Pacific Gas and Electric Co. has renegotiated double-digit discounts on five previously signed contracts for energy from third-party solar farms and battery storage projects in California, the state's largest utility disclosed in filings with the U.S. Bankruptcy Court for the Northern District of California in San Francisco.
"I believe that the utility's assumption of the [contract revisions] represents a valid exercise of the utility's business judgment and will benefit the utility's estate," Marino Monardi, energy procurement and policy director for Pacific Gas and Electric, or PG&E, said in a July 31 declaration attached to the utility's motion for approval of the amended agreements.
The court must approve the reworked deals, saving an estimated $20 million, as part the utility's Chapter 11 restructuring with its parent company, PG&E Corp. The California Public Utilities Commission must also consent to the changes.
The request is PG&E's first related to its review of $42 billion in commitments with 350 counterparties holding 387 power purchase agreements for 13,668 MW, more than half of which is renewable energy.
In the filings, the utility asked Judge Dennis Montali to approve 10% reductions in the megawatt-hour price PG&E agreed to pay in 2017 to Recurrent Energy LLC for the output from three separate 20-MW sections of its Gaskell West complex near Lancaster, Calif., in Kern County. The actual prices of the 15-year power purchase agreements, with original start dates of December 2020, were kept confidential. PG&E and the developer also agreed to extend start dates by up to two years.
San Francisco-based Recurrent is an affiliate of Canadian Solar Inc.
In addition, PG&E negotiated a 10% price discount of a 15-year resource adequacy agreement with a development arm of esVolta for its 75-MW Hummingbird Battery Energy Storage System in Santa Clara County. The lithium-ion battery array, also with an original contract start date of December 2020, could be delayed by up to one year, according to the motion.
PG&E renegotiated an 11% reduction in the price of a 10-year deal with a subsidiary of Micronoc Inc. for 10 MW of aggregated behind-the-meter energy storage. It could be delayed by roughly 15 months under the proposed contract amendments.
Both energy storage contracts were approved in November 2018 as part of PG&E's state-ordered search for alternatives to natural gas-fired generation in an area between Silicon Valley and Monterey Bay. In May, Montali authorized the two developers to cancel the contracts after they requested permission to do so because of looming development costs and concerns that PG&E might seek to end the deals as part of its restructuring.
An affiliate of Enel SpA also received the bankruptcy court's permission to cancel three energy storage projects, totaling 85 MW. Those deals were not among the renegotiated contracts presented July 31. Enel did not immediately respond to a request for clarification on whether it intends to renegotiate or withdraw from those agreements.