DOE Loans Appear to be intact

DFN: Went to the Senate Appropriations website, download HR bill from site, just looking through it now, 461 pages, it will take a bit.

Solar Loans Spared by Congress Budget Ax

By Eric Rosenbaum 04/12/11 – 10:55 AM EDT

NEW YORK (TheStreet) — The solar industry and one of its fastest-growing markets, the U.S., was spared the blow of the Congressional budget ax, with a key Department of Energy loan guarantee program left off the chopping block in the details of the budget deal revealed by the federal government on Tuesday morning.

The DoE program is an important financing mechanism for developers of large-scale solar projects. While it may on balance be more prevalent in the development of solar thermal projects, photovoltaic solar project developers including First Solar(FSLR_), SunPower(SPWRA_) and MEMC Electronic Materials’(WFR_) SunEdison affiliate are companies that could use the loan guarantee program as part of solar project financing.

The Department of Energy loan guarantee program section 1703 and 1705 have been primary methods of financing large-scale solar projects. Primary examples of the loan recipients include First Solar and its Agua Caliente project — a project for which financing remained uncertain during the budget battle. BrightSource Energy recently received a $1.6 billion loan guarantee for a major solar thermal project. Thin film upstate Abound Solar received a $400 million loan guarantee as part of its push to commercialize its thin film technology.

On Tuesday morning, Google(GOOG_) announced a $168 million investment in BrightSource Energy’s 392 megawatt Ivanpah solar power plant in California’s Mojave Desert, which includes not just DoE loan guarantee financing but an equity stake invested by NRG Energy, which is also the buyer of First Solar’s Agua Caliente project. Google’s stake in the BrightSource project is its largest clean energy investment to date, though it is also spearheading an ambitious plan to develop a subsea transmission line for offshore wind energy on the Atlantic coast.

>>Google Backing Offshore Wind

The major U.S. solar companies aren’t wholly reliant on the DoE program, but it’s one more primary financing mechanism at a time when the tax equity market that funded solar projects pre-financial crisis still hasn’t returned to its former level of investment. Piper Jaffray recently wrote a research note highlighting the risk to First Solar and the U.S. solar industry from the budget battle.

The solar industry had recently lobbied Congress to spare the loan guarantee program from the budget axe, writing a joint letter to Congress signed by 34 green energy CEOs, including the CEOs of First Solar and SunPower.

>>Solar CEOs to Congress: Don’t ax our Loans

The budget cuts agreed to by the President and Congressional leaders late Friday night appear to leave the DOE loan guarantee program intact, according to details released early this morning on the House and Senate appropriations committee websites.


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