DOE’s Loan Guarantee Program: Batting .500
Last week, I discussed the fact that in the aftermath of Solydra’s declaration of Chapter 11, the government’s efforts to offer financial support for clean technology in general and solar in particular look likely to become heavily politicized – a development which, particularly ahead of the 2012 Presidential elections, can only have the affect of reducing the potential flow of finance into the sector.
You can read my original article on the issue here. Since then, the headlines have only become more worrisome. In particular, today The Hill reports that Rep. Michael Burgess (R-Texas) has called for a special investigator to look into the DoE’s decision to provide the $535m loan guarantee to Solyndra. Burgess is on the Energy and Commerce Committee, which has already launched its own investigation into the issue.
As I argued in my last article, this is a particularly pressing issue for the solar industry. As demand for new solar installations has collapsed in Europe, the US utility-scale sector has been one of the few areas of significant new demand facing the industry – as indicated by the sector’s 24 GW project pipeline. However, there is a financing gap for projects of the scale seen in the utility sector and the DoE’s loan guarantee program has been a significant factor in ensuring that these projects, mainly in the 150 MW to 500 MW plus range, can be financed.
Consequently, the politicization of this process is a clear worry.
Last week, the DoE had around 14 new loan guarantees on the table, 9 of which were for solar projects. Republicans members of Congress have been very focused on whether or not approvals for these projects will be rushed through before the 30th September deadline. The Energy Department’s advanced energy loan-guarantee program, which was funded under the 2009 stimulus law, in fact expires on that deadline.
- On Wednesday of last week, First Solar said that their application for a $1.9bn loan guarantee for their 550 MW Topaz project will not complete the application process in time to beat the deadline.
- On Friday, a similar fate befell SolarCity’s application for a $275m loan guarantee. The DoE blamed increased paperwork resulting from the Congressional investigation into the Solyndra decision. SolarCity’s project, SolarStrong, would have put solar panels on the roofs of 160,000 military family homes.
- Today the DoE did, however, go ahead with a $727m loan guarantee for a 110 MW solar project sponsored by Tonopah Solar in Nye County, Nevada.
- The DoE also announced the finalization of a separate $337m loan guarantee for a Sempra Energy 150 MW project in Arizona.
Energy Secretary Steven Chu made a fairly upbeat statement on the need for these loan guarantees: “If we want to be a player in the global clean energy race, we must continue to invest in innovative technologies that enable commercial-scale deployment of clean, renewable power like solar….. Solar generation facilities, like the Crescent Dunes Solar Energy Project, help supply energy to local utilities and create hundreds of good, American clean energy jobs.”
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