Green Wombat

PG&E this morning finally consummated a long-expected solar
power deal with Silicon Valley startup Ausra, agreeing to buy 177
megawatts of green electricity generated by a solar thermal plant to be
built by the company on California’s central coast. As Green Wombat
reported Friday, Ausra — backed by marquee venture capitalists Vinod
Khosla and Kleiner Perkins Caufield & Byers — has filed a
development and licensing application with the California Energy
Commission for the project, called the Carrizo Solar Energy Farm.

With its latest power purchase agreement, PG&E (PCG) has
committed to buying more than 1.2 gigawatts of greenhouse-gas free
electricity from three large-scale solar power plants — enough to
light nearly a million homes. Construction of the Ausra power plant is
expected to begin in 2009 and go online the following year. Terms were
not disclosed — they never are in power purchase deals — but Ausra
revealed in its Energy Commission application that the agreement runs
for 20 years. The company, which decamped to Silicon Valley from Sydney
last year, claims that its Compact Fresnel Linear Reflector system —
long flat mirrors that focus the sun’s rays on water-filled tubes to
create steam that drives electricity-generating turbines — will
produce power at costs competitive with natural gas-fired plants. A
pilot power plant (Ausra photo above) is up and running in Australia.
The Carrizo solar farm will be a boon for the San Luis Obispo County
economy, employing 350 workers during construction and creating 100
permanent jobs, according to Ausra.

Carrizo will be the company’s first solar power station in the U.S.,
though in September Florida utility FPL (FPL) announced it would build
10-megawatt demonstration plant using Ausra’s technology as well as a
300-megawatt version if all goes as planned. Ausra executives have told
Green Wombat they anticipate rolling out enough solar farms to produce
at least a gigawatt of electricity over the next few years.

That might be taken as so much Silicon Valley hype, and only time
will tell if the technology lives up to its promise, but regulatory and
economic trends indicate that deals like the PG&E-Ausra agreement
is just the beginning of a wave of Big Solar projects. California’s
investor-owned utilities — PG&E, Southern California Edison (EIX)
and San Diego Gas & Electric (SRE) — face a 2010 deadline to
source 20 percent of their electricity from renewable sources, with the
ante rising to 30 percent by 2020. Those utilities are actively
negotiating gigawatts of solar power deals, sources tell Green Wombat.
Meanwhile, California-based solar power companies like Ausra and BrightSource Energy,
as well as a host of overseas competitors, are moving to license
prospective projects, confident they’ll secure power purchase
agreements with utilities as well as the financing to build their solar
power plants. That Morgan Stanley (MS) has quietly invested in
BrightSource — the company is negotiating a 500-megawatt agreement
with PG&E — is but the latest sign that Wall Street is looking to
profit from Big Solar.

Even California’s green governator weighed in on the PG&E-Ausra
deal. "Today’s agreement between PG&E and Ausra highlights how
clean energy will create jobs in California while delivering a reliable
source of renewable energy," said Arnold Schwarzenegger in a statement.
"I’m pleased to see California companies rising to the challenge of AB
32, California’s historic initiative to reduce carbon emissions and
combat climate change. Clearly, California continues to lead the nation
in clean energy research, development and generation."