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PG&E Wants to Ditch Big Batch of Planned Utility-Scale Solar

NOTE: See the short update at the end of the post.

The nation’s largest solar industry group is objecting to an attempt by Pacific Gas & Electric to eliminate a hefty batch of solar power solicitations set for this year and 2017, in part, the group said, because the utility could be mistaken if it thinks the price tag will go down in the future.

In a January petition to the California Public Utilities Commission, PG&E said it doesn’t need additional solar power plants to meet its near- and medium-term obligations under the state’s Renewable Portfolio Standard, which requires the utility to get a third of its power from renewables by 2020, rising to 50 percent by 2030. PG&E added that contracting for more solar now could hurt ratepayers, given that the cost of renewable energy is trending down and that new “more efficient and cost-effective” technologies could become available if it waits.

The precise amount at issue isn’t explicitly spelled out in the petition, but it looks to be 136.5 megawatts, which on an annual basis could produce electricity equal to the amount used by about 50,000 California households.

A 15-megawatt Five Points solar plant near Fresno,, built under PG&E's truncated "PV program."

The 15-megawatt Five Points solar plant, built under PG&E’s truncated “PV program.”

Originally, the power was part of a special “PV program” intended to develop 500 megawatts of solar within PG&E’s territory at plants ranging in size from 1 to 20 megawatts, on the smaller side for utility-scale power in California. Half the power was to be owned by PG&E, the other half was to be obtained through power purchase agreements.

But in 2014, PG&E sought to cut short the program two years and around 210 MW shy of completion, transferring the remaining portion half to a scheduled 2015 auction and half to the 2016 and 2017 solicitations it now wants to eliminate. In December, the utility executed four power purchase agreements totaling 73.5 MW rolled over from the PV program.

Responding this week to PG&E’s petition, the state’s Office of Ratepayer Advocates gave a thumbs up. “Given PG&E’s current RPS portfolio and compliance position, it is unnecessary to lock ratepayers into long term contracts at the current market price,” the ORA said.

But the Solar Energy Industries Association, the voice of U.S. solar, asked the CPUC to deny PG&E’s petition. The group argued, for one thing, that the assessment that PG&E is in good shape vis-à-vis the RPS was based in part on the assumption that the 2016 and 2017 solicitations would happen. The group noted that when PG&E asked to end the PV program and move the unused megawatts over to the other auction mechanism, the utility said doing so would “result in procurement that better matches PG&E’s demonstrated RPS need, which is later in the decade and beyond.”

Plus, the group said, PG&E won’t necessarily be able to get cheaper renewables by kicking the solar can down the road:

“Undergoing solicitations in 2016 and 2017 will allow developers to take advantage of the recently extended 30% Investment Tax Credit and thereby lower their bid price – a benefit which will pass through to PG&E’s customers in the form of lower cost renewable energy. Forestalling additional procurement for several years will preclude PG&E from capturing the ITC benefit for its customers.”

The ITC was set to fall to 10 percent for utility-scale projects at the end of this year, but in December Congress passed an extension and gradual phase-out. The credit remains at 30 percent through 2019, falls to 26 percent in 2020, 22 percent in 2021 and then 10 percent thereafter.

As for the “new technologies” argument by PG&E, the SEIA said such developments are spurred by procurement, not by sitting back and waiting for them to happen.

“In order for there to be market innovation and the creation of new and more cost efficient technology, there has to be procurement,” SEIA wrote. “Indeed, that was the very purpose behind the Commissions approval of PG&E’s PV program – i.e., promoting the development of a certain technology, smaller scale PV. Forgoing all renewable solicitation for the next few years undermines rather than  enhances PG&E’s future opportunities to procure RPS resources using better technologies at lower prices.”

UPDATE: The Sierra Club has joined in opposing PG&E on this. Like the solar folks, the Sierra Club says these solicitations are baked into all the decision-making that’s already gone down on PG&E’s RPS requirements. The club notes, as well, that “many potential bidders will have already begun the resource-intensive process of preparing the system impact and interconnection studies PG&E requires.”