Southern California Edison Signs Agreements with First Solar for Two Solar Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--First Solar Incorporated (NASDAQ:FSLR) (Tempe, Arizona) has signed engineering, procurement and construction (EPC) agreements to build two large-scale photovoltaic solar power projects with Southern California Edison Company (SCE), a part of Edison International (NYSE:EIX) (Rosemead, California).

First Solar will use thin-film photovoltaic modules in the construction of the 250-megawatt (MW) Desert Sunlight facility at Desert Center, California, and the 300-MW Stateline facility to be built in northeast San Bernardino County, California. SCE will purchase electricity produced from these plants, which will be operated by First Solar.

Construction of the Desert Sunlight plant is scheduled to start in 2012, while that of the Stateline plant will begin a year later, although both projects are subject to government approval and will require network upgrades. The schedule calls for both plants to be completed in 2015.

SCE is a leading renewable power provider in the U.S. In 2008, the company procured 12.6 billion kilowatt-hours (kWh) of electricity for customers, representing 16% of SCE's total power supplied. The largest portion of this renewable energy, about 60%, comes from geothermal projects, followed by wind at 20%; biomass at 10%; and solar and small hydroelectric projects at 5% each. SCE currently has power contracts for 354 MW from solar power, so the new plants will add considerably to its solar capacity.

In June this year, SCE launched the annual call for both short- and long-term renewable energy contracts for solar, wind, biogas, biomass, geothermal, and oceanic power projects. The solicitation of renewable energy projects began in 2002 and the previous six calls have resulted in 48 new contracts, providing future power generation of 27.3 billion kWh.

Proposals for projects were to be submitted by the end of August, and SCE will advise the status of proposals to prospective sellers by October 23. Contracts will then be negotiated and submitted to the California Public Utilities Commission for approval by April 30, 2010. At this stage, no pricing structure has been revealed.

Although California has a target of producing 20% of power from renewable sources by next year, it seems unlikely the state will achieve that target, especially as most of the renewable energy capacity requires upgrades and additions to the transmission network before it can be successfully connected to the power grid. SCE is reportedly investing $2 billion in the Tehachapi Renewable Transmission Project (TRTP), which is aimed at connecting wind farms being developed in the Tehachapi Wind Resource Area in Kern County to the existing electricity grid.

SCE, like other power utilities, is looking at electricity storage options for renewable energy solutions such as solar and wind power, often referred to as "use it or lose it" power. By storing renewable energy in "battery banks" when produced during daylight hours or times of wind activity, the power can then be supplied to the grid during periods of high demand.

One unusual side effect of the push for low-emission transport is the increased use of hybrid cars, which can be powered by both gasoline and battery power. Attractive as they are, these vehicles pose new demands on the power grid. The batteries on these vehicles will most likely be recharged at night, and the recharging of a hybrid car battery has been likened to adding a house to the grid. The challenge for the power utilities is to supply that extra power without building extra power stations by using off-peak power supplied from battery banks, topped up by renewable energy.

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