In my neighborhood I could snap up some nice real estate for next to nothing. Too bad I don\u2019t have a big wad of cash to make the investment. Unlike me, Pacific Gas & Electric is not only willing but particularly able to take advantage of the downturn and invest in distressed renewable companies. \u201cWe are evaluating a way for PG&E to participate in the market,\u201d president and chief executive officer Peter Darbee said February 24. Darbee said the utility is pursuing 500 MW of photovoltaic power. Of that, PG&E expects to own about 250 MW. Darbee, who is both the head of the utility and its parent corporation, said PG&E may become a \u201cgreen knight.\u201d As one of the largest utilities in the nation, with $35 billion in assets, PG&E has the ability to invest in distressed solar companies with which it has power agreements. According to Darbee, PG&E plans to seek permission from the California Public Utilities Commission to recover investments made in struggling solar companies by rolling them into its rate base. The prospect that PG&E may take an equity position in projects could be a major boost for renewable energy companies. Solar companies, for instance, may have contracts with utilities that help them meet their renewable energy mandates. But, the firms still have to line up financing to build the infrastructure needed to deliver the contracted-for alternative energy. In the last six months, the renewable energy industry, like others, has seen financing options disappear. Getting a contract is one thing, getting financing to actually build a plant and deliver energy is another matter. As a result, a number of solar companies--including ones with which PG&E has contracts, like Optisolar and Ausra--were forced by the economic downturn to seriously downsize last month. That\u2019s where PG&E hopes to step in. Its first round of investments is expected to involve purchasing pieces of distressed solar companies. The parent corporation or the affiliate utility also may take equity positions in other renewable firms. But, unanswered is who will provide money for the investments--shareholders or ratepayers. Then there\u2019s the matter of the strength of the underlying renewable energy firms in which PG&E may invest, as well as the size of those investments. Whether Darbee becomes a knight in green armor who saves solar and other renewable damsels in distress or a Snidley Whiplash who ties distressed Nell to the tracks depends on the answers to such questions. Darbee said the company was exploring \u201cequity infusions, joint ventures and outright purchases.\u201d PG&E plans to capitalize on federal tax credits for solar, wind, and other renewable projects that utilities can now tap into to reduce their tax liability. The PG&E chief said he is hopeful that the California Public Utilities Commission will approve its plans to invest in renewable energy companies. However, history raises doubt. When PG&E tried to seek rate recovery for a fossil fuel plant investment-- the 560 MW $860 million plant in Alameda County known as Tesla-- regulators rejected the proposal. The Tesla turndown doesn\u2019t count, according to Darbee. He told financial analysts February 26 that the CPUC views utility-owned renewable power \u201cvery differently from owning conventional resources.\u201d That\u2019s because of the state mandate for 20 percent renewable energy in investor-owned utilities\u2019 power sales portfolios. So buying a stake in solar or other alternative energy developments could help free Dudley\u2019s beloved Nell from the financial bondage inflicted by the financial crisis and help ensure the utility meets is renewable energy mandate, which is likely to rise to 33 percent of utility power supplies in 2020 under pending legislation. PG&E expects to reach a 14 percent renewable supply this year and 24 percent in 2013. Buying equity in alternative power companies also might help PG&E curb its greenhouse gas emissions under the state\u2019s climate protection law and reductions soon anticipated at the national level. The state\u2019s power sector, which is the second largest source of carbon dioxide in California, is supposed to reduce its emissions by at least 40 percent. Renewable power is seen as key to achieving real carbon curbs. PG&E could play a role in bolstering the renewable energy industry given it is one of the few companies that\u2019s seeing its profits grow. In an earnings report released this week, PG&E said its net income for the last quarter of 2008 was $512 million, compared to $203 million the last quarter of 2007. It reported total net income for last year of $1.34 billion. But let\u2019s get back to the source of the investment money. That can make the difference if the utility becomes Snidley or Dudley. Using ratepayer dollars could become another rope around renewable developers\u2019 necks, skewing what remains of the hybrid energy market. (That is, a partial competitive market for electricity in which utilities and third-party generators exist in some relative equality.) While some struggling solar and renewable companies embrace PG&E\u2019s possible plan of equity investment, others want to maintain their independence and some semblance of a competitive market. Also, unlike shareholders, ratepayers can\u2019t withhold their money from PG&E by liquidating shares when they don\u2019t like the company\u2019s direction. Instead, they must send their money in a continuing and regulated stream of revenue to the utility. This puts them at risk if a renewable investment goes South. It is significant for independent generators too. While ratepayers are required to pay for PG&E investments, independents must compete to raise project money in today\u2019s tough financial markets. This might undercut even large, healthy companies like NextEra Energy (formerly FPL), Enexco, a subsidiary of France\u2019s EDF, and Iberdrola. It also might result in PG&E-backed companies competing for the same federal economic stimulus money that independent developers hope will become their Dudley DoRight. On the other hand, if PG&E were to invest shareholder dollars into generating-related firms via an affiliate, it needs to make sure it avoids mistakes it made when investing in power facilities when the state deregulated the energy sector. In the late 1990s, PG&E Corp., the parent company, took billions of dollars of utility profits and poured some into other affiliates, including NEG, which invested in generating facilities. When the utility got whiplashed by soaring power prices in the 2000-01 energy crisis when the state\u2019s deregulatory scheme went haywire, the parent company refused to bail it out. Instead, it ring fenced its affiliates so the utility couldn\u2019t access any funds. But even then, NEG and another trading company affiliate lost billions of dollars, filed for bankruptcy, and were dissolved in 2003. Large amounts of money and numerous jobs were lost. Any proposal to allow PG&E or its parent corporation to further expand into the generation business must ensure that history does not repeat itself. Solar Nell can be snatched from the hands of the train wreck market, or become another victim of utility miscalculations. But let\u2019s remember what Nell really wants--that is, to forget DoRight and Whiplash and be on her own.