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Solar Millennium Receives Conditional Term Sheet Draft from U.S. Department of Energy for Loan Guarantees

published: 2010-11-26 14:53

Solar Millennium LLC, the American project development unit of the Solar Millennium Group, has received the draft of a conditional term sheet from the U.S. Department of Energy (DOE) in the scope of the approval process for the federal loan Guarantee program. The terms and conditions in the draft term sheet provide a framework for the commencement of discussions on terms between the DOE and Solar Millennium regarding the securing of the loan guarantee. In these discussions, the major terms of a proposed loan guarantee are set forth. Receipt of the term sheet is thus a significant prerequisite for successfully concluding the financing of the planned power plants Blythe 1 and 2.

At the Blythe location in Riverside County, California, Solar Millennium plans to build and operate up to four parabolic trough power plants through Solar Trust of America, LLC, with a capacity of 250 megawatts (MW) each. All four solar power plants together will make up the world’s largest solar power facility to date. Solar Millennium has already received the respective construction permits by the California regulatory authorities and the U.S. government in September and October. The Company plans to finance at least two-thirds of the construction volume of its two power plants with low-rate loans by the U.S. Federal Finance Bank. In order to secure this share of debt capital, the Company has applied for the respective loan guarantees from the U.S. Department of Energy.

Oliver Blamberger, CFO of Solar Millennium AG, explains the further business plans: “We assume we’ll be able to wrap up negotiations with the U.S. Department of Energy in the new year. Because the Blythe projects represent a significant portion of our sales and profit planning, the Executive Board has decided not to give an early forecast for the current fiscal year until further notice.” Regarding the schedule for the two solar power plants going forward, Blamberger adds: “As we have already announced, we plan to begin construction on Blythe 1 and 2 in December regardless of the conclusion of financing. The preliminary contracts here have already been signed with a major U.S. construction company.”

Uwe T. Schmidt, Chairman and CEO of Solar Trust of America, is pleased about the receipt of the draft term sheet: “We‘re extremely pleased with the proactive approach by the U.S. Department of Energy with regard to our Blythe projects, and we are excited to see the progress made in securing the loan guarantees.” Schmidt is also optimistic about the further course of the approval process: “We are confident that the U.S. Department of Energy, as well as the other federal authorities involved in the loan guarantee program, will now act quickly to move the approved power plant projects forward. The solar power plants under development and construction are of central importance not only for reaching California’s climate goals, but also for improving the region’s economic future.”

Solar Millennium believes the construction phase of Blythe will create more than 1,100 jobs as well as up to 200 permanent maintenance and operations positions once the two power plants are fully operational. With a potential capacity of 1,000 MW, Blythe will forge ahead of the dimension of nuclear power plants. The four power plants together are expected to produce enough electricity for more than 300,000 American households, thereby saving roughly one million tons of carbon dioxide annually.

Power purchase agreements between Solar Millennium LLC and the American utility Southern California Edison (SCE) for the first two 250-MW solar power plants to be realized were approved by the California Public Utilities Commission in July of this year. The agreements regulate the purchase of electricity produced by SCE.

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