A federal program to support the development of clean energy technologies escaped the budget ax this week and the Energy Department wasted no time announcing major commitments to fund two of the world's largest solar projects.
SunPower Corp (SPWRA.O) received a conditional commitment on Tuesday for a $1.187 billion loan guarantee from the U.S. Department of Energy to finance a 250-megawatt photovoltaic power plant in central California that will generate enough electricity to power 100,000 homes.
That announcement came a day after the government finalized a $1.6 billion loan guarantee for privately held BrightSource Energy Inc's 392 MW Ivanpah solar thermal project. [ID:nN11258988]
In February, the Republican-controlled U.S. House of Representatives passed a bill that would have cut most of the funding for the DOE's loan guarantee program for innovative green technologies.
The alternative energy industry, in response, argued that the program would create tens of thousands of jobs and generate billions of dollars in investment. The program, which applies to projects that begin construction by September of this year, was preserved in the final budget agreement for this year.
The head of the solar power industry's trade group said none of the very large solar power projects under development would have been built without the loan guarantee program.
"The capital markets are still not there to support renewable energy development at the scale we need," Solar Energy Industries Association Chief Executive Rhone Resch said in an interview. "None of the projects that are under construction right now would have been able to go forward without this program."
The DOE said on Tuesday it has issued loan guarantees or offered conditional commitments for loan guarantees of over $19 billion for 21 clean energy projects.
Under loan guarantees, the federal government agrees to pay portions of private loans if the companies default.
The DOE program has provided funding for projects whose innovative technologies have difficulty securing financing from traditional lending sources hard hit by the financial crisis and therefore less willing to take on the risk of pouring money into unproven technologies.
SunPower will start construction of its California Valley Solar Ranch in San Luis Obispo County in the second half of this year. NRG Energy Inc (NRG.N) has agreed to buy the project.
NRG, which is also an investor in the BrightSource Ivanpah project, received a conditional commitment for a $967 million DOE loan guarantee for its 290 MW Agua Caliente photovoltaic solar power project in Arizona. That plant is being built by First Solar Inc. (FSLR.O) (Reporting by Nichola Groom; editing by Bernard Orr and Andre Grenon)