Gas utilities and state commissions must work together to help preserve rates of return, encourage conservation, and lower customers’ bills.
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Utility turbines bridge the capacity gap.
often an expensive option because most projects are located in remote areas that lack the necessary transmission capacity,” says Richard Lauckhart, managing director of enterprise management solutions at Black & Veatch in Pasadena, Calif. “So the other option is gas-fired generation. The beauty of gas is it’s relatively clean, so you can permit it close to the load center.”
San Francisco-based PG&E Corporation is in the process of investing in both. In August, the utility announced it had entered into an agreement with Topaz Solar Farms LLC, a subsidiary of OptiSolar Inc., for 550 MW of thin-film PV solar power. The utility also signed a contract with High Plains Ranch II, LLC, a subsidiary of SunPower Corporation, for 250 MW of high-efficiency PV solar power.
At the same time, PG&E is investing more than $2 billion in four gas-fired plants, the first fossil projects it has developed in 20 years. The plants will, in total, bring the utility roughly 1,900 MW of new, gas-fired generating capacity.
“We’re allowed to build our own plant if we can demonstrate to the CPUC that it’s cheaper than buying the power from someone else,” says PG&E spokesperson Darlene Chiu. “Population growth, demand-response and energy-efficiency programs and renewable options are all part of the evaluation.”
PG&E’s $370 million, 530-megawatt, combined-cycle natural gas-fired Gateway Generating station is located near Antioch and will begin operations in 2009. The $239 million Humboldt Bay Repowering Project is located south of Eureka and will employ a gas-fired system to generate 163 MW, up from its original 105-MW rating. The $673 million Colusa Project near Maxwell will generate 660 MW of electricity and begin operations in 2010.
The fourth project is a proposed $850 million, natural gas fueled power plant in Alameda County, near Oakland. If approved by the CPUC in early 2009, PG&E says the 560-megawatt plant should begin commercial operation in late 2011, or early 2012.
The project, Chiu says, would be situated near the Altamont Pass Wind Resource Area, one of the world’s oldest and largest wind power farms, and near PG&E’s own Tesla substation. “Because the plant will be located near the wind farms, we would be able access the wind generation and operate the Tesla plant as a backup, if necessary.”
Lauckhart says Black & Veatch data indicates utilities and private developers have proposed more than 17,000 MW of gas-fired capacity for California. With a total peak load of 60,000 MW, plus another 15 percent for reserve capacity, he guesstimates roughly 9,000 MW actually might be built.
The final tally and rate of development will depend, of course, on the cost of natural gas and the amount of available renewable energy. “During the price spikes last summer, we had some renewable energy developers saying they might not need production tax credits anymore,” he says.