U.S. doles out last of loan aid to solar projects
WASHINGTON | Fri Sep 30, 2011 6:53pm EDT
(Reuters) – The Obama administration on Friday approved more than $4.7 billion in loan guarantees for major solar projects as the government closed out an incentive program embroiled in controversy over the bankruptcy of one of its biggest projects.
With the program’s statutory deadline approaching, the government finalized deals with First Solar, SunPower Corp, and Prologis Inc.
The government’s clean energy program has been at the center of a political firestorm since the high-profile collapse of Solyndra, a solar panel manufacturer that was the first company to receive backing from the program.
Still, the projects that received loan guarantees Friday differ from the Solyndra deal, which relied on the company’s ability to sell panels manufactured after its plant was completed.
Instead, both First Solar and SunPower received guarantees to build solar power plants, which need contracts to supply electricity to utilities for financing and therefore have a fixed revenue stream.
The government closed a deal to partially back $1.46 billion in loans for First Solar’s massive Desert Sunlight plant in Riverside County, California.
Once completed, the 550 megawatt plant, which could power more than 110,000 homes, will be one of the largest solar plants in the world.
First Solar also closed a deal for $646 million in backing for its 230 megawatt Antelope Valley solar plant, while SunPower received a $1.2 billion guarantee for its 250 megawatt California Valley Ranch plant.
With loan guarantees in hand, all three of the plants have already been sold.
First Solar said Exelon bought the Antelope project. NextEra Energy, Inc and GE Energy Financial Services have acquired the Desert Sunlight plant.
NRG Energy has purchased the California Valley project, SunPower said Friday.
The completion of the loan guarantees for industry stalwart First Solar will remove some uncertainty for investors in the aftermath of Solyndra’s bankruptcy.
“The difference is that First Solar’s is proven technology, Solyndra’s was not,” said Mark Bachman, an analyst at Auriga USA. “This solidifies the longer-term prospects; it would have been a huge negative if the government had not done this today,” Bachman said.
The FBI has been probing the collapse of Solyndra and Republicans have launched an investigation as they step up criticism of the Obama Administration’s handling of the program.
Republicans have complained that the department may be rushing to complete deals to meet the program’s deadline.
The department has strongly disputed these claims, saying any deal that is completed will be “fully vetted” following months of intense review.
Energy bankers and financiers have also said the department’s process to qualify for the loan guarantees was far more onerous and detailed than required by private banks.
“For the ones that went through the whole process, it’s been brutal,” said Pavel Molchanov, an analyst at Raymond James. “The fact that there are still loan guarantees being finalized shows that Washington is not completely dysfunctional,” Molchanov said.
In addition to the SunPower and First Solar guarantees, the department finalized a partial guarantee for a $1.4 billion loan to support a project installing solar panels on industrial buildings. The project is owned by Prologis and backed by NRG Energy Inc.