IMPORTANT

PG&E Agrees to End Power Purchases from Ivanpah Solar Project to Save Customers Money

Date: January 17, 2025
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As it continues to look for cost savings for its customers, PG&E is evaluating every aspect of its operations.

 

That effort includes reviewing power purchase agreements across its clean energy portfolio.

 

Ivanpah Solar is an example.

 

The concentrating solar power plant in the Mojave Desert went into service a decade ago. It was among the first such projects in the United States to provide electricity to utility customers.

 

PG&E contracted in 2009 for output from units 1 and 3. The current contract capacity is approximately 250 megawatts. The plant began generating electricity in 2014. The agreements were scheduled to run through 2039.

 

In 2021, the California Public Utilities Commission (CPUC) ordered a multi-year process for investor-owned utilities to evaluate their energy supply portfolios. As part of PG&E’s 2023 process, current plant owner Solar Partners offered PG&E the opportunity to terminate the Ivanpah Solar power purchase agreements.

 

PG&E determined that ending the agreements at this time will save customers money compared to the cost of keeping them through 2039.

 

Now, PG&E and Solar Partners have agreed to terminate the contracts if approved by the CPUC. Customers would no longer receive power from the plant beginning in 2026.

 

More affordable clean energy

 

Ivanpah Solar was built when developers were investing in many different types of clean energy. The goal was to find efficient and affordable technologies to reduce the need for greenhouse gas-emitting fossil fuels.

 

“It was really all hands on deck,” said PG&E Senior Director, Commercial Procurement Don Howerton. “The climate crisis was becoming clear. The Southwest United States had been in a megadrought for more than a decade. Heat waves had intensified. Wildfires had grown in number and size.”

 

PG&E was one of the nation’s largest buyers of electricity for utility customers. In addition to needing to comply with California’s Renewables Portfolio Standard, company leaders felt a responsibility to support clean energy through purchasing decisions, Howerton said.

 

The company had already invested in and contracted for renewables including solar photovoltaic, hydroelectricity, wind, biomass and geothermal. Adding concentrating solar power would diversify PG&E’s energy portfolio and support new technologies.

 

A concentrating solar power facility has a large number of mirrors on the ground that track the sun to direct the sun’s rays to a receiver at the top of a tower. Water is piped to the top of the tower. The water runs through the receiver’s heat exchanger and absorbs the heat from the sun and turns to steam to turn generation turbines.

 

The technology had worked on a smaller scale in Europe. Spain had several concentrating solar projects of up to 20 megawatts.

 

In the 2000s and 2010s, various private companies invested in large-scale concentrating solar power in the United States.

 

But over time, solar photovoltaic technology raced ahead of its rival in affordability.

 

“It’s so important to support investment in different projects as we look to solve climate challenges,” Howerton said. “It’s not clear in the early stages what technologies will work best and be most affordable for customers. Solar photovoltaic panels and battery energy storage were once unaffordable at large scale. Today, after years of sustained investment and improvement, those technologies provide thousands of megawatt hours of clean electricity for PG&E customers.”

 

A healthy portfolio

 

While the company forecasts that ending the agreements would cost customers substantially less than keeping them, power purchase cost forecasts and savings are confidential.

 

Ending the agreements will not affect PG&E’s compliance with California’s renewables mandates. PG&E continues to meet its state obligations and is on track to continue meeting increasing renewables mandates.

 

“In the coming years, we expect an even more efficient and affordable market for clean energy,” Howerton said. “We’re proud of our investments in renewables. We look forward to continuing to support technologies that benefit our customers through lower costs and a cleaner environment.”