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Californian utility, PG&E Corporation (PCG - Analyst Report) received approval from California Public Utilities Commission to buy power from the 150-megawatt solar-thermal project from Rice Solar Energy, LLC. Per the agreement power from the project would be sold to Pacific Gas & Electric utility for 25 years beginning Jun 1, 2016. The 150 megawatt (MW) Rice Solar project is proposed to deliver estimated annual generation of 448 gigawatt hours (GWh) over a term of 25 years.

The project will use thousands of mirrors to focus sunlight onto a central tower containing molten salt, which is funneled through a steam generator to produce electricity. The salt retains heat and can produce power at night, an advantage over photovoltaic panels that cost less but work only when the sun is shining.

Rice Solar is a wholly owned subsidiary of SolarReserve LLC, developer of solar thermal (power tower) generation facilities that incorporate molten salt storage. The company is headquartered in Santa Monica, California with offices in Madrid, Spain and Sandtown, South Africa.

Going forward, PG&E will continue to focus on investing new capital, consistent with California's focus on clean energy. The company is mandated by California’s renewable energy portfolio standard to raise its renewable generation. California’s renewable portfolio standard requires utilities to generate 33% of power from renewable sources by fiscal 2020.

We believe, going forward, favorable decisions from regulators, long-term supply contracts, diversification into alternative power sources and infrastructure improvement programs will bode well for the company.

These positives, however, will be partially offset by risks, including the present tepid macro backdrop, extent of San Bruno liabilities, headwinds in the California economy, earnings dilutive issuances and power-price volatility.

The company is expected to release its fourth quarter and full year results on Feb 21, 2013. The Zacks Consensus Estimates for the fourth quarter and full year 2012 are currently at 57 cents per share and $3.19 per share, respectively.

We have a Zacks Rank #3 (short-term Hold rating) on the stock. This implies that the stock is expected to perform in line with the broader U.S. equity market over the next 1–3 months. Consequently, we advise investors to remain on the sidelines for the time being. In the near term, we would advise investors to focus on its Zacks Rank #1 (short-term Strong Buy rating) peers like Ameren Corporation (AEE - Analyst Report), Integrys Energy Group, Inc. (TEG - Analyst Report) and Pike Electric Corporation (PIKE - Snapshot Report).

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