The U.S. Department of Energy is in the end stretch of finalizing cleantech loan guarantees before the program sunsets at the end of this month and is moving some projects along and declining others. On Friday, the DOE announced the closing of three loan guarantees, but also said solar installer SolarCity won’t be securing a loan guarantee for a military solar housing project.
The DOE apparently told SolarCity that there wouldn’t be enough time to complete all the paperwork to finalize the loan guarantee before the Sept. 30 deadline. But SolarCity said the DOE’s decision also had something to do with an investigation by a House committee into the loan guarantee program and in particular, the $535 million loan guarantee to now-bankrupt solar panel maker Solyndra.
The DOE did finalize the agreements for part of a $168.9 million loan for a 99 MW wind power project by Granite Reliable Power; part of a $350 million loan for a 113 MW geothermal power project by Ormat Nevada; and a $105 million loan guarantee for ethanol maker Poet to build a biofuel plant. The DOE can guarantee part or an entire loan, and the guarantee is a promise that the government will pay back the loan if the borrower can’t.
But SolarCity wasn’t able to secure a guarantee for its $344 million loan to install solar panels on military housing at military bases in 33 states. SolarCity and the DOE announced the loan guarantee only two weeks ago, and the Energy Secretary touted the project, called SolarStrong, as the largest residential solar rooftop program in the country. The loan guarantee would have covered $275 million of the $344 million loan.
Closer scrutiny of the loan guarantee program influenced the DOE’s decision to say no to SolarCity’s application, said SolarCity CEO Lyndon Rive. Rive is asking leaders of the House energy committee to extend the sunset date for the loan guarantee program, arguing that an extension would give the DOE time to finalize applications (presumably including SolarCity’s).
Solyndra’s CEO and CFO appeared before a congressional hearing today, but invoked the Fifth Amendment and refused to answer the committee’s questions. Republicans on the committee contend the DOE didn’t spend enough time reviewing the loan guarantee application from Solyndra before approving it, and say that questions the value of the loan guarantee program. Solyndra’s application underwent nearly three years of review, though, and that’s lengthy. Democrats dispute Republican’s charges and say the program is an important tool for the government to invest in cleantech technology development and deployment, particularly when countries such as China are spending a lot more to support their domestic manufacturers and project developers.
SolarCity’s announcement came a day after First Solar (s FSLR) announced it won’t be able to secure a government guarantee for a $1.9 billion loan from private lenders to build the Topaz Solar Farm in California. The Arizona company said there wasn’t enough time to go through the remaining steps for finalizing the guarantee before Sept. 30, when the program ends.
DOE spokesman Damien LaVera declined to discuss SolarCity’s application, but sent along this statement by email:
“We have consistently said that we will not close any deal until all of the rigorous technical, legal, and financial review has been completed. Failure to close a loan application does not indicate that a project doesn’t have merit or a strong business case to succeed, but rather that all of the extensive due diligence and legal documentation simply cannot be completed by September 30. We are absolutely committed to ensuring that every deal we close is fully vetted and will not corners on any deal that is unable to meet the 1705 deadline. The Department has requested additional funding for the loan program in our FY 2012 budget request. If Congress provides those funds, additional projects can be considered based upon the availability of that funding.”
Section 1705 is the name commonly used for the loan guarantee program, which was part of the stimulus package designed to create jobs and promote renewable energy. There are nine more pending loan guarantees in the queue (not counting First Solar’s Topaz and SolarCity’s project).
Image courtesy of SolarCity