A program to place 500 megawatts of solar photovoltaic panels on commercial rooftops in the Southern California Edison territory was approved unanimously by the California Public Utilities Commission on Thursday.

The Edison International subsidiary SCE will own half of the 500 MW of solar PV to be installed, and half will be developed under purchased power agreements.

The SCE-owned portion of the program is to be completed in five years and will cost an estimated $875 million. SCE says that each year it will install 50 MW.

SCE and Edison International are based in Los Angeles suburb Rosemead.

The purchased-power portion in which independent solar developers install the PV panels and enter long-term contracts to sell power to SCE, is already under way. While it is not expected that all 250 MW of this portion to be installed within five years, contracts for the installations are likely to be signed by then, an SCE official said. Long-term contracts for solar are usually 20 years.

SCE said the cost for the PV panels it owns is estimated to be $3.50 per installed watt, which is about half the cost to install PV panels on homeowners roofs in the California solar incentives program. That's because of economies of scale.

PUC Commissioners Rachelle Chong and John Bohn said splitting the program to allow utility-owned and independent producer-owned panels allows comparison of costs and other issues.

The credit crisis has dried up finding for renewable energy projects. Utilities, however, have been a bright spot for solar installations because, effective late last year, they can claim a 30-percent federal tax credit.

Earlier this year, Pacific Gas & Electric Co based in San Francisco said it would pay $1.4 billion to own up to 250 MW of solar generation, its first direct investment in renewable generation in more than a decade. PG&E Co is a unit of PG&E Corp (PCG.N: Quote, Profile, Research, Stock Buzz).

First Solar (FSLR.O: Quote, Profile, Research, Stock Buzz) won the first two competitive bid contracts in the program of panels to be owned by SCE. First Solar has already installed 2 MW on commercial roofs in Fontana, California and is installing 1 MW of panels on roofs in Chino, California.

Eventually, SCE will own 250 MW of PV panels atop 150 commercial roofs that together will cover two square miles (5.2 square kilometers) under lease arrangement with building owners. The Fontana project has 33,700 PV panels and is the largest PV installation in the state.

PUC President Michael Peevey said an advantage of putting PV panels on large commercial buildings are that they are normally near or in cities where the electricity demand is. (Editing by Christian Wiessner)

California Renewable energy Energy Solar