2008 Corporate Responsibility Report

How we are creating a smarter foundation for a sustainable future

Investing in Renewable Energy Resources

California’s Renewable Portfolio Standard (RPS) requires each investor-owned utility to meet 20 percent of its customers’ electric demand through eligible renewable resources by 2010, with provisions allowing the utilities to account for renewable resources that are under contract and will be delivering energy by 2013.

PG&E customers benefit from more than 90 MW of wind energy generated from an Iberdrola Renewables site in Sherman County, Oregon. Photo courtesy of Iberdrola Renewables

In 2008, 12 percent of PG&E’s delivered electricity mix came from RPS-eligible renewable resources. Because a large portion of PG&E’s delivered electricity came from open-market purchases in 2008, California regulators calculate that an additional 2 percent came from renewable resources, but this amount does not qualify toward the state’s RPS target.

PG&E currently holds contracts for renewable energy deliveries that represent more than 20 percent of its future energy needs. However, the ability of developers to actually bring new resources online is subject to risks. For example, tight capital markets and lack of transmission are presenting significant challenges, in addition to other hurdles such as permitting and technology development. As a result, achieving the 20 percent target by 2010 represents a significant challenge.

PG&E remains fully committed to working to achieve this goal. We will continue to pursue every avenue to increase eligible renewable resource procurement, including general solicitations, bilateral negotiations and further exploration of potential utility ownership.

Last year, PG&E continued to aggressively add renewable electric power resources to its supply through contracts with third-party developers. During 2008, PG&E entered into a number of new contracts with developers. These contracts represented almost 1,800 MW of additional future renewable energy supplies.

In total, since 2002, PG&E has entered into contracts for additional supplies of approximately 3,600 MW of renewable energy—wind, solar, geothermal, biomass and small hydro resources. These include agreements for future supplies from projects that must be successfully permitted, built and connected to the grid before they can deliver.

In early 2009, PG&E asked the CPUC to approve our proposal to develop and construct up to 250 MW of utility-owned PV generating facilities, to be deployed over a period of five years, at an estimated capital cost of approximately $1.5 billion, and to execute power purchase agreements for up to 250 MW of PV projects to be developed by independent power producers.

Photo courtesy of Sempra Generation.

The new renewable energy agreements PG&E signed last year included some of the largest-ever commitments for utility-scale solar energy, for example:

  • Sempra Generation’s new El Dorado Energy solar facility in Nevada, which began delivering 10 MW of photovoltaic (PV) solar energy in January 2009;
  • San Joaquin Solar, which will generate 107 MW from an innovative combination of solar thermal trough technology and steam turbines powered by biomass fuel;
  • OptiSolar Inc. (now First Solar, Inc.) and SunPower Corporation, two utility-scale PV solar power contracts—generating 550 MW of thin-film PV solar power and 210 MW of high-efficiency PV solar power, respectively; and
  • BrightSource Energy, Inc., for up to 900 MW of power to be supplied from numerous solar thermal electric generating projects.

Located on more than 80 acres, the El Dorado Energy solar facility will generate up to 23 GWh of renewable energy annually, equivalent to the amount of energy needed to serve more than 3,360 residential homes annually. Photo courtesy of Sempra Generation.

PG&E also continues to pursue its “WaveConnect” program that will study and demonstrate technologies to convert the abundant wave energy off the coast of Humboldt County into electricity distributed to PG&E customers. PG&E was awarded a $1.2 million competitive matching grant by the U.S. Department of Energy, along with a $4.8 million authorization from the CPUC toward completing environmental and feasibility studies of the program.

If developed and licensed by the Federal Energy Regulatory Commission, each project could provide up to 40 MW of supply. PG&E also signed on to a set of shared principles on ocean renewable energy—joining the Environmental Defense Fund and a diverse array of groups including conservation organizations, utilities, renewable energy companies and academics. The principles establish a framework for an integrated and comprehensive approach to ocean management.

In addition to executing contracts with third-party developers, PG&E is exploring developing and/or owning renewable generation resources, subject to CPUC approval. For example, during 2008, PG&E researched numerous opportunities for utility-owned wind generation within both California and the western United States, including installing meteorological towers on our own land to further investigate the potential for wind generation.

PG&E’s efforts also include supporting the development of renewable resources by working with regulatory and governmental agencies to facilitate timely construction of transmission lines and permitting of proposed project sites.

For example, last year, PG&E encountered challenges when planning a transmission line connecting a new source of wind energy to the electric grid. The project, part of enXco’s 150 MW Shiloh II wind farm, was temporarily delayed because of potential impacts to the California tiger salamander, an endangered species under federal law. PG&E worked with the U.S. Fish and Wildlife Service to expedite a permit allowing the project to move forward while also ensuring the protection of the salamander.

Renewable Portfolio Standard—Contracts Signed in 2008
Project (Developer)
Location
Technology
MW
GWh/Year

Rattlesnake Road Wind Power Project
(Arlington Wind Power Project, LLC)*
Arlington, OR
Wind
103
240

BrightSource Energy, Inc.
Ivanpah Dry Lake and Broadwell Dry Lake, CA
Solar Thermal
5001
1,230

Calpine Geysers (Calpine Corporation)*
Sonoma and Lake Counties, CA
Geothermal
57
500

San Joaquin Solar 1&2 (Martifer Renewables Electricity, LLC)
Fresno, CA
Solar/Biofuels
107
700

Hatchet Ridge Wind, LLC (Babcock & Brown Limited)
Burney, CA
Wind
103
303

Klondike IIIa (Iberdrola Renewables)*
Sherman County, OR
Wind
91
263

Topaz Solar Farm (OptiSolar, Inc.)2
Carizzo Plains, CA
Photovoltaic
550
1,148

High Plains Solar Farm (SunPower Corporation)
Carrizo Plains, CA
Photovoltaic
210
594

El Dorado Energy (Sempra Generation)*
Boulder City, NV
Photovoltaic
10
23

Wadham Energy LP*
Colusa County, CA
Biomass
26
141

Total
 
 
1,757
5,142

* Operational as of April 2009.

1 This contract contains provisions for up to 900 MW.

2 First Solar, Inc. acquired OptiSolar, Inc.’s solar project pipeline.

Renewable Portfolio Standard—Contracts Signed, 2002–20081
Type
Number
MW
Geothermal
6
493 to 591

Wind
10
778

Biomass/Biofuels
13
129 to 154

Solar Thermal
3
1,227

Solar Photovoltaic
5
777

Solar Thermal/Biomass Hybrid
1
107

Total
38
3,511 to 3,634

1 This chart does not reflect terminated, cancelled or CPUC-rejected contracts. It also does not include small renewable generator contracts of up to 1.5 MW.