Northern California utility PG&E (s PCG) already plans to own 250 MW of solar PV projects, and now it wants its first wind assets — and it’s willing to spend $900 million to get them. Today PG&E said it will purchase and operate a wind farm called the Manzana Wind Project from the U.S. arm of the Spanish engineering firm Iberdrola Renewables.
Manzana is planned for 7,000 acres in the Tehachapi area of Kern County. It’s slated to have a generating capacity of 246 MW, and could start producing power in December 2011 if it’s approved the California Public Utility Commission. Manzana will cost PG&E just over $900 million in total capital costs, including paying Iberdrola to build the wind farm, says the utility. For PG&E’s customers, that investment will require a slight rate increase of 1.1 percent in 2012 compared to 2009 (for an average customer that’s $0.25 more per month). Like a group of scholars said earlier this week at an event at Google’s (s GOOG) San Francisco headquarters, we’re going to have to get used to a new era where energy is neither cheap nor dirty.
There’s a variety of reasons why a utility would want to own clean power projects. Utilities can use their taxable income to provide much-needed funding to get projects up and running. Recent revisions to federal renewable-energy tax credits opened the door for a purchase like PG&E’s Manzana wind project by allowing utilities to get tax breaks for this type of investment. PG&E CEO Peter Darbee actively worked on getting those rules changed.
Some of the startups that are building these clean power projects can also be risky. Take PV solar maker OptiSolar, which sold off to First Solar (s FSLR) a coveted 550 MW solar project that was supposed to supply PG&E with solar power, and then eventually shut down manufacturing and cut staff. Working with a company that goes out of business is probably something PG&E wants to avoid.
Owning a clean power plant puts the control and financing in the hands of the utility. And PG&E needs to make sure these plants are up and running on time because it’s trying to hit the state renewable portfolio standard that says utilities need to get 20 percent of their electricity from renewables by 2010. PG&E says the Manzana project will put out 670 gigawatt-hours per year and “contribute significantly to PG&E’s efforts to meet California’s Renewable Portfolio Standard.”
Image courtesy of brentdanley via Flickr Creative Commons.