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Congressional support for US solar industry rolls along despite Solyndra's collapse



September 19 - America's solar energy industry continues to advance, with new federal loans for solar projects planned and the country's most ambitious photovoltaics program in the works, despite the high-profile bankruptcy of solar panel-manufacturer Solyndra.


The collapse of Solyndra has not diminished congressional support for the Department of Energy's loan-guarantee program -- at least not yet. The Senate Appropriations Committee approved a fiscal 2012 spending bill on September 7 that would give DOE another $200 million beginning next month to support loan guarantees for wind farms, solar facilities and other renewable-energy projects.


The Democratic-led panel fully met DOE's budget request for the loan-guarantee program, despite the recent collapse of Solyndra, which was the first company to receive a federal loan guarantee since the Carter administration. (Listen to a related podcast: Loan guarantee program could change in wake of Solyndra bankruptcy)


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Committee Democrats said DOE's loan-guarantee program is vital to increasing America's energy security and lowering carbon emissions. Senator Dianne Feinstein, a California Democrat who chairs the Appropriations Subcommittee on Energy and Water Development, said at the full committee hearing on September 7 that DOE loan guarantees "promote innovation and leverage private-sector investment in clean-energy projects to create jobs."


The $200 million that the panel's bill would provide would be used to pay the so-called credit subsidies of loan-guarantee recipients, which, like points on a mortgage, are fees that are collected to protect against potential defaults. The committee approved the loan-guarantee funding as part of a larger appropriations bill for energy and water projects.


The Republican-led House Appropriations Committee this summer approved its version of the energy and water funding bill, providing $160 million for the DOE loan-guarantee program to pay for credit subsidy fees.


At her subcommittee's hearing September 6 on the appropriations bill, Feinstein said she would have preferred to provide even more than DOE requested for renewable energy loan guarantee credit subsidies, but given the political and economic realities of constrained budgets, $200 million was as much as she could have hoped for.


"It's de minimis," she said of the $200 million in the bill


DOE continues to provide loan guarantees for renewable energy projects. The department finalized a $150 million loan guarantee on September 8 for 1366 Technologies to scale up a new process for manufacturing solar-cell wafers that the company said cuts costs in half.


"This type of pioneering technology is needed to compete and thrive in the global race for solar manufacturing, a market worth billions of dollars and tens of thousands of jobs in the years ahead," Energy Secretary Steven Chu said in a statement. DOE first reported in June it intended to award the loan guarantee to 1366 Technologies.


The company estimates it will be able to produce 700-1,000 MW of silicon solar wafers annually. The project will be based in Lexington in the state of Massachusetts, and DOE estimates it will create 70 permanent jobs and 50 construction jobs.


It uses a process that reduces the number of steps involved in manufacturing silicon wafers, and cuts the amount of silicon waste. The company originally developed the technology at the heart of its novel manufacturing process with a $4 million grant from DOE's Advanced Research Projects Agency-Energy, which funds high-risk, high-reward research, and $3 million from the department's Solar Energy Development Program.


In addition, DOE said September 12 that it had reached a final agreement on a loan guarantee to support Abengoa's Mojave Solar Project, a proposed 250-MW concentrating solar power plant in California.


Construction of the facility will support more than 900 construction and permanent operations jobs, DOE said, and when it is complete, it will increase the US' currently installed CSP capacity by about 50%. The project will generate enough electricity to power more than 54,000 homes, with PG&E agreeing to a 25-year power-purchase contract.


DOE said the Mojave Solar Project will use technology from Abengoa that is significantly better than the previous generation of CSP installed in the US during the 1980s and 1990s. Agengoa's solar collector assembly was developed with the help of a DOE grant.


The assembly includes a lighter, stronger frame than used in previous systems that is designed to hold parabolic mirrors that are easier and less expensive to build and install, DOE said. The advances make the technology 30% more efficient than the first generation of CSP plans, department officials said.


As of September 16, DOE had either closed on or issued conditional commitments for more than 30 loan guarantees under its 1705 loan guarantee program that was set up and funded under the American Recovery and Reinvestment Act of 2009. The closed guarantees account for more than $8 billion in loans for renewable-energy projects, while the yet-to-be-closed conditional commitments amount to $10.7 billion in loans. Under program rules, construction on the projects must begin by September 30.


The department is also helping to finance the largest US program to date for installing solar PV. Chu said September 8 that DOE had offered a conditional commitment for a partial guarantee of a $344 million loan to help secure financing for US company SolarCity's SolarStrong project, which is designed to double the number of residential solar PV installations in the United States.


