June 27, 2013 - 1:03 am
Companies with leases to develop solar facilities in Eldorado Valley are having trouble selling their power.
A representative from South Korean company Komipo, which inked a 50-year lease with the city in 2011, said that the company is having trouble landing a power purchase agreement with a utility provider, which is needed before construction can begin.
“The PPA is the problem right now. We applied with the California utilities and they prefer a California project,” Las Vegas-based representative Brian Park said.
Park said the size of Komipo’s proposed 300 megawatt project is a slight problem, too, because California utilities are looking to purchase smaller amounts of power.
Companies building solar facilities in Nevada are interested in selling to California utilities because of its strict renewable energy requirements.
Park said Komipo applied for a purchase agreement through the Southern California Public Power Authority, which on its website describes itself as “a joint powers authority consisting of eleven municipal utilities and one irrigation district.”
The members listed on the website are the California municipal utilities of Anaheim, Azusa, Banning, Burbank, Cerritos, Colton, Glendale, Los Angeles, Pasadena, Riverside, Vernon, and the Imperial Irrigation District.
A representative from the authority did not respond to an interview request.
A month ago, Komipo, a major South Korean utility provider backed by its government, found out it had been placed on a backup list with more than 400 applicants, Park said.
It is looking for alternative buyers, Park said.
“We’re not expecting anytime soon to hear from the California utility companies,” Park said. “It’s really a tough situation right now, but we’re contacting a lot of companies and utilities that are using the electricity, hoping for some luck.”
Potential buyers include NV Energy and the casino industry, Park said.
Two other South Korean companies with Eldorado Valley solar facilities in the predevelopment stages, Kowepo and Techren Solar, are also having trouble landing purchase agreements, according to City Finance Director Shirley Hughes.
“They’re all having trouble getting PPAs,” she said. “The market has changed and what people are willing to pay to purchase the power is different.”
The city’s 50-year lease with Kowepo, a company responsible for the generation of 12 percent of Korea’s power, was signed in early 2012. The city’s 54-year lease with Techren Solar was signed in 2010. Representatives from Kowepo and Techren Solar could not be reached.
San Diego-based Sempra U.S. Gas Power has purchase agreements for its two undeveloped Eldorado Valley solar facilities. In December Sempra inked a 20-year agreement with Los Angeles and Burbank to sell 250 megawatts of solar power from its Copper Mountain 3 project, which is expected to be completed in 2015.
Under the terms of the leases, Komipo, Kowepo and Techren Solar have some time before they are scheduled to begin development, Hughes said.
“They all got a year or two or three, depending on them. We’re all sitting here and hoping things get through the queue and we get to the point where they can get the PPA,” she said.
If necessary, the companies can apply for an extension, she said. Techren Solar has done so.
The city has more than $10 million in the form of walk-away fees and up-front lease payments from solar companies held in a deferred account. This money cannot be spent until development of the individual projects is achieved, Hughes said.
“We’ve worked with the (City) Council and we’ve made some decisions. We’ve put this money aside so in the event these don’t come to fruition, the money is available and we’ll refund it, the portion we can refund,” she said.
If Komipo does not develop the project, the city will have to refund the first year’s rent payment of $2.6 million, but it gets to keep a walk-away fee of another $2.6 million.