DOE Awards $1.2B Loan Guarantee to NRG, SunPower Solar

 At a packed room at the solar factory of solar
company SunPower (SPWRA) and electronics maker Flextronics on Tuesday afternoon,
Department of Energy Chief Steven Chu announced that the DOE has awarded a
conditional commitment for a $1.2 billion loan guarantee to a solar farm that
will be built by SunPower and owned by power company NRG Energy. (NRG) (Both NRG
Energy CEO David Crane, and the DOE’s Loan Chief Jonathan Silver will be
speaking at our Green:Net event
next week).

Loan guarantees essentially serve as a promise by the government to make good
on a loan if the company can’t, and typically enable better interest rates and
lower costs than would otherwise be available to a company for project
financing. U.S. government loan guarantees can also mean the difference between
getting a large clean power project like this funded in a difficult financing
environment, and having one of these farms stall at the commercialization
phase.

That award, to NRG Energy’s so-called California
Valley Solar Ranch farm, is on the larger side of the DOE loan guarantees
offered to date. BrightSource’s solar thermal farm was awarded
a $1.6 billion guarantee
, and the DOE awarded a $1.45 billion loan guarantee
that will help Abengoa Solar build a solar thermal plant in Arizona. In
comparison to BrightSource and Abengoa’s solar thermal plants, the SunPower farm
will use solar photovoltaic panels.

NRG Energy bought
the solar farm in San Luis Obispo County in late-November 2010
. The farm is
supposed to go under construction in the second half of 2011, and start
delivering power by the end of 2011, with final completion by 2013. Utility
Pacific Gas and Electric already has already signed a 25-year agreement to buy
the electricity from the power plant.

The loan guarantee program has come under fire in
the latest 2012 budget proposal, and has also
been scrutinized
for how it’s been executed. But clean power companies and
greentech investors have
pleaded
with congressional leaders to save the funding for the program in
the budget.

Solar executives, members of the media and
politicians gathered in SunPower and Flextronic’s factory on Tuesday afternoon
to watch California Governor Jerry
Brown sign a bill
into law that says utilities have to supply 33 percent of
their electricity from clean power by 2020. It was also the official launch of
the solar factory, in Milpitas, Calif.

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