Calif. PUC OKs two PG&E renewable energy contracts

NEW YORK, June 4 (Reuters) - The California Public Utilities Commission (PUC) on Thursday approved two renewable energy contracts for PG&E Corp's (PCG.N) Pacific Gas and Electric Co to help the utility meet its renewable energy requirements.

In a release, the PUC approved PG&E's plan to buy power from NextLight Renewable Power LLC's 290-megawatt Agua Caliente Solar facility in Yuma County, Arizona, through a 25-year power purchase agreement (PPA) starting in 2014.

Officials at NextLight were not immediately available to discuss how much the Agua facility would cost.

Industry sources estimate it costs about $6,200 per kilowatt to build a solar photovoltaic plant and $5,100 for a solar thermal plant, versus about $2,000 for onshore wind, $4,000 for nuclear, $2,200 for coal and $1,000 for combined-cycle natural gas.

The PUC also approved of a 25-year power purchase agreement with DTE Stockton LLC to buy energy from a fossil-to-biomass conversion project starting in 2013. DTE Stockton proposed to convert the existing 45-MW coal-fired facility into a biomass-burning plant.

A spokesman at PG&E said the company did not disclose how much it would pay for the renewable power due to competitive reasons.

Renewable power is more expensive than fossil-fired generation today, according to industry sources. But over time could actually be cheaper than fossil-fired power due to the volatility of fossil fuel prices, especially natural gas, and if the federal government puts a price on carbon emissions from fossil-fired plants to combat global warming.

California gets almost 60 percent of its power from natural gas-fired plants, 15 percent from nuclear, 12 percent from renewable other than hydropower and about 10 percent from hydropower.

RENEWABLE ENERGY RULES

More than 30 states have renewable energy requirements on the books to spur job growth, foster a healthier environment and reduce carbon emissions.

California, which already leads the nation in generation from non-hydroelectric renewable energy sources like wind, geothermal and solar, has several renewable requirements.

The state PUC requires power investor owned utilities like PG&E to obtain 20 percent of their retail sales from renewable energy sources by 2010.

In addition, Gov. Arnold Schwarzenegger signed executive orders in 2008 and 2006 establishing a 33 percent renewable energy goal by 2020, and requiring 20 percent of renewable electricity should be generated from biomass resources within the state by 2010.

The PG&E spokesman said the company already has more than 20 percent of future energy needs locked up and is committed to achieving the 2010 goal within the flexible compliance period, which allows the utility to make up current year procurement shortfalls with future surpluses. (Reporting by Scott DiSavino; Editing by David Gregorio)