US Finalizes Loan Guarantees
by Ryan Tracy
The guarantees for solar power plants in Nevada and Arizona will support more than $1 billion in financing, placing them among the largest deals the department has closed since Solyndra filed for bankruptcy earlier this month. Records released since then show some administration officials felt rushed during the review of Solyndra's $535 million loan guarantee in 2009, putting added pressure on the department as it finalizes these latest deals.
Seven other renewable energy projects totaling about $5.3 billion are still waiting to get loan guarantees that must be finalized by Friday, when the stimulus funding expires. The department won't say exactly how much funding it has left to back those projects, but it has less than 25% of its funds remaining and may not have enough to close all the deals. Last week, some deals were canceled due to time constraints. After Friday, the department can still make loan guarantees but will have less funding to do so.
Both projects approved Wednesday are facilities that generate power, which are considered less risky than manufacturing companies like Solyndra because they have long-term contracts in place to sell electricity.
One $737 million loan guarantee will help finance a 110-megawatt power plant near Tonopah, Nev., that will use technology never before used at commercial scale. An array of mirrors will focus the sun's rays on a stream of super-heated liquid that can be kept hot in insulated tanks for weeks, providing heat to run steam generators even after the sun sets.
The main sponsor of that project is SolarReserve LLC., in which Argonaut Private Equity holds a 3% stake. Argonaut is an investment arm of the family foundation of George Kaiser, a billionaire political supporter of President Barack Obama. The firm also holds a 39 % stake in Solyndra. Obama administration officials have denied that Kaiser's connection to the White House played a role in the decision to support Solyndra.
Kevin Smith, SolarReserve's chief executive, said the deal closed Wednesday had undergone about two years of detailed government review, which he described as "pretty excruciating." "I've built 50 projects," he said. "The level of due diligence here has far, far exceeded that on the commercial side."
A second $337 million loan guarantee announced Wednesday will back Sempra Energy's (SRE) Mesquite Solar I project in Arizona, about 45 miles west of Phoenix. That 150-megawatt facility will use solar panels made in Arizona by Suntech Power (STP), which is based in China.
The Obama administration said both projects will fund hundreds of construction jobs. "If we want to be a player in the global clean energy race, we must continue to invest in innovative technologies that enable commercial-scale deployment of clean, renewable power like solar," Energy Secretary Steven Chu said.
learn more on topics covered in the film
see the video
read the script
learn the songs