Sun Power Corp. and Pacific Gas & Electric (PG&E) have etched out a contract that will add 40 megawatts (mW) of photovoltaic (PV) energy capacity to the planned California Valley Solar Ranch in San Luis Obispo County, California. Today’s announcement comes on the heels of the original agreement, in August 2008, to build the California Valley Solar Ranch, bringing the total planned capacity to 250 megawatts.

Concerns over potential environmental and visual impacts have slowed the planning process. Plans have been adjusted accordingly to protect local wildlife habitats during construction, the first phase of which is set to be finished by 2011. When complete, the 250-mW solar installation — together with the 550-mW Topaz Solar Farm – will be one of the largest solar installations in the country.

According to the press release, Howard Wenger, SunPower’s president of utilities and power plants business group, had the following to say:

“We are thrilled to continue to advance one of the first central station solar power plants in the world with PG&E and in coordination with San Luis Obispo County. The California Valley Solar Ranch will generate pollution-free solar power that is competitive with new, conventional peak power.  Our incremental 40-MW agreement with PG&E provides more visibility into our power plant pipeline in 2011 and beyond.”

The solar installations’ electricity output will help PG&E, California’s largest utility, meet the its obligations under the state’s renewable energy standard. California law mandates that utilities source by 2020 a third of their electricity from renewable sources.

Related reading: San Luis Obispo’s California Valley Solar Ranch Fact Sheet (PDF).