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Utility PG&E placing bets in solar tech race

California utility betting on both solar photovoltaic panels and concentrating solar power to lower solar electricity costs, as it also explores technologies for grid storage.

NEW YORK--California utility Pacific Gas & Electric is betting big on solar power but it's still not sure which technology will ultimately win out.

PG&E's senior vice president of energy procurement, Fong Wan, on Tuesday said that the utility has opened up bidding for a 2-megawatt solar photovoltaic array, part of a five-year program to install 500 megawatts worth of solar power in California, one of the biggest programs in the country.

Solar photovoltaic panels with trackers at the Nellis Air Force base in Nevada. SunPower

Wan spoke at the Jefferies Global Clean Technology Conference here about the utility's renewable energy and efficiency strategy, offering insights into the hurdles and real-world tradeoffs of using different green technologies.

In addition to its huge solar program, the company--considered one of the most progressive and technology-savvy utilities in the U.S.--is in the process of rolling out smart-grid capabilities to 5 million homes. It is also exploring large-scale energy storage methods, including batteries, compressed air, and pumped hydro, executives said.

Its investments in solar are driven by state mandates that require utilities to get 20 percent of their electricity from renewable sources by 2010, which could be increased to 33 percent by 2020.

PG&E recently decided to install solar power facilities itselfbecause it has the capital and income to take advantage of a federal 30 percent tax credit for renewable energy investments. The lack of profits at many banks has dried up the market for renewable energy investments that rely on tax credits.

The utility will install about 250 megawatts worth of solar power facilities itself and purchase the rest from independent power producers. Each installation will be medium-size--between 2 and 20 megawatts. Two megawatts of capacity would be enough to supply about 600 homes.

PV or CSP?
The first 2-megawatt project will be a solar photovoltaic (PV) installation near a PG&E substation. But the utility is also investing in concentrating solar power (CSP) systems, which create heat from the sun to make steam that turns an electricity turbine, Wan said. There are a number of CSP designs, including mirrored troughs and flat mirrors to reflect light to make heat.

The cost for both solar PV and concentrating solar power continues to go down, but it's not clear yet which one will be most economic for the utility in the long run, he said.

"It's going to be a really, really interesting and close race. No one knows the answer as to who is going to win. We're interested in building a portfolio of both," Wan said.

Each offers different advantages and is better suited for different environments. Concentrating solar power systems are more efficient overall, but they require water cooling to get the highest levels of efficiency, Wan said. CSP systems, which can be large 500 megawatt-installations, offer cost efficiencies through scale and have some storage options.

PV panels, on the other hand, are well-proven technology and can be installed in smaller increments and connected to the grid without massive transmission upgrades. That siting flexibility, even if costs are higher, is a significant advantage to solar PV panels, said Wan.

"PVs are easier to implement right off the bat. CSPs are dependent on transmission," he said. "CSP (systems) are all in the desert and there's no existing transmission lines that will go there. A generation plant is hard enough to site, but a transmission line would impact a whole path of probably 100 communities."

By investing in solar, PG&E is hoping to accelerate cost reductions by fostering competition between different PV and CSP technologies, he said.

Storage, too, is a technology where PG&E is a leading-edge customer.

Having several hours of storage available allows utilities to flatten out their power generation over the course of a day. The peak electricity demand at PG&E late in the afternoon can be double its power generation during the middle of the night. That means some power plants are only used 40 times a year, said Wan.

The company is investigating the use of lithium-ion batteries for storage as well as so-called flow battery where giant tanks hold electrolytes that are released to create a few hours' worth of electricity.

For the last 20 years, PG&E has had a pumped hydro station where water from a reservoir is pumped up to the top of a mountain and then released to make electricity during off-peak times. The utility is exploring three more sites.

With compressed air storage, pressurized air is pumped into underground formations such as limestone caverns. PG&E is working with the Electric Power Research Institute to evaluate suitable sites, said Hal La Flash, PG&E's chief technology officer.

PG&E's smart-grid program envisions using communications technology to better control the flow of electricity across a more diverse grid of centralized and distributed power generation. Martin LaMonica/CNET

The company's smart-grid program of equipping 5 million homes with systems to let consumers take advantage of off-peak rates will be installed in the next two and a half years, according to Scott Lang, the CEO of Silver Spring Networks, the company which PG&E chose for the smart-grid roll-out. Lang also spoke at the Jefferies conference on Tuesday.

On average, smart-grid trials have shown that consumers can decrease energy consumption between 5 and 15 percent by having more information on usage. Through energy-efficiency programs, the per capita energy consumption of California residents has stayed steady since the 1970s.

See Martin LaMonica's microblogs/tweets from the Jefferies conference on Twitter.