US energy giants throw weight behind solar projects

Five-year solar energy programme to generate up to 500MW of power

Two of the largest energy companies in the US have this week delivered a major boost to the solar industry, announcing plans for new solar farm projects that combined will generate a gigawatt of power.

California-based Pacific Gas and Electric (PG&E) announced on Tuesday plans for a five-year solar energy programme designed to generate up to 500MW of power, providing enough energy for 150,000 homes.

The company said that 250MW of capacity would be built and operated by third-party operators, while a further 250MW would be built and operated by the utility itself, marking its first direct investment in renewable energy in the past decade.

Market watchers said that PG&E had been encouraged to build its own solar developments as a result of the recent extension of solar energy tax credits, which would allow the company to access a 30 per cent tax break.

The company added that by locating mid-sized projects of between 1MW and 20MWs on its own land and buildings, it would be able to minimise grid connection delays by ensuring they are close to existing substations.

Projects developed by independent parties will also be offered standard contracts and pricing as part of an attempt to streamline the utility's review of applications and ensure that the full 500MW of capacity is up and running by 2015.

The proposals have now been presented to the California Public Utilities Commission and the company said it is hoping to receive official approval before the end of the year.

The proposals secured praise from California Governor Arnold Schwarzenegger, who said that by "bringing renewables online as quickly as possible and advancing the development of green technologies" the utility would help the State meet its "aggressive" climate change targets.

The PG&E announcement came just a day after New Jersey-based NRG Energy announced it had inked a deal with solar thermal company eSolar to build solar farms in California and the South West, with a combined capacity of 500MW.

Under the terms of the deal, NRG Energy will invest approximately $10m for equity and associated development rights for three projects on sites in south central California and the Southwest US, where it plans to install up to 11 eSolar modular concentrated solar thermal generating units.

The company said that the first plant could begin generating electricity from 2011, which it plans to sell to local utilities through contracted power purchase agreements.

Writing in a letter to shareholders to announce the new projects, company chief executive David Crane hinted that further solar energy investments could be in the pipeline.

"While this acquisition does not represent a substantial upfront commitment of NRG Capital - less than $10m - it nonetheless signifies a meaningful step forward in NRG's efforts to be a leader in solar development in the United States," he wrote.

"These scale projects will be located in parts of the country with bountiful solar resources and will incorporate a technology that can be built at a cost that makes the projects profitable and, ultimately, value-enhancing to our shareholders," he said.