The Loan Programs Office’s Accomplishment

By Roy L Hales

Screen shot 2014-03-18 at 3.43.47 PMAmerica’s solar industry is celebrating its most stellar year. The amount of capacity number of installations have grown from a mere 45 MW, in 2003, to 4,751 MW in 2013. As Rhone Resch, President and CEO of Solar Energy Industrieys  Association (SEIA) puts it, solar energy is now mainstream. More than half of those installations was from ere utility scale solar projects that probably would not have come into being were not for the Department of Energy’s Loan Programs Office (LPO).

“Without the Loan Programs Office, we wouldn’t be seeing this kind of growth in solar energy here in the United States,” Peter Davidson, Executive Director of the LPO says. “We helped finance the first large-scale solar projects that got the industry off the ground, put Americans to work, and showed the markets that this technology was ready for prime time. We’re now leading the world in solar power and powering American homes and businesses with clean energy.”

LPO-financed projects represent about 22% of the current utility-scale PV capacity and more than half of the current U.S. CSP capacity (that’s including Ivanpah, which was not included in SEIA’s 2013 Year in Review because it came online in 2014.). Two of their CSP projects (Solana and the first phase of Genesis) represented nearly all the CSP that came online in 2013. LPO-finance projects represent about 13% of total U.S. solar capacity as of 2013. (not including Ivanpah)

There have been problems with the environmental impact on the desert, violation of Native American Sacred sites and conflicts with rural communities – but these are issues outside of the LPO’s mandate.

On their website, the LPO states it endeavors to

  • “Encourage commercial- and utility-scale development and adoption of new or significantly improved energy technologies,”
  • “Fund innovative technologies which reduce greenhouse gas emissions”
  • “Protect U.S. taxpayers by ensuring the loans and loan guarantees we provide have a reasonable prospect of repayment.”

The LOP’s job is to finance projects and ensure the money is well spent.

“The first 100 MW+ solar PV projects in the U.S were financed by the loan office,” Davidson says.

Ten utility-scale PV projects have gone into development since LPO funding under the Section 1705 program sunset  in 2011.

“The PV solar industry has now been incubated and is completely financed from the private sector,” Davidson said. “That is a real success.”

LPO is helping to finance five concentrated solar power (CSP) projects, which will have a capacity of 1.26 gigawatts. This includes Ivanpah, the world’s largest CSP plant, which officially came online in Q1 2014.

Ivanpah supposedly has the capacity to generate 392 megawatts (MW) of clean electricity — enough to power 94,400 average American homes – most of which is already sold under long-term power purchase agreements to Pacific Gas & Electric and Southern California Edison Company. Only, as Christian Roselind recently pointed out, there have been problems and it is not yet certain this facility will perform the way it was designed.

It is equally certain that if there a $1.6 billion loan from the Loan Programs Office, there would be no Ivanpah.

The LPO invested in CSP projects like Abengoa’s Solana and SolarReserve’s Crescent Dunes when many were beginning to question this technology because, these projects utilize a storage capability that allows the facility to keep operating during the night.

A recent Lux Research report states that large CSP projects are presently too costly, but added that power towers could already successfully compete with utility scale Multicrystalline silicon (mc-Si) if they could secure larger projects that integrate thermal energy storage. Lux predicted this will happen in the next few years and, after it does, CSP will assume a much larger role than it occupies at present.

Davidson recently wrote that, “The Energy Department is not only playing a role in CSP by helping to finance its first commercial deployments, my colleagues in SunShot and ARPA-E are driving advancements through innovative research, development and demonstration projects, as well as manufacturing.

  1. Recently, ARPA-E announced $30 million in investments for 12 projects to develop transformational hybrid solar energy technologies that deliver cost-effective power when the sun isn’t shining.
  2. The Department’s SunShot Initiative announced a $25 million funding opportunity to help solar energy manufacturers and the solar supply chain tackle key cost-contributors such as raw materials, labor, and capital expenses and make improvements to labor-intensive solar manufacturing processes.
  3. The Department is partnering with Sacramento Municipal Utility District (SMUD), investing $10 million to integrate utility-scale CSP technology with SMUD’s 500 MW)natural gas-fired Cosumnes Power Plant in an effort to demonstrate cost-competitive CSP-fossil fuel power generating systems in the United States.”

Davidson claims that, at this point, less than 3% of LPO’s investments have turned bad. Given that his mandate is financing large commercial projects that banks deem too risky, that is an accomplishment.

(Image at top of page: IVANPAH, CALIFORNIA, APRIL 04 2013: Tower 2 and its heliostats at sunrise at the Ivanpah Solar Power Facility. Located in the Mojave Desert 40 miles southwest of Las Vegas, The Ivanpah Solar Electric Generating System is a solar thermal power project, currently under construction, with a planned capacity of 392 megawatts gross, enough to power approximately 140,000 houses. It will deploy 173,500 heliostat mirrors spread over approximately 3,500 acres, focusing solar energy on boilers located atop three solar power towers, generating steam to turn a conventional steam turbine. The project – owned by NRG Solar, Google and BrightSource Energy – is currently the largest solar thermal plant under construction in the world. The project is being constructed by Bechtel. (photo Gilles Mingasson/Getty Images for Bechtel).

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