fortune 500 energy services holding company based in San Diego.