The Department of Energy is handing out more loan guarantees for solar projects. Thursday morning, the DOE said it had offered a $967 million loan guarantee for the Agua Caliente Solar project, a 290-MW, photovoltaic facility that will be built in Yuma County, Ariz., and which NRG Energy said it planned to buy from First Solar last month.
The Agua Caliente project will use panels from First Solar, is set for completion in 2014 and is supposed to create 400 construction jobs. Northern California utility PG&E plans to buy the electricity from the project. NRG plans to invest up to $800 million in equity in the project, and the deal between First Solar and NRG requires that First Solar installs, operates and maintains the project.
This is the third big round of DOE loan guarantees for the solar industry. Last summer, the DOE awarded close to $2 billion in loan guarantees to Spanish solar company Abengoa Solar and Colorado-based solar panel maker Abound Solar. Abengoa Solar was awarded a $1.45 billion loan guarantee to help it build Solana, a solar thermal, trough-based, solar farm that is under contract to sell power to Arizona utility APS in Gila Bend, Arizona. BrightSource also received a $1.37 billion loan guarantee to build out BrightSource’s Ivanpah solar project, which is the first new solar thermal power plant being built in California’s deserts in 20 years.
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. As DOE Loan Chief Jonathan Silver told us recently, it takes about six months “soup to nuts” to get these applications processed and finalized.
These types of solar projects make sense for the DOE loan guarantee program, because these are the first projects from some of these solar firms in the U.S. The idea is to get a company like BrightSource across the so-called “valley of death,” between proving the technology and building out and scaling up actual plants. Solar projects also offer construction jobs and good press.
Silver told us recently that the “first couple biofuels deals” will be announced “shortly” for the loan guarantee program, and that biofuels will likely be among the next several loan guarantees issued. In the coming year, he said, we’re also likely to see “additional interest” in nuclear and “advanced fossil fuel technologies,” such as “clean coal” and carbon capture.
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