PG&E signs PPA for output of 163MW NextEra wind project

California utility Pacific Gas & Electric (PG&E) has reached an agreement to buy the output of NextEra Energy Resources’ 163MW North Sky River wind project in California’s windy Tehachapi Pass area.

NextEra, a subsidiary of FPL Group and the largest North American wind owner, intends to use GE 1.6MW turbines at the project. Blatnner Energy is the engineering, procurement and construction contractor.

The utility is seeking approval of the 25-year power purchase agreement (PPA) from the California Public Utilities Commission (CPUC). With an expected capacity factor of 35%, the North Sky River project is expected to generate up to 597GWh of energy a year.

PG&E says in an 80-page advice letter to the CPUC [ PDF] that the PPA price is below the market price referent – a proxy for the long-term cost of energy from a new 500MW natural gas-fired power plant – but specific price information is held confidential.

The PPA calls for the project to begin commercial operations by 31 December 2012.

PG&E served 15.9% of its 2010 load with renewable energy, according to the latest report from the CPUC. That’s short of California’s Renewable Portfolio Standard (RPS) target of 20% by 2010, but flexible compliance rules allow utilities to make up deficits in subsequent years. PG&E chief of external communications Jonathan Marshall writes in a blog post that the utility “is on target to make the 20% goal in the next year or two, if enough of its renewable energy contractors meet their contract deadlines”.

Southern California Edison reached 19.3% and San Diego Gas & Electric hit 11.9% renewable energy in 2010.

Utilities are scrambling to meet the state’s newly enacted 33% by 2020 RPS target. PG&E, for example, aims to procure 800-1,600GWh of renewable energy each year, equivalent to 1-2% of its annual retail electricity sales volume. The North Sky River contract, negotiated bilaterally with the developer rather than through the utility’s annual RPS solicitation, would contribute significantly toward that goal.

The PG&E wind PPA adds to the 36 contracts for 2.1GW of renewable energy generation California utilities submitted for CPUC approval in the first half of the year. Almost 300MW of new capacity came online in that period and another 777MW is expected to reach commercial operation yet this year.