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Carrizo Plains solar farm’s credit rating drops to ‘junk’ as PG&E bankruptcy looms

Representatives for the massive Topaz Solar Farm in the Carrizo Plains are keeping an eye on PG&E, now that the farm’s only source of revenue seems poised to declare bankruptcy.

The 550-megawatt photovoltaic solar farm in eastern San Luis Obispo County relies on the cash-strapped public utility. By contract, PG&E purchases 100 percent of the electricity produced at the farm.

“Topaz is monitoring the dynamic situation surrounding PG&E’s financial situation,” Jessi Strawn, director of corporate communications for Berkshire Hathaway Energy, wrote in an email to The Tribune on Tuesday. “Topaz continues to perform obligations under its power purchase agreement.”

“Maintaining financially healthy utilities in California is good for current and future renewable energy investments in the state,” Strawn added, “and is important for meeting the state’s renewable energy goals.”

Berkshire Hathaway Energy, also known as BHE Renewables, owns the farm.

PG&E’s potential bankruptcy is already taking a toll on the solar farm’s credit rating.

S&P Global Ratings downgraded Topaz Solar Farm’s credit rating from “BBB” to “B” on Jan. 10— a downgrade that pushed the farm’s rating into “junk” status.

Corporations whose credit rating is below a “BBB” are typically more susceptible to defaulting on payments, and for those with a “B” rating, “adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitments on the obligation,” according to S&P’s ratings guide.

In its decision to downgrade Topaz, S&P noted the solar farm “receives all of its revenue from PG&E under a long-term power purchase and sale agreement (PPSA). Our rating on the solar project is currently capped by our view of the credit quality of PG&E, its utility offtaker.”

S&P also downgraded PG&E’s credit rating to “B” last week.

S&P kept Topaz Solar Farm on its Creditwatch negative listing — meaning its rating could still go down — to reflect “the increasing risk that we will downgrade PG&E by one or more notches over the next few months.”

If S&P lowers its PG&E ratings again, it could do the same to Topaz Farms, it said.

PG&E’s potential bankruptcy filing could trigger a cross default for Topaz’s financing, S&P warned, unless the power contract with PG&E is replaced within 90 days of the filing.

Strawn declined to comment further on the farm’s relationship with PG&E, or whether it was seeking other purchasers of its electricity. She also declined to disclose how many people work at the farm.

According to its website, Topaz Solar Farm has added $417 million into the local economy — including $192 million for the roughly 400 construction jobs required to build the plant between 2012 and 2014. That total also included “$52 million in economic output for local suppliers, $14 million in sales taxes during construction and up to $400,000 per year in new property tax revenues,” according to the website.

The farm spans about 4,700 acres and provides enough electricity to power more than 180,000 average California households, according to the website.

 

Carrizo Plains solar farm’s credit rating drops to ‘junk’ as PG&E bankruptcy looms, by Kaytlyn Leslie, The Tribune, January 16, 2019.

Napa County supervisors want to adopt rules before approving another solar farm

Napa County supervisors want to create rules for large commercial solar farms in the wake of people’s fears that photovoltaic panels might someday blight wine country.

Supervisor Belia Ramos brought up the topic of commercial renewable energy rules at the Jan. 8 Board of Supervisors meeting. Her colleagues quickly agreed they should craft policies for a use presently allowed in all zoning districts with Planning Commission approval.

“I think it’s prudent we address this sooner rather than later, as it has already proven to be contentious in our community,” Ramos said.

How soon the Board of Supervisors acts remains to be seen, as the issue has yet to be scheduled. A renewable energy ordinance is now one more thing on the county’s 2019 to-do list.

Renewable Properties LLC last year proposed to build county’s first commercial solar farms, one near American Canyon along Interstate 80 and the other in the rural Coombsville area near the city of Napa. The Coombsville proposal proved controversial among neighbors and has since been withdrawn.

The American Canyon proposal went before the county Planning Commission on Oct. 17, Nov. 28 and Dec. 5. It finally passed by a 3-2 vote amid concerns that the county has no regulations for commercial solar farms, as do neighboring Sonoma and Solano counties.

“This application sets a precedent that may be impossible to challenge for the next application or the one after that,” said Eve Kahn of Get a Grip on Growth and Napa Vision 2050.

Commissioner Joelle Gallagher voted against the American Canyon project.

“I want to see the regulations and guidance in place before we start approving commercial solar,” she said.

A majority of commissioners said they thought the American Canyon site a good place for 12,000 solar panels to provide power for Marin Clean Energy, which serves Napa County. But they too wanted more guidance from the Board of Supervisors on renewable energy projects.

In the wake of Planning Commission approval, the American Canyon solar project itself looked likely to go to the Board of Supervisors. Resident Laura Tinthoff said after the meeting that critics of the project would file an appeal. They never did.

On Thursday, Tinthoff said the potential appellants are new to the county government process. They started out concerned about the now-defunct Coombsville project and then saw the issue was much bigger.

“We were very sincere in realizing this could affect all of Napa County,” Tinthoff said.

She expressed satisfaction with the Board of Supervisors’ willingness to work on an ordinance, saying that’s what her group was seeking.

Ramos said a renewable energy ordinance will give more guidance to the Planning Commission. Also, the use permit application used for the American Canyon commercial solar farm project was for wineries, something she’d like to see changed.

Supervisor Brad Wagenknecht said he would have brought the renewable energy ordinance issue up if Ramos hadn’t.

“I really think we need this,” Supervisor Diane Dillon agreed.

 

Napa County supervisors want to adopt rules before approving another solar farm, by Barry Eberling, Napa Valley Register, January 15, 2019.