[ exact phrase in "" • results by date ]

[ Google-powered • results by relevance ]


News Home

Subscribe to RSS feed

Add NWW headlines to your site (click here)

Sign up for daily updates

Keep Wind Watch online and independent!

Donate $10

Donate $5

Selected Documents

All Documents

Research Links


Press Releases


Publications & Products

Photos & Graphics


Allied Groups

Proposal to gut DOE loan guarantee program  

Credit:  -By Naureen S. Malik, Dow Jones Newswires, www.morningstar.com 30 March 2011 ~~

About $41 billion in loan guarantees for renewable energy projects are caught up in the bipartisan wrangling over the federal budget, which could derail dozens of projects and eliminate tens of thousands of jobs. Even established companies are concerned, underscoring the nascent industry’s reliance on government help.
A Republican proposal to slash the loan-guarantee program was included in a U.S. House of Representatives’ budget bill passed last month. Such a move would be a setback for the Obama Administration’s push to develop alternate sources of energy, slash greenhouse gas emissions and create jobs.

Renewable energy companies, particularly solar power product makers and developers, say the loan-guarantee program administered by the Department of Energy is crucial to allow projects currently under development to proceed. Loan guarantees for nuclear plants would not be affected.

“The DOE loan program provides an important financing ‘bridge’ at a time when the U.S. private debt markets have little to no experience financing first of their kind utility-scale solar projects,” First Solar Chief Executive Rob Gillette said in an email. He said the program supports large solar projects that create jobs, state and local tax revenue and investment opportunities.

The loan guarantee acts as lenders’ insurance in case of default or unforeseen delay for technologies trying to go commercial for the first time. It is meant to push companies out of the so-called valley of death where private equity or debt investors are reluctant to cover huge construction costs on unproven technology given the sluggish growth outlook power demand.

First Solar has more than 2,000 megawatts of solar farms under development in the U.S. Among them is a 290-megawatt Arizona project called Agua Caliente, for which the company obtained a $967 million conditional DOE loan guarantee. Independent power producer NRG Energy Inc. (NRG) agreed to buy the solar farm, but only if the DOE provides the loan guarantee.

“Without the federal loan guarantee program, private sector capital earmarked for this and other clean energy projects will stay on the sidelines,” NRG Chief Financial Officer Christian Schade said by email. NRG is seeking DOE loan guarantees for two other solar farms and an offshore wind project.

If the House proposal to slash funding were to proceed, the DOE would be forced to withdraw six conditional loan guarantees the agency has issued to renewable projects, said Ebony Meeks, spokeswoman for the agency. In addition, 25 other renewable energy projects that are currently in the final stages of receiving their loan guarantees would not get them, she said.

Together, these projects are seeking more than $13.6 billion in loans to finance $24.5 billion in new energy infrastructure that are estimated to put more than 25,000 Americans to work, Meeks said. Since 2009, the DOE has issued nearly $4.4 billion in such loan guarantees.

Cutting the DOE program would “kill all clean energy projects with pending DOE loan guarantee applications, causing the loss of tens of thousands of jobs and many other benefits,” the Solar Energy Industries Association said in a statement.

Federal loan guarantees, along with a investment tax credit and other incentives helped the U.S. solar power market more than double in 2010, with similar growth expected this year, according to analysts and solar power companies.

While larger companies will be able to continue developing projects, albeit on a smaller scale, without loan guarantees, small business owners may be forced to abandon their projects.

James Taylor and his family have sunk their fortune into a $145 million project in Montgomery, N.Y. that converts waste into electricity. The Taylor BioMass Energy project is close to finalizing terms for a $100 million loan guarantee, which the company needs to obtain a loan of that size from a separate DOE program, said Taylor, the company’s chief executive.

“We’ve got every cent that we own in this project on the faith and belief that it appears that [the loan guarantee] is finally going to happen,” Taylor said.

After unsuccessfully shopping the project to 150 venture capital, debt and equity investors, the DOE may be Taylor’s only way for retaining control over the landfill technology that he spent more than 15 years developing. “I’m hoping I don’t have to give it away,” he said.

Source:  -By Naureen S. Malik, Dow Jones Newswires, www.morningstar.com 30 March 2011

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

Wind Watch relies entirely
on User Funding
Donate $5 PayPal Donate


News Watch Home

Get the Facts Follow Wind Watch on Twitter

Wind Watch on Facebook


© National Wind Watch, Inc.
Use of copyrighted material adheres to Fair Use.
"Wind Watch" is a registered trademark.