At a packed room at the solar factory of solar company SunPower 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. (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.