Pacific Gas & Electric, a California based utility, has agreed to purchase 800 MW in solar power from 2 solar companies – OptiSolar and SunPower. This is exciting news for the solar industry, and advocates of clean energy, as it provides some industry-based validation for the potential of solar to serve as utility-scale power. (More on this story here, here and here). A few additional thoughts below:
The two projects represent two different technological approaches – OptiSolar uses thin-film technology, which uses much less silicon per PV panel, reducing cost, but also efficiency (and thus power output) of the system. SunPower utilizes the more traditional crystalline-silicon technology (c-Si), which conversely increases the amount of costly silicon in its panels, but results in much higher efficiency. (Quick overview of the different technologies here). To date, over 80% of solar installations rely on crystalline-silicon technology, but the most prominent U.S. solar companies (e.g. First Solar, OptiSolar) have been focused on thin-film. There are economic and technical reasons underlying the use of either, and PG&E may be hedging its bets by employing both.
Of interest also is the actual solar output from these plants. Solar capacity is typically listed in terms of peak capacity – i.e. the amount of maximum potential power generated from a solar panel at optimal conditions. Solar capacity factors have tended to range in the 17.5%-20% range, meaning that it would take from 5-5.7 MW of solar capacity to provide 1 MW of electricity. From the PG&E press release (and the OptiSolar website), the 550 MW OptiSolar site promises 1,100,000 MWh of power - a 22.8% capacity factor. The capacity factor for the c-Si SunPower site is 25.1% (550,000 MWh from 250MW panels).
In addition, most utility-scale solar power agreements have typically involved concentrated solar power – a different technology that has some storage capacity and increased economies of scale, but requires considerable land use and has been mostly located in remote regions far from where its electricity can be utilized. As reported, this is one of the first large-scale photovoltaic solar deals entered into by utilities, and it could serve as an important stepping stone towards similar deals for utility-scale PV solar. It also represents a dramatic jump in the size of past large-scale PV solar installations, which have come in well under 100MW.
Finally, and perhaps most importantly, these deals come with one large caveat. In the press release, PG&E states:
Both projects are contingent upon the extension of the federal investment tax credit for renewable energy and processes to expedite transmission needs.
Given the current situation in Washington, where the federal ITC for solar is set to expire in December despite numerous attempts at extending it, and build-out of renewable transmission infrastructure has been contentious, this is worth exploration. First, despite industry fears, it seems some solar deals may still get done in this uncertain environment, under the assumption of the ITC eventually being renewed and infrastructure being built. Second, this may unfortunately be increasing the cost of these projects, due to the added risk of this contract provision (and its impact on the cost of debt, insurance and other project costs). Given the need to reduce the cost of the projects to ensure their competitiveness with other generating sources, this is unfortunate. Third, deals of this nature and magnitude will hopefully add to the pressure on Washington to finally reach agreement on both of these issues.