PROJECT EASY GREEN

A German, an Italian, and an American solar developer walk into a bar…

I don't really have a punchline for this.

But suffice it to say that a few years ago, the American solar project developer would have had very little to talk about.

Residential and commercial solar dominated a modest market and utility-scale solar was a rounding error. Utility-scale solar in the U.S. didn't exist in 2006 and was only 58 megawatts in 2009.

That changed in 2010. Now there's more than 700 megawatts of U.S. utility solar scheduled for 2011 completion.

Here's some more utility-scale solar action. Three renewable energy developers have been selected by California utility Pacific Gas and Electric (PG&E) as the winners of its 2011 solar PV program solicitation for 50 megawatts of new solar photovoltaic (PV) power.

PG&E has a program to develop 500 megawatts of new generation from small-to-medium-sized solar projects over five years — half to be owned by the utility and half by developers who will sell their power back to PG&E. 

The projects are capped at 20 megawatts to minimize the permitting and environmental issues that can thwart larger projects (see the First Solar large project drama here). That relatively smaller size enables the projects to be located near existing open-capacity power grids and avoid the challenges of building new transmission lines.

According to PG&E, the projects were selected on the basis of price and commitment to supplier diversity. The 2011 winners are:

• a 20-megawatt project by Recurrent Energy in Kings County
• an 18-megawatt project by Westlands Solar Farms in Fresno County
• and a 12-megawatt project by Fotowatio Renewable Ventures (FRV) in Kern County

All projects will deliver power to PG&E for 20 years, with estimated starting dates in February 2013.

Recurrent Energy, owned by Sharp, has more than 450 megawatts of capacity in operation under construction or in contract. 

Westlands Solar Farms is a partnership of Fresno county landowners and energy industry professionals formed to build large-scale solar plants on agricultural lands with excellent solar resources but uncertain water supplies. Its project for PG&E will create about 150 construction jobs in an area that is suffering from high unemployment.

FRV has 40 megawatts of projects deployed in the United States, including the 14 megawatt PV array at Nellis Air Force Base. FRV also has a contract to supply power to Southern California Edison and the rights to develop up to 450 megawatts of solar power at Edwards Air Force Base.

FRV has a pipeline of projects that has grown to 280 megawatts of signed PPAs. That puts them into fourth position behind SunPower, First Solar, and Tenaska.

According to this CPUC document, 20-year contracts in 2013 have a market price referent of $0.109. And according to the pertinent CPUC advice letter, "Each of the three PPA prices is below the 2009 MPR for the 20-year delivery terms of the contracts beginning in 2013."

The U.S. utility market continues its roll.

AEP Ohio, a unit of American Electric Power (NYSE: AEP), has entered into a "participation agreement" with Turning Point Solar, a joint venture of Agile Energy and New Harvest Ventures. The Turning Point Solar Project, at close to 50 megawatts, is one of the largest solar generating facilities east of the Mississippi River.

Despite the scale of recent "loan-guaranteed" PV projects from First Solar and SunPower in the 200-megawatt to 550-megawatt range, 50 megawatts is still a lot of solar power and requires almost 250,000 photovoltaic panels (which will be made in Ohio by Isofoton).

The 49.9-megawatt commercial solar facility will be built on approximately 750 acres of reclaimed land once mined for coal in Noble County, Ohio. Construction and commercial operation of the facility will be phased in over three years with construction expected to begin in the summer of 2012 and slated to be finished in 2015.

According to Glen Davis, CEO of Agile Energy, one of the co-developers of the project, more than 600 direct jobs will be created, including approximately 300 during the construction and installation phase of the project.

The "participation agreement" defines (a) how Turning Point Solar and AEP will cooperate in the development of the project, and (b) the terms under which the project assets will be transferred from Turning Point Solar to a new company that AEP will control.

AEP Ohio intends to invest $20 million in the development of the project.

Ohio Substitute Senate Bill 221 requires that AEP Ohio supply 0.06 percent of its load in 2012 with generation from solar resources, 0.09 percent in 2013, and 0.12 percent in 2014. The benchmark requirements ramp up annually to a total of 0.5 percent by the end of 2024. 

American Electric Power is one of the largest electric utilities in the U.S., delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation's largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S.

Agile Energy, a developer of utility-scale renewable power generating projects, recently closed a $24 million second round of investment from Good Energies Capital, bringing the total amount of the investment by Good Energies to $37 million.

As the developer, Agile's role is to act as both conductor and stagehand in order to get the project ready for construction. This includes negotiating the lease, doing the land and environmental permit work, setting up the interconnection application, selecting an EPC contractor, working with a design engineering firm and setting out the construction plans so that all of the details of the project are laid out clearly and ready to be financed. A 50-megawatt project of this type will require in the neighborhood of $200 million in order to complete construction.  

Agile is working with Ohio venture firm New Harvest Ventures on this enterprise. Agile provides capital and the solar and project development know-how, while New Harvest, which originated the project, provides local knowledge and, crucially, the human network and political connections required for a project of this scope.

The deal with AEP is a develop-transfer structure, rather than a PPA.  When the project has received financing, Agile could still maintain management of the project.