HUGE LOAN GUARANTEE TO SOLAR POWER PLANTS

California solar project gets $1.4 bln US guarantee; BrightSource loan guarantee to help build 3 solar plants
Poornima Gupta and Ayesha Rascoe (w/ Tom Doggett, Peter Henderson and Marguerita Choy) February 22, 2010 (Reuters)

"The United States…gave its biggest backing yet to a renewable energy project, guaranteeing $1.37 billion in loans for a California development by BrightSource Energy… [that is] expected to generate about 400 megawatts of electricity and power about 140,000 California homes, giving it the heft to compete with plants fueled by coal and natural gas.

"President Barack Obama's administration has touted green energy investments as a way to create jobs and increase international economic competitiveness…The sector has seen projects being launched and agreements being signed with utilities, who count on solar thermal to meet California clean energy goals, but construction has yet to start on a large scale for the solar thermal industry."

Artist's rendering of the Brightsource solar power plant technology. (click to enlarge)

"Financing of projects has been a big challenge with the tightening of the credit markets as capital requirements of these green energy companies are very large…Solar thermal companies like BrightSource and rivals Abengoa Solar, eSolar Inc have technology that uses the sun's rays, reflected by thousands of small mirrors, to heat liquids to create steam in turbines and generate electricity.

"The conditional loan guarantees from the U.S. Department of Energy, the largest federal loan commitment offered to a renewable energy firm, would help BrightSource build three utility-scale solar thermal plants for its Ivanpah project, which will be located on federally-owned land in the Mojave Desert in southeastern California…California, and other parts of the world, are betting heavily on solar thermal. About a quarter of the clean energy contracts approved in 2009 in California by capacity was solar thermal…Construction on the first Ivanpah plant is expected to begin during the second half of this year, with commercial operations beginning in 2012…All three plants are expected be on line by 2014."

More detail. (click to enlarge)

"The loan guarantee is conditioned on BrightSource [obtaining] financial…environmental…local, state and federal regulatory approvals…The company earlier this month agreed to reduce the footprint for the Ivanpah project to minimize the environmental impact…[California utility] PG&E will purchase approximately two-thirds of the power generated at Ivanpah and [California utility Southern California Edison (SCE)] will purchase approximately one-third.

"…[T]he key value of federal loan guarantees is that it helps strong renewable energy projects get financed, especially since the credit markets have yet to reach normal levels of activity…The loan guarantee is the sixth such offer to renewable energy companies by the Obama administration…Under the program, the Department of Energy issues a conditional commitment to guarantee loans to be provided by the U.S. Treasury's Federal Financing Bank."