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Allure of Solar-Natural Gas Integration Uncertain

While the role of natural gas-fired generation seems pretty clear when it comes to increased reliance on wind energy for large-scale electricity supplies, the same cannot be said for utility-scale solar projects, despite current bullish pronouncements from the government and renewable energy sectors.

One thing is clearer as the first half of this year winds down: judging from California's experience in approving thousands of megawatts of large solar projects in 2010, a shift toward photovoltaic (PV) technology and away from solar thermal projects is definitely under way. The recent Solar Energy Industries Association (SEIA) and GTM Research projections for the U.S. solar market to double this year are largely based on solar PV developments.

So far in June, SEIA issued predictions of 1.8 GW of solar PV this year, compared with 887 MW installed last year, followed by a San Francisco renewable energy investment firm, CleanPath LLC, announcing last Tuesday that it intends to invest $800 million in more than 1,000 MW of solar PV during the next five years.

Reinforcing this trend, Sempra Energy's San Diego Gas and Electric Co. (SDG&E) signed two contracts for 235 MW of large-scale solar PV, bringing its total number of PV contracts for the year to collectively representing 1,035 MW. Just ahead of the latest solar signing, SDG&E signed contracts for 450 MW from three gas-fired peaking plants slated for San Diego County.

The amount of added gas-fired generation needed to balance electricity loads with ever-more solar generation sources is unknown at this time, according t California Energy Commission (CEC) experts. But with a 33% renewable portfolio standard (RPS) goal for 2020, the focus among the state's energy analysts is what will be needed assuming that level of renewable-based power 10 years from now.

Additional gas-fired generation needed to support a 33% RPS is currently being studied by the California Independent System Operator (CAISO), which runs the private-sector part of the state's transmission grid. "CAISO, CEC and California Public Utilities Commission (CPUC) analysts are discussing this issue," said Ivin Rhyne, who heads the CEC electricity analysis office.

While there are no definitive answers yet, the issue of gas-fired generation's role in a more predominant renewable mix is part of the Long Term Procurement Process headed by the CPUC and supported by the CEC in recent workshops. Part of the work papers used include western-wide projections for the retirement of more than 2,600 MW of coal-fired generation by 2020 and forecasted natural gas prices at 15 major western delivery points in which the lowest monthly projected price never drops below $4/MMBtu and the highest prices never get above the low $6/MMBtu area.

In contrast to the solar PV world gaining traction, Department of Energy (DOE) Secretary Steven Chu recently announced conditional commitments for $2 billion in loan guarantees for two concentrating solar power (CSP) project in the Southern California Mojave Desert regions of San Bernardino and Riverside counties for separate 250 MW projects, but much larger solar thermal projects that have been trying to get started for the past six years are now either being abandoned entirely or being switched to solar PV projects on a smaller scale than the earlier CSP projects approved by state siting officials.

A CEC spokesperson confirmed last Friday that the two biggest solar thermal projects approved last year for development -- Stirling Energy Systems' (SES) Calico and Imperial Valley projects -- have both been sold to new developers who are struggling to make the projects work as smaller-scale PV technology projects, hoping that investment and ultimate regulatory OKs will come easier than they did using the SES solar dish/Stirling Engine technology.

Calico Solar's new owner, K Road Sun, LLC, modified the project last March and filed the revised plans with the CEC, which is holding a workshop in Sacramento on Tuesday to review the revised project. Calico's new backers said the proposed revisions would not change the project's size, boundary or generating capacity; it would modify the solar collector technology. In December the CEC licensed Calico as a 663.5 MW facility using SES's SunCatcher technology.

Under the proposed new approach, the project would generate 100.5 MW from SunCatcher technology and 563 MW from single-axis tracker photovoltaic technology. The 4,600-acre U.S. Bureau of Land Management (BLM) site is in the Mojave Desert near Interstate 40 about 37 miles east of Barstow. The BLM approved a right-of-way lease for the original project and now will also be processing an amendment to its project approval, a CEC spokesperson said.

In Imperial Valley, the current developer, a unit of Arlington, VA-based AES Corp., has indicated to the CEC at one point that it was revoking its development license, but shortly thereafter it withdrew its request to abandon the project and said it would be filing by this Thursday to pursue the project on a solar PV basis.

"AES Solar plans to switch to 100% PV for Imperial Valley Solar," said the CEC spokesperson, noting that the power plant developer/operator has until Thursday to inform the state power plant siting agency. "If you don't subject the request to revoke before June 30, the company would get charged that $25,000 annual compliance fee."

In the coming months, it may become clearer how many of the now burgeoning large-scale solar PV projects actually get financed and under construction. But for integrated resource planners wondering what level of future gas-fired generation will be needed, no one seems to have a clear picture. SDG&E is the only one of the major private-sector California utilities thus far that has reached out to add more gas-fired capacity specifically to back up the new solar and wind contracts it is signing.

"The output from most kinds of renewable generation fluctuates throughout the day, posing a challenge for our system operators who must balance supply and demand every few seconds to maintain reliability in the region," said SDG&E Senior Vice President James Avery, who runs the utility's power supply operations.

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