Pacific Gas and Electric on Monday announced that it signed a 177-megawatt solar thermal power purchasing agreement with Ausra.

According to John O'Donnell, Ausra's executive vice president, the twenty-year agreement will generate over $1 billion in revenue for the Palo Alto, California-based start-up.

The plant will be located in San Luis Obispo County, California, and is expected to begin generating power in 2010. Ausra has filed its application for certification for this plant with the California Energy Commission, which must grant approval before construction begins.

PG&E supplies 12 percent of its energy from renewable sources, said Keely Wachs, PG&E’s environmental communications manager.

“PG&E continues to aggressively add renewable electric power resources” to its supply and the company is confident that it will meet or exceed its 20 percent renewable energy goal by 2010, he said.  

Proving that bigger isn’t always better, the plant will use only one square mile of land and will burn no fuel, use minimal water, and have no air or water emissions.  

Ausra’s Compact Linear Fresnel Reflector (CLFR) solar technology utilizes the heat from the sun’s rays to create steam. Solar collectors boil water at high temperatures to power steam turbine generators.

Because Ausra’s flat mirrors–called Fresnel reflectors–are never more than eight feet off the ground, they cast shorter shadows that allow them to be built close together. This means Ausra only needs 2-2.5 acres of land per megawatt compared with 5 acres per megawatt for solar trough systems or 7 acres per megawatt for solar dish engine systems, Mr. O’Donnell said.

Compared with other power purchase agreements in California in the last few years, the new agreement with Ausra is among the smallest.

According to Mr. Wachs, PG&E’s 553-megawatt power purchase agreement with Solel-MSP-1, a subsidiary of Israel-based Solel Thermal Systems, in July is the single largest solar commitment in the world right now.

PG&E has also entered an agreement with Oakland, California-based BrightSource Energy for a 500-megawatt plan to be announced soon.

Although these agreements dwarf the deal with Ausra, New Energy Finance analyst Nathaniel Bullard said that Ausra is well-positioned.

Other solar thermal energy projects such as Solel’s Mojave Solar Park, to be constructed in California’s Mojave Desert, will be far away from populated areas and the electric grid. Ausra’s plant, to be located about ten miles north of Carrizo Plain National Monument, may get less sun than the Mojave Desert, but it will be directly under a PG&E transmission line,  O’Donnell said.

Ausra’s proposed plant will only need “850 feet to connect,” said Bullard. They’ll be able to “tap right into the electric grid. It’s a lot less expensive and it speeds up the process.”

The high cost of the feeder and trunk lines required to connect to the grid from a long distance are often well outside of a smaller developer’s range.

By skirting the sometimes two-year-long Bureau of Land Management review process and eschewing the burden of proof required to build on public land, Ausra’s decision to buy private land will also help speed up the process.

“We’re hoping to be the first to break ground,” Mr. O’Donnell said. The plant, which will be built on dried out former farm land, will be “growing megawatts instead of wheat,” he said.

Perhaps Ausra’s plant will prove that when it comes to cost and speed, size doesn’t always matter in the race to solar thermal power.