Solar Boom in Limbo: 7 Project Approvals, Only 1 Federal Loan Guarantee
Public lands in California, Arizona and Nevada will undergo a rather stunning transformation in the next several years from desert landscape to thousands of acres of solar mirrors and dishes capable of providing electricity to several million homes. If, that is, the one essential ingredient -- financing -- comes through. Unfortunately, the two federal programs that solar developers rely on to make their projects financially viable are either set to expire or at risk of getting the axe altogether.
Seven large-scale solar energy projects have been approved by the Bureau of Land Management in the past four weeks as part of a coordinated fast-track effort to push the administration's renewable energy installation goals. The latest approval, which was announced Thursday, gave the go-ahead to NextEra Energy Resources' 250-megawatt Genesis solar energy project in Riverside county, Calif.
The fast-track approvals are crucial because a federal grant program that pays developers 30 percent of the project cost in cash upfront is set to expire at the end of the year. The grant program will technically run through 2016, but after Dec. 31 of this year developers will only receive the cash payment after the project is completed. Without the upfront cash many of these projects won't get off the ground.
But even with the grants, most of these projects face additional financing hurdles. These large-scale solar projects, with their billion-dollar price tags, really need support from the Energy Department's loan guarantee program. The program, which set to expire next September, allows solar developers to borrow money on favorable terms to finance up to 80 percent of construction costs.
So far, only Brightsource's $2 billion solar thermal Ivanpah project, has received the coveted federal loan guarantee. Brightsource, which broke ground last month on its Ivanpah project in California, also received an additional $300 million investment from NRG Energy.
But the federal loan guarantee program, which has been criticized for its slow and unwieldy approval process, could be killed before the expiration date. According to the WSJ, President Obama's top advisers recommended cutting off funding for the program, saying taxpayer dollars might be better spent elsewhere. At the same time, the advisers warned that pulling money from the program would "signal the failure" of the Recovery Act.
The federal program meant to spur the clean energy economy and create jobs has already been gutted by Congress from the $6 billion it originally appropriated to the current $2.5 billion budget. Lest we forget, Congress pilfered $2 billion from the energy loan guarantee initiative to pay for Cash for Clunkers, the popular federal car trade-in program.
And just so we're clear on the history, various members of Congress said at the time the money would be put back into the loan guarantee program.
Photo from Brightsource
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