Last week, First Solar Inc. said it would not be able to meet the deadline for the Conditional Commitment Loan Guarantee from the Department of Energy (DOE). The DOE had committed up to $1.5 billion in loan guarantees for the proposed 550-megawatt photovoltaic farm on the Carrizo Plain in San Luis Obispo County, Calif.
The company said it couldn’t meet all the requirements for the backing by deadline.
“The Topaz project meets the standards for inclusion in the loan guarantee program and received a conditional commitment for a loan guarantee from DOE on June 30, 2011, but there was insufficient time to process all requirements before the Sept. 30, 2011 deadline specified under Section 1705 of the Energy Policy Act of 2005,” the company said in a press release.
The company didn’t specify which requirements it wouldn’t meet by the deadline, according to spokesperson Alan Bernheimer. The project is subject to a lawsuit by local conservation groups. But that was not keeping the project from getting the loan guarantee, he said.
The company has won conditional commitments for solar loan guarantees on other projects as well in the U.S. Southwest as well.
It won the a $680 million loan guarantee for its 230-megawatt Antelope Valley Solar Ranch 1 project and a $1.5 billion guarantee for the 550-megawatt Desert Sunlight project. Both those projects are still in the DOE loan guarantee process, according to First Solar.
To secure the loan guarantee the company must start construction on the projects before Sept. 30.
The loan guarantees add certainty to the projects for potential investors, helping companies gain access to financing at lower costs. The lower interest rates for such project financing helps keep the costs of such projects lower.
Still, First Solar is moving ahead with the Topaz project.
“First Solar is in advanced talks regarding the sale and financing of the project with potential buyers utilizing a different transaction structure that does not require a DOE loan guarantee,” the company said.
How much it will cost without the loan guarantee remains to be seen.
“We have not provided a valuation of the project,” Bernheimer said.
Nor has the company discussed how much more the project is likely to cost without the benefit of the loan guarantee, he said.
However, when the DOE issued the conditional commitment it anticipated that the costs of the entire Topaz project would be slightly more than $1.9 billion.
“We will continue to develop Topaz, and transfer ownership once financing is completed. We expect to build it and to operate and maintain the project,” Bernheimer said. “It’s our business model to develop—site, PPA, permit, transmission—projects and to build and operate them, but to bring in investors whose business is to own these assets long term.”
Image courtesy of First Solar.