As part of the project, SolarCity plans to work in partnership with military housing-privatization developers to install, own and operate up to 160,000 rooftop solar installations on as many as 124 military housing developments across 33 US states. The company cited estimates that there are currently 166,000 PV installations in the United States.


The project is expected to create more than $1 billion in solar projects and 371 MW of new solar generation capacity. USRG Renewable Finance, a subsidiary of U.S. Renewables Group, will serve as the lead lender for the project in partnership with BofA Merrill Lynch.


"Now the solar industry has a debt model that can make distributed generation affordable on a massive scale," SolarCity CEO Lyndon Rive said.


The SolarStrong projects will likely include installing solar PV on other privatized buildings on military bases, such as community centers, administrative offices, maintenance buildings and storage warehouses. The first SolarStrong-eligible project -- a coordinated effort between real estate developer Lend Lease and SolarCity -- is already underway at Hickam Communities at Joint Base Pearl Harbor-Hickam in Hawaii. When completed, that project alone will provide renewable power to more than 2,000 military family homes.


The SolarStrong project will help the Department of Defense, America's single-largest energy consumer, secure its energy needs from renewable sources operated in parallel with the electric grid. DOD has set a goal to obtain 25% of its energy from renewables by 2025.


Casting a shadow over expansion of the US solar industry is the uproar over the recent Chapter 11 bankruptcy filing of Solyndra, a California solar panel maker that received a $535 million DOE loan guarantee in 2009. House Republicans have launched an investigation into the Solyndra loan guarantee, charging that the Obama administration failed to vet the company closely enough before offering it the taxpayer-backed financing. (See related story: Subpoenaed emails stoke uproar over DOE loan program.)


Goverment second in line to recoup losses


According to its bankruptcy filings, Solyndra has drawn down about $528 million in loans from the Treasury Department's Federal Financing Bank, which DOE has guaranteed. The federal government stands second in line to recoup its loan from the revenue raised by a sale of Solyndra's assets in bankruptcy, behind a group of investors that lent the company $75 million.


Several solar industry analysts said they doubt the company's assets will generate much interest from would-be buyers, given the specialized nature of the company's manufacturing equipment and the already oversupplied market for photovoltaic panels.


Thomas Maslin, a Washington-based solar industry analyst with consulting firm IHS-Emerging Energy Research, said he does not foresee other solar manufacturers being too eager to bid on Solyndra's assets, since its manufacturing equipment was custom designed to make Solyndra's unique cylindrical, modular rooftop solar panels. And the patents for those panels may not be highly coveted by other solar manufacturers, since Solyndra has already shown the technology cannot stay cost-competitive with cheaper traditional photovoltaic panels.


"It's a very unique technology, so maybe the number of suitors are smaller than if it were nanosolar or something more of a traditional flat panel thin-film," he said. Still, Maslin said, Solyndra's panels, designed for rooftop installations, have received generally good reviews from installers and clients. The modules are lightweight and easy to install, and, unlike most conventional solar panels, Solyndra's do not require any major supportive structures to be built onto a building.


"There may be some value to be gleaned from any inventory yet to be sold," Maslin said.


Theo O'Neill, a New York-based analyst with brokerage firm Wunderlich Securities, said that with several other solar firms going bankrupt or announcing asset sales in recent weeks -- including Q-cells, Schott Solar, Spectrawatt and Evergreen -- Solyndra's assets are going on the market at a bad time.


"The Solyndra [intellectual property] may be worth something, but the plant and equipment, probably not," he said. "As with Evergreen, the equipment is designed for a non-standard wafer size and will go on the market when there is already equipment from other bankrupt solar makers up at auction. I assume it will bring some value as parts or scrap or both."


Kerina Cusick, solar developer SunEdison's Mid-Atlantic director of government affairs, said Solyndra made a bad bet with its technology by seeking to reduce the amount of polysilicon in its panels, just before several new polysilicon plants were built, lowering prices for the material.


"They built the company on some great patents, they had a very unique and very refreshing approach that made them very revolutionary at one period of time," Cusick said in a panel discussion at the 2011 Georgetown Clean Energy and Cleantech Conference in Washington. "Unfortunately, at the same period of time, a number of polysilicon plants were being built. They lost their competitive advantage. They were at a higher cost differential instead of a lower cost differential."


DOE has noted that PV prices have fallen 42% in this year alone, with the Chinese government heavily subsidizing its manufacturers, contributing to Solyndra's inability to stay afloat. (See related story: Solar industry outlook brightens and dims; it depends on whether you are buying or selling .)


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