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Cuts to DOE Loan Program Could Set Back U.S. Solar Industry

Industry executives say that several planned solar plants would be canceled if House Republicans succeed in eliminating key DOE loan guarantee programs

By Maria Gallucci

Mar 15, 2011
Solar roof with construction crane

Solar companies are warning that if Congress kills two major Department of Energy funding programs this spring, the country would squander the opportunity to exploit recent breakthroughs in solar energy development.

For Tenaska Solar Ventures in Omaha, Neb., a cut in DOE loan guarantees could mean losing two planned solar plants in Southern California, which in turn would halt operations at a new manufacturing facility for solar parts.

"It would kill off a number of projects that otherwise would have been created," Tenaska spokesperson Bart Ford told SolveClimate News.

Through its CSOLAR Development subsidiary, the firm plans to supply 130 megawatts of photovoltaic (PV) capacity from its Imperial Solar Energy Center (ISEC) South project.

A second 150-megawatt project at its ISEC West location would triple the amount of concentrated photovoltaic (CPV) capacity that research consultancy Strategy Analytics expects to be installed in the U.S. this year.

The facility is the largest power station of its kind to be announced worldwide, with potentially enough capacity to serve 55,000 California homes.

CPV currently accounts for 0.1 percent of the total domestic PV market, as the relatively new technology slowly begins to compete with traditional lower-cost silicon PV projects.

The technology, which is best suited to extremely sunny areas, uses optical lenses to concentrate sunlight onto high-efficiency solar cells. The panels are mounted on tracking systems to follow the movements of the sun's rays.

Ford said that both projects have secured 25-year power purchase agreements from San Diego Gas & Electric (SDG&E), and that pricing for the deals was based on receiving credit subsidies. 

He declined to disclose the total costs of the projects or the amount of DOE funding on the table, explaining only that, "If the loan guarantee goes away, then likely our solar projects go away." 

Solar Surged in 2010 From Loan Guarantees

The DOE loan guarantees encourage investment in risky, innovative energy projects by ensuring financial institutions and project developers that the government will cover loans they cannot pay back.

Under 2009's American Recovery and Reinvestment Act (ARRA), the Obama administration created the temporary Section 1705 program to provide loan guarantees to projects for renewable energy, advanced biofuels or upgrades to the national transmission system.

The program initially appropriated $6 billion for credit subsidy fees, which is the amount the government estimates it would have to pay out. The subsidy account was later reduced to $2.5 billion.

The 1705 program has since allowed the DOE Loans Programs Office to conditionally commit or close $18 billion in loan guarantees to 20 clean energy projects, creating or saving 20,000 jobs across 13 states, office spokesperson Ebony Meeks told SolveClimate News.

"For every dollar appropriated, the loans are driving thirteen dollars of private sector investment," she said via e-mail. "The DOE has thus far pledged to finance eight renewable energy generation projects with a combined capacity of more than 4,000 megawatts — enough to power more than one million homes."

Section 1705 is a follow up to Section 1703, a permanent loan guarantee program to support innovative energy technologies that are not commercially available. Applicants in this program pay an insurance premium and include projects in nuclear power, fossil fuels, carbon capture and storage, industrial energy efficiency and renewable energy.

The loan office's budget for fiscal year 2012 proposes $200 million in credit subsidies for the 1703 program. The average credit subsidy for solar generation and manufacturing projects is $156 million in total, with biomass, geothermal plus wind generation and manufacturing averaging a collective $150 million in credit subsidies.

In the case of Solar Reserve,

In the case of Solar Reserve, this is particularly bad news, since they are innovative creators of molten salt heat storage technology, which is what really gives solar thermal it's unique features, like low intermittence and dispatchable power. 


GOP lawmakers are  killing off innovation, jobs growth and ensuring that the U.S. falls further behind in the worldwide clean energy revolution.  What's worse is further disregard for any kind of sane environmental policies and denial of climate science.  They have to honor their Koch pledge of course.


 


 

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