Feds Finalize Largest Clean Power Loan Guarantee

Following on the heels of the Obama administration’s plan to streamline the Department of Energy’s loan guarantee program, the DOE has just given final approval to its largest clean power loan guarantee to date (not counting nuclear): a $1.45 billion guarantee for a solar thermal project in Arizona built by Abengoa Solar, the solar arm of Spanish construction and engineering firm Abengoa. That basically means Abengoa was able to meet the equity commitment requirement for the DOE to finalize its guarantee.

The DOE awarded the conditional loan guarantee back in July, alongside another $400 million loan guarantee for Abound Solar to produce thin-film solar panels. As DOE Loan Chief Jonathan Silver told us recently, it takes about six months “soup to nuts” to get these applications processed and finalized. Loan guarantees essentially serve as a promise by the government to make good on a loan if the company can’t, and typically enable better interest rates and lower costs than would otherwise be available to a company for project financing.

Abengoa’s solar thermal trough-based solar farm, Solana, is under contract to sell power to Arizona utility APS in Gila Bend, Ariz. Fred Morse, U.S. senior adviser to Abengoa Solar, told me earlier this year (just months before the guarantee was announced) that Abengoa had “completed the permitting,” “gotten the transmission link ready,” and had just started “on financing the project.” Solana, which is supposed to be ready in 2013, is meant to create 1,600 jobs in Arizona, and over 70 percent of the solar components are estimated to be made in the U.S.

Abengoa’s loan guarantee is just larger than the conditional one awarded to BrightSource for $1.37 billion. Solana will use more traditional trough technology to collect the sun’s rays at Solana, because, as Morse told me earlier this year, the company thinks other more experimental forms of solar thermal technology have had a tough time getting funded in the U.S. But Abengoa is using solar power tower technology (a next-gen solar thermal tech) on its home turf.

BrightSource, by comparison, uses the central power tower design, which includes an array of mirrors that reflect the sun’s light onto a central receiver full of water, creating steam and powering a turbine. BrightSource’s Ivanpah solar thermal farm is already under construction.

Silver told us recently that the “first couple biofuels deals” will be announced, “shortly” for the loan guarantee program, and that biofuels will likely be among the next several loan guarantees issued. In the coming year, he said, we’re also likely to see “additional interest” in nuclear and “advanced fossil fuel technologies,” such as “clean coal” and carbon capture.

The DOE has issued larger loan guarantees for nuclear — $8.33 billion for Georgia Power Company, and $2 billion for AREVA — but Abengoa’s is the largest one issued for clean power.

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