However, new rules placing a cap on similar transactions will limit opportunities for other out-of-state developers.
The California Public Utilities Commission (CPUC) has approved three 20-year contracts between San Francisco-based Pacific Gas & Electric (PG&E) and Greengate Power Corporation for the RECs associated with the Calgary-based developer's 150MW Halkirk 1 and 300MW Blackspring Ridge 1 wind projects.
PG&E will use the credits to meet its obligations under California's renewable portfolio standard, which requires state utilities to meet 20% of electricity from renewables. An executive order signed by former Governor Arnold Schwarzenegger will see that figure boosted to 33% by 2020.
The approval lets PG&E receive credit in California for renewable energy that is neither produced in nor delivered to the state. It is the first such transaction since a CPUC decision in mid-January lifting a ban on buying and selling credits separately from the underlying renewable energy. Greengate, says its CEO Dan Balaban, will sell all of the energy produced by the wind farms into Alberta's competitive power market.
Balaban says the REC contracts open up the finance markets for Greengate's projects. They also provide a path towards construction in a province where wind producers have been challenged by a lack of long-term power-purchase agreements and renewable energy policy.
"These contracts are an essential component of the project economics and our financing structure," he says. Balaban would not disclose the price PG&E will pay for the RECs, but he did say it "represents a significant portion of the revenue stream" of the projects.
Construction of the Halkirk project, which is 50% owned by Edmonton-based Capital Power Corporation under a joint venture agreement struck in December, is expected to start later this year, with the wind farm coming online in 2012. Blackspring will follow in 2013, says Balaban.