Solar projects hinge on DOE loan guarantees
SANTA MONICA, CALIFORNIA - The success of SolarReserve's first two U.S. solar power projects hinges on the survival of the U.S. Department of Energy loan guarantee program, the company's chief executive said.
Santa Monica, California-based SolarReserve is awaiting approval of federal loan guarantees that will enable it to start building two solar thermal power plants with a combined price tag of about $1.5 billion.
Chief Executive Kevin Smith said privately held SolarReserve is weeks away from getting conditional approval for its first project, the 110-megawatt Crescent Dunes plant in Nevada. Meanwhile, a Republican budget bill would cut the DOE's loan guarantee program for renewable energy companies significantly.
SolarReserve argues that any serious curtailment of the loan guarantee program would not just endanger solar plants, but also jeopardize much-needed jobs and economic activity.
"If they shut it down tomorrow we're in big trouble," Smith said in an interview at SolarReserve's headquarters. "We're looking at least a 12-month delay in the project, if not termination of the project."
Crescent Dunes will create about 600 jobs once it goes into construction, Smith said. Not only that, he added, the government stands to make money on the loan guarantee program.
"That money has to be repaid... and the federal government earns interest on it," he said.
SolarReserve's 150-MW Rice project in California is also going through the DOE loan guarantee process.
The company is developing large solar thermal power plants using molten salt energy storage technology licensed from Pratt & Whitney Rocketdyne, a unit of United Technologies Corp.
Founded in 2007, SolarReserve's investors include US Renewables Group, Good Energies, Citigroup Inc, PCG Clean Energy & Technology Fund LLC, Nazarian Enterprises, CalPERs, Argonaut Private Equity and Credit Suisse.
The company's technology has yet to be employed in a large-scale power plant, and traditional project financiers since the financial crisis have shied away from taking those kinds of technology risks.
"Pre-financial meltdown we felt there was a pretty good chance that we could have gotten financing through the normal commercial lenders," Smith said. "In this market, no. For our initial projects, it's the Department of Energy Loan Guarantee Program that is instrumental in getting these kinds of technologies kicked off."
Once it has two projects under construction, Smith believes SolarReserve in 2012 "will be more favorably received by the commercial lending market."
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