Nation's largest public utility joins Panoche solar venture - Morgan Hill Times: Articles From Hollister

Nation's largest public utility joins Panoche solar venture

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Posted: Tuesday, July 17, 2012 12:01 pm | Updated: 9:57 am, Wed Jul 18, 2012.

The largest public utility company in the nation is now a partner in the Panoche Valley solar project as part of a move that should add construction clout for the venture expected to break ground sometime in 2014.

Duke Energy Generation Systems, a subsidiary of North Carolina-based Duke Energy, bought into the partnership about two months ago. Representatives from the Fortune 250 company, along with officials with partner PV2 Energy, will host an informational breakfast Wednesday morning to provide details on the merger and other general information looking ahead, such as a timeline for the project.

“They want to meet the leaders of the community – not just political leaders,” said Brad Sullivan, an attorney with the law firm L&G representing the joint venture. “They’re very excited about the opportunity to participate in the renewable energy market.”

The company initially was called Solargen Energy before a new owner in the spring of 2011 acquired it and renamed the estimated $1.2 billion Panoche Valley endeavor as PV2 Energy. Its new name under the joint partnership is Panoche Valley Solar, LLC, said Eric Cherniss, a project development official who has been with the company since its Solargen origins.

Cherniss highlighted Duke Energy’s “long track record of finishing construction.” Duke Energy is more than 150 years old and serves more than seven million customers, according to its company fact sheet. It also maintains a portfolio of renewable energy assets.

“Duke’s a larger organization and they have different skill sets in environmental, legal, community outreach – things like that,” Cherniss said.

The currently estimated 399-megawatt project encompasses 4,885 acres in southern San Benito County but also includes more than 10,000 acres for mitigation to protect locally endangered species, such as the kit fox and blunt-nose lizard. It is expected to create 50 permanent jobs and nearly 200 construction jobs, according to company documents.

It has been in the works, at least officially, since the fall of 2009. As expected, such a large-scale project has encountered its share of bumps in the road, including extensive and often tense public dialogue at county board and planning commission meetings before an official approval on the environmental documents in November 2010.

Opponents from Save Panoche Valley, the Santa Clara Audubon Society and the Sierra Club followed up by filing a lawsuit to halt the project – challenging the board's approval of the environmental impact report, The Williamson Act contract cancellations, the development agreement and the water assessment report. A judge in August 2011 ruled in favor of the solar company, while opponents are appealing the decision.

Panoche Valley Solar, LLC hopes to have the lawsuit matter behind it by the end of the year, Cherniss said. The company expects to spend much of 2013 preparing – such as holding job fairs – before starting construction in 2014, he said. The project is expected to create 50 permanent jobs and nearly 200 construction jobs, according to company documents.

Delays from the outside and within have held up movement on construction. Company leaders initially shot for a pre-2011 construction time frame but lost out on a portion of the federal support potentially available because of delays. It cannot obtain a federal grant for up to 30 percent of property value with some limits. Construction had to start by the end of 2010 to get the grant, while the company still remains eligible for a tax credit – along with other federal and state incentives – on 30 percent of facility costs, Cherniss noted.

“Of course, if you can get cash from the federal government given to you rather than a tax credit, that’s more valuable,” he said.

The Panoche Valley project, however, is not alone in its relatively slow push to break ground. Cherniss pointed out that other direct competitors in the market have not obtained the necessary power purchase agreements required for the federal funding. Panoche Valley Solar wants to have its power purchase agreement finalized by sometime in 2013, he said.

As for other details, the project size and scope have not changed since the county’s approval last fall. Cherniss said all prior commitments – such as an annual payback to the county in lieu of tax exemptions, with an estimated average of about $1 million per year – remain intact as part of the re-executed agreement. The company still also owes around $150,000 in delinquent payroll taxes to the Internal Revenue Service and the State of California in relation to a February 2009 merger with TMEX USA – the move that then propelled the start-up to being a publicly traded company.

Supervisor Jerry Muenzer represents Panoche. Publicly, he has remained “neutral” on the solar project. He said he remains so and will wait to hear from the new joint venture Wednesday “about what they have to say.”

 

If You Go:

WHO: Solar project owners

WHAT: Discuss new partner, timelines

WHEN: 8:30 a.m. to 10:30 a.m. Wednesday

WHERE: San Juan Oaks

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