United States

United States

Wind PPAs at risk as PG&E bids to renegotiate contracts

Bankrupt US utility Pacific Gas & Electric (PG&E) is seeking to preserve the option of cancelling or renegotiating renewable energy contracts in a bid to cut costs, exposing a number of projects and developers.

Wildfires in California in 2017 and 2018 are said to be a major cause of PG&E's financial troubles (pic: Dick Lyon / WikiCommons)
Wildfires in California in 2017 and 2018 are said to be a major cause of PG&E's financial troubles (pic: Dick Lyon / WikiCommons)

Google Translate

The San Francisco-based utility, the US’s largest, voluntarily sought bankruptcy protection at the end of January in the face of huge liabilities resulting from the deadly wildfires in 2017 and 2018.

However, state regulators seem unlikely to allow the long-term contracts to be "rejected", as PG&E has euphemistically put it in federal court documents.

When PG&E previously declared bankruptcy, in 2001, its wind power purchase agreements were not cancelled.

PG&E currently has 2,150MW of wind energy under some 26 separate power purchase agreements (PPAs), according to state data.

Overall, the utility has over 250 contracts for renewable energy representing some $57 billion in investment.

Most of the contracts – including wind – are at above-market rates, because the costs of renewable energy have been falling, a driver for PG&E to seek to renegotiate them.

The deals at greatest risk – by being over the current market rate by the most – are probably the solar thermal and solar PV contracts signed in 2011-2014, said Nancy Rader, executive director of the trade group California Wind Energy Association.

But as Rader admits: "The bankruptcy puts a cloud over the all the [renewable energy] contracts."

She said PG&E has been losing market share as Consumer Choice Aggregations, or local entities that aggregate customer demand, multiply.

It is also lagging in meeting state renewable-energy requirements.

"We really didn’t need this bankruptcy on top of a market that is already in a shambles," she said.

Still, Rader said that the California Public Utilities Commission (CPUC) is expected to recommend to the bankruptcy court that the renewables contracts remain intact.

On 4 February NextEra, an owner of wind and solar projects that sell electricity to PG&E, asked a US District Court — not the bankruptcy court — to rule on the issue of whether PG&E can block the Federal Energy Regulatory Commission (FERC) from having jurisdiction over PPAs, news agency Reuters reported.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in

Windpower Monthly Events


Latest Jobs