First Solar won’t get loan guarantee for $1.9B project

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Solyndra’s bankruptcy has shined a harsh spotlight on the Department of Energy’s loan guarantee program, and that spotlight now includes a solar industry darling that’s in far better financial health than Solyndra. First Solar (s FSLR) announced Thursday it won’t be getting a guarantee for a bulk of a $1.9 billion loan for a California solar project.

First Solar (s FSLR) said the project, called Topaz Solar Farm, did qualify for the loan guarantee, and the award was conditionally given back in June, but said today “there was insufficient time to process all requirements before the Sept. 30, 2011 deadline.” The loan guarantee program is set to end on that day, and DOE is working on finalizing at least a dozen of the awards.

The company’s statement doesn’t adequately explain the holdup, and it’s not willing to provide more details about its application. But First Solar says it’s “in advanced talks regarding the sale and financing of the project with potential buyers utilizing a different transaction structure that does not require a DOE loan guarantee.”

The announcement comes at a time when the loan guarantee is under scrutiny because its first beneficiary, solar panel maker Solyndra, secured a $535 million loan guarantee to build a factory but then went bankrupt. House Republicans are now investigating whether Solyndra qualified to receive the loan guarantee or lied to lawmakers when it assured them just a few months back that the company was doing fine. That scrutiny has prompted pundits to wonder if other companies that are seeking loan guarantees will find it more difficult to secure them.

Still, First Solar is not Solyndra. First Solar, which makes solar panels and develops utility-scale projects, is one of the largest solar panel makers in the world and has demonstrated its ability to deliver projects to buyers.

It’s possible that the DOE is taking extra steps to review its remaining loan guarantee offers in order to be able to defend its decisions, and that caused a delay in finalizing the loan guarantee for Topaz. First Solar also could have asked for different terms than what it got earlier this year — or disagreed with new terms from the DOE.

Some companies have noted that the loan guarantee terms could be stifling. NRG’s CEO David Crane told us in spring this year that the government was asking for “more and more conservative terms.”

First Solar spokesman Alan Bernheimer said the company “wouldn’t speculate” about any connection between the Solyndra investigation and the Topaz loan guarantee application. Asked whether First Solar asked for different loan guarantee terms than what it received back in June, Bernheimer wrote in an email, “Not that I’m aware of.”

The DOE offered three loan guarantees totaling roughly $3.73 billion for three First Solar projects in June and another $976 million for the 290 MW Agua Caliente project in Arizona earlier. In August, First Solar finalized the loan guarantee for Agua Caliente and sold the project to NRG Energy. (s nrg) NRG bought a 21 MW project in California from First Solar in 2009.

First Solar said Thursday the pending loan guarantees for the other two projects, 230MW Antelope Valley Solar Ranch 1 and 550MW Desert Sunlight, “remain in the DOE process.” The company’s shares fell nearly 4 percent to reach $70.67 per share in recent trading.

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