San Diego, April 13, 2011 — San Diego Gas and Electric entered into two, 25-year solar power purchase agreements for a total of 80 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 energy 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.
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 Concentri 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.
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.
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.
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.
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.