US Energy Department to Back Loans
by Ryan Tracy
The US Energy Department said it is offering to guarantee about $4.5 billion in loans for First Solar to finance three renewable energy projects in California that the solar-panel maker is developing.
The government's conditional offer to support the projects drew funds from the stimulus-funded loan guarantee program, which expires on September 30 and currently has less than 25 per cent of its funds remaining.
Once built, First Solar said that two of the projects would be the largest capacity solar-panel farms in the world.
First Solar's California plan includes two 550mW plants in Riverside and San Luis Obispo counties that will be supported by $US1.88bn ($1.75bn) and $US1.93bn in loans, respectively, according to the Energy Department.
Under the loan guarantee, taxpayers would cover as much as 80 per cent of the borrower's obligation in the event of a default.
A third project, First Solar's 230mW Antelope Valley Solar Ranch, received a conditional offer for a $US680 million taxpayer-backed guarantee.
First Solar will supply thin-film solar panels for the plants from an existing manufacturing facility in Ohio as well as a new plant in Arizona.
Power from the projects will be sold to PG&E subsidiary Pacific Gas & Electric Company and Edison International unit Southern California Edison.
The three plants are expected to be fully online by 2015.
US subsidies for solar projects are winding down as government help for solar in Europe has become less available.
Italy recently capped its support for solar after companies rushed to take advantage of tariffs guaranteeing friendly electricity rates for developers.
In the US, a popular renewable-energy tax credit funded through the Treasury Department is also set to expire at the end of the year.
"Without much confidence in the US or European governments' ability to lower deficits, investors worry that renewable subsidies may be sacrificed for austerity programs," said Jesse Pichel, global head of clean-energy technology research at Jefferies, an investment bank.
First Solar has joined other companies in arguing for extended federal subsidies, saying that without them solar developers may find it more difficult to secure financing for projects.
"We don't think they need to be in place forever, but the capital markets are still not that familiar with this kind of power-generating asset," said Alan Bernheimer, the company's director of corporate communications.
In 2010, First Solar had net sales of $US2.56bn.
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