Utilities enter solar sector

In the corporate world, if you can’t beat them, why don’t you “eat” them up? Lately a series of events of utilities acquiring solar firms or operating own solar projects have been happening. If your utility firm knows that it has to pay for energy derived from renewable energy, as governments start to enforce this “sell excess renewable energy to utilities” policy, your firm might as well acquire some companies or operate own solar projects to meet whatever target set such as 5% or 10% of energy produced must derive from renewable energy sources.

In PWC’s renewables deals 2008 report, it says that only 16% of all 2008 renewables purchases (all types including solar) were by alternative energy companies themselves. The largest category of buyers is power utility companies, who accounted for 32% of total deal value in 2008, followed by infrastructure and other financial investors (28% of deal value). See figure below (right click to view the picture if it’s too big):

PWC renewables deals 2008

You can read an article from Earth2Tech on “Intersolar: 5 Reasons Utilities Want to Build Their Own Solar Projects”. If you want to know the top utilities generating solar electricity, here’s an end of 2007 figures from Solar Electric Power Association (SEPA):


Some of the recent events and M&As:
1. On 20 Aug 2009, Wellington, NZ-based Meridian Energy has acquired San Francisco-based Cleantech America, which develops utility-scale photovoltaic solar farms. NZ’s largest electricity generator said the move is expected to allow the company to grow its US expertise and implement renewable energy projects in California, while adding solar for the first time to its portfolio. Financial details were undisclosed. The state-owned enterprise, which already develops large-scale wind and hydroelectric projects, said it eventually plans to bring solar to the New Zealand market. Meridian is also currently building the world’s southernmost wind farm in Antarctica, on Ross Island.

2. In Oct 2008, the US utilities became eligible to participate in federal renewable energy tax credits when the $18 billion tax credits package was passed. Previously, utilities were not eligible to receive the credits. Duke Energy is one of the utilities to be involved in owning and operating their own plants (see here) that sets it apart from other utilities that have opted to buy solar power. But more utilities could enter the solar power generation business themselves due to the legislation. See separately the news from Solar Energy Industries Association (SEIA) here regarding the federal solar tax credit.

3. In February 2009, PSE&G, a subsidiary of Public Service Enterprise Group (NYSE:PEG), announced plans to spend $773 million on 120 MW of solar photovoltaics, marking one of the first major projects by a U.S. utility to take advantage of federal solar incentives.

4. In July 2009, on the heels of news that New Jersey plans to double its solar power installations, New Jersey-based Atlantic City Electric and Jersey Central Power & Light said they are issuing a request for proposal to secure solar renewable energy certificates. The solar subsidiary of New Jersey’s largest utility Public Service Electric & Gas had a $515 million plan approved by state regulators to install 80 MW of solar power through 2013. The move would effectively double the state’s amount of solar power, making it America’s second most solar-powered state, only behind California.

5. On 10 Aug 2009, Italy’s largest electric utility Enel said its 6 MW photovoltaic plant, located in Montalto di Castro in the Viterbo province, has been completed. The plant marks the largest such facility in Italy and indicates the Rome-based company is continuing to grow its renewable energy business. The plant, covering nearly 10 hectares (24.7 acres), is expected to generate more than 7 million KW hours per year—enough for the power needs of 2,700 households. The facility’s solar energy is expected to prevent the emission of about 5,000 tons of carbon dioxide annually and its panels were supplied mainly from Sharp Solar. Enel also has a 3.3 MW plant in Salerno, Italy, which was the country’s first large-scale photovoltaic plant established in 1993 and is still operational.

It will be interesting to see how many more solar firms will be gobbled up by utility firm or how utility firms will operate their own solar plants; just as interesting to see how oil firms will diversify its income from renewable energy sources. On the other hand, solar firms are also fighting back by entering the utilities sector, earning themselves the name “solar utilities”, i.e. see First Solar’s aggressive move into utility projects. Doesn’t this remind you of the telecoms’ era of wireless versus landline competition/consolidation? We’ll see how then the utilities sector will evolve within the next decade.

Meridian Energy gets into solar, acquiring Cleantech America
Utilities to Hit Solar Scene
Duke Chops $100M Distributed Solar Project in Half
New Jersey utilities continue to pile on ambitious solar plans
Italy’s largest PV plant goes live