Green

Following the lead of new legislation in California, utility company Pacific Gas & Electric (PG & E) is aiming to provide much of the current energy it delivers to customers from renewable sources. Under Governor Schwarztenneger, California will require utilities to acquire at least 20 percent of their power from renewable projects by 2010, and a new target of 33 percent by 2020 was recently approved. PG & E has risen to the challenge, and they currently buy 12 percent of their power from environmentally-friendly sources like solar, wind, geothermal, and biogas, with contracts in place for 18 percent. It’s an unlikely move for a power company, but they are preparing for an emerging competitive renewable energy market.

PG & E’s website claims, “On average, more than half of the electricity we deliver to customers comes from sources that emit no CO2 and an increasing amount comes from renewable sources of electricity.” They are working with several Silicon Valley VC-backed energy companies who are pushing solar technology to the next level. They have brokered a 500-megawatt agreement with BrightSource, a company out of Oakland, CA. The deal is enough energy to light up to 700,000 homes at prices competitive with less-environmentally friendly options like natural gas. BrightSource builds massive solar fields in the hottest parts of California’s Mojave Desert, enabling them to maximize the power produced by their innovative solar panel designs. They are just one of a number of companies which PG & E has partnered with to provide clean alternatives to traditional electricity sources.

In addition to buying solar energy from local firms, PG & E also administers a Solar Schools Program, which will provide up to 40 schools a year with a 1 kilowatt solar installation. The program will not only help needy schools control energy costs, but will also provide a hands-on example of how renewable energy technologies work. PG & E is offering training seminars for teachers to help them incorporate the solar project into classroom lessons. Their interest in solar also extends to private businesses, who receive rebates and incentives when they install renewable energy technologies: “Through PG & E’s Self-Generation Incentive Program, nearly 130 customers received incentives of more than $69 million for projects totaling more than 37 MW in 2006.” One of those companies is Google, who installed a solar-paneled carport at their headquarters last year.

The utility giant is also working on an initiative to tap the power of the tides in San Francisco Bay. They’ve teamed up with the City and County of San Francisco and the Golden Gate Energy Company to conduct a study which will assess the technology solutions available to harness tidal energy. This would create a zero-emissions renewal power source for PG & E. The utility hopes that, “future plans could ultimately lead to the development of a full-scale commercial project [in the bay].” Their plans include building two 40-megawatt power plants along the California coast in the next few years.

Why all the interest in renewable energy, especially coming from the largest utility company in California? Peter Darbee, CEO of PG & E, told Business 2.0 magazine, “This is a defining moment for utilities. Are we going to be central players in shaping the new energy economy that is now emerging, or are we going to leave these challenges to others?” His strategy is clearly to embrace the new trend towards renewable energy, and it’s turning out to be a sound business strategy. Darbee has taken the company from bankruptcy in 2001 to profits of $2.8 billion in 2007.

PG & E’s strategy proves that renewable energy is not only the right thing to do anymore, it’s a profitable industry. As other states begin to follow California’s lead in regulating the percentages of clean energy that utilities must distribute, other companies will surely look to PG & E’s business model for inspiration.

By Haley January Eckels