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Home > News > Industry News > Due to the impact of PG&E&.....

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Due to the impact of PG&E's restructuring of the California PV project

  • Source:the Internet
  • Release on :2019-01-24
According to the New York Times, the US Pacific Gas and Electric (PG&E) company will enter the bankruptcy restructuring phase on January 29 because of the huge compensation for the huge mountain fire caused by the company's power equipment. As the main utility company in California, the bankruptcy of PG&E is likely to greatly affect the development of renewable energy in California and the United States as a whole.

After PG&E declared bankruptcy, the City of New York immediately stated that the company should actively honor its cooperation as an energy supplier, including "selling electricity from photovoltaic power plants and wind farms under the Long-Term Power Purchase Agreement (PPA)."

It is understood that the current PG&E assets include 5.9 GW.PhotovoltaicPower generation capacity and 1.3 GW of light and heatPower generationInstalled capacity. These projects were basically completed before 2012 and cost about $150/MWh. According to Credit Suisse's data, PG&E's PPA price-weighted average is $140/MW, and the current price is only $32.5/MW. The costly cost of early PV and wind power projects may make future takeovers prohibitive.

In addition to the company's own projects, PG&E bankruptcy has a greater impact on renewable energy projects with associated power purchase agreements. Due to the bankruptcy and restructuring of PG&E, renewable energy projects that had previously signed a power purchase agreement will lose their power underwriters and need to re-find the power consumption market, which is closely related to the rating and financing of renewable energy projects. It is reported that Berkshire Hathaway Energy's 550 MW installed Topaz solar farm has been downgraded by S&PPM's credit rating to "junk", and NextEraEnergy's 250 MW installed Genesis photovoltaic power plant has also been downgraded.

According to statistics, Credit Suisse’s downward credit rating may increase the cost of new power purchase agreements by 10% to 20%, which is equivalent to an increase in electricity prices from US$36/MWh to US$39/MWh. Developers need to absorb the loss of renegotiated power purchase agreements by raising the price of new projects. However, even so, the above price is still much cheaper than the average price of PG&E of $100/MWh.

However, for California, there is no expectation of a slight increase in electricity prices, as this may undermine California's renewable energy and zero-carbon energy goals. Earlier, the federal court in Ohio ruled that the bankrupt utility company FirstEnergy violated several loss-making power purchase agreements and forced FirstEnergy to maintain a high PPA agreement.

However, no matter how California wants to maintain low renewable energy costs to continue its ambitious zero-carbon energy goals, the impact of PG&E bankruptcy can't be easily erased. In addition to California's most important power underwriter, PG&E is the state's largest energy efficiency and electric vehicle infrastructure investor, investing more than $1 billion annually in this area. As PG&E's bankruptcy restructuring progresses, its negative impact on California may intensify. PG&E, the driving force behind the rapid push for California's goal of zero-carbon energy, may eventually become its biggest resistance.


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