NRG NRG Energy Inc

By Cassandra Sweet 

California regulators threw a lifeline Thursday to the struggling Ivanpah solar plant, which has failed to generate the electricity it is required to produce under contracts with PG&E Corp.

The California Public Utilities Commission approved without discussion forbearance agreements that would give the owners of the plant, BrightSource Energy Inc., NRG Energy Inc. and Alphabet Inc.'s Google unit, up to a year to work out its problems.

The unconventional solar-thermal project uses more than 170,000 mirrors mounted to the ground to reflect sunlight to 450-foot-high towers topped by boilers that heat up to create steam, which in turn is used to generate electricity.

But since opening in 2014, it has angered some environmentalists by killing thousands of birds, many of which are burned to death--and has so far failed to produce the expected power.

PG&E's California utility had asked the commission to approve the agreements, saying that the plant would otherwise be in danger of shutting down if it failed to meet contractual requirements.

BrightSource was pleased with the decision, said Joe Desmond, a senior vice president at the company.

"Performance has steadily improved since the project was delivered on time and on budget," he said.

The extension was approved over objections from consumer groups, which wanted PG&E to cancel the contracts or renegotiate them to get a lower price.

The plant, located about 50 miles southwest of Las Vegas in California's Mojave Desert, cost roughly $2.2 billion and received about $1.5 billion in federal loans, according to the Energy Department.

The plant's two units that serve PG&E are expected to generate 640,000 megawatt-hours a year, according to documents from the commission. The units generated 45% of that amount in 2014, and 68% in 2015, according to a Wall Street Journal analysis of federal and state documents.

The plant isn't required to generate the full amount of power listed in state documents, according to representatives for NRG and BrightSource. They declined to say how much it was required to produce.

PG&E signed the Ivanpah contracts as part of efforts to comply with a state law that requires utilities to provide 33% of their power from solar, wind or other renewable sources by 2020. State lawmakers last year boosted the mandate to 50% renewables by 2030.

A PG&E spokesman said it has more renewable energy than it needs to meet its current requirement, and is still on track to meet both mandates.

Write to Cassandra Sweet at cassandra.sweet@wsj.com

(END) Dow Jones Newswires

March 17, 2016 15:42 ET (19:42 GMT)

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