Mojave Solar $1.2 Billion Loan Guarantee Done

From EarthTechling's Pete Danko:

The Obama administration has given another boost to big solar in California, finalizing the $1.2 billion federal loan guarantee for Abengoa Solar’s 250-megawatt (MW) Mojave Solar project. The financing, which had been conditionally set in June, joins a host of loan guarantees closing before the U.S. Department of Energy (DOE) Section 1705 program for renewable energy development wraps up at the end of the month. The program has been under fire of late due to the Solyndra bankruptcy.

The Mojave plant, set for about 100 northeast of Los Angeles, will use concentrating solar power (CSP) technology. Abengoa does both tower power and parabolic trough versions of CSP, but in this case it will go the trough route – and the DOE said the newest generation of this technology is easier and less expensive to build and install than the prior generation, and uses a heat-collection element that can increase thermal efficiency by up to 30 percent.

Around 900 jobs are expected to be created in building the plant, which Abengoa hopes to have operating by 2014. And there will be plenty of indirect jobs as well, the DOE suggested. It said about 80 percent of the total cost of the project – $1.6 billion, according to Abengoa – including both capital equipment and labor, will be sourced domestically. DOE said the project “will purchase all of the receiver tubes from a facility in New Mexico, the parabolic trough mirrors from a new facility in Arizona and other key equipment from different suppliers in several states across the country.”

DOE said the plant will produce electricity equivalent to that which would power 54,000 homes annually. The Northern California utility PG&E will get it, under a 25-year agreement.

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Comments

[Andrew Harvey]

09:34 AM on 10/15/2011

OK, so lets take a look at this from a financial standpoint:

This plant will provide power to 54,000 homes according to the article.

Lets assume that each of those homes pays 300 bucks per month in electric costs.

Of course, the plant only works during the day, so lets take 50% off that 300 dollars = 150 per month per home.

150 x 12 x 54,000 = $97,200,000 per year.

Of course, the plant also has some costs of its own, lets assume that 25% of that revenue is absorbed by operating costs, leaving $72,900,000 per year in operating profit. (I'm being extraordinarily generous here, I bet it costs more than that)

Now comes the interest on the loan: at 5% (which is lower than ANY corporate entity pays for long term debt), 5% x 1,200,000,000 = 60,000,000 per year in interest costs.

So, 72,900,000 - 60,000,000 = 12,900,000 left over after loan costs.

Then come the taxes, let assume 28%. -> $9,288,000 after taxes to shareholders and debt repayment.

Any guess how many years its going to take before they can pay back the loan?
(hint, at 3% annual inflation, it'll take 54 years)

Without the inflation, it would take 129 years before the loan could be paid down. Aside from being optimistic at every turn, it still looks like garbage. What happens when a tornado blows through and cracks all your mirrors?

We'll see this one in chapter 11 by the end of the decade.

[This American]

07:52 AM on 10/07/2011

If this is such a good idea, why do taxpayers have to guarantee the loan?

[vetxcl]

09:27 PM on 09/25/2011

Investors are getting onboard the solar money train. Others, stuck in the mud here are missing out. And there's this: http://cleantechnica.com/2011/09/24/solar-growth-vs-fossil-fuel-demise/

[Philip Ballman]

01:40 PM on 09/16/2011

As long as one side of the aisle fights the other on every issue we will suffer economic defeat. One segment of Congress passes loans to American companies to produce solar panels then another gives incentives to a Chinese company to import solar panels at 40% of the cost of the American produced panels. Then produce sound bites exclaiming the ignorance of giving loans to American companies and blaming the President for the company's failure. I wish one news broadcasting company would clear the air and produce a truly fair and balanced news,with old time investigative journalism and sound research at it's core. The way it goes thees days,"The Truth", goes to the highest bidder. Their version of the truth that is, it goes this way with almost everything in our culture. We don't dance or sing together as a people so our culture is fragmented, the melting pot, we call it. Our way is the moronic path of greed, self gratification and short sightedness. Is there any other Cultural traditions we can stamp out with our youthful, naive and militaristic nature. The Chinese have been playing this game of trade, economics and war for 6,000 years, count them 6,000 years, we are relatively new to this venture. Do you really think we will beat them on a level or a Congressionally enhanced playing field. Sorry for my composition I have much more to learn (didn't take full advantage of the education afforded me) I'm 64 and still trying.

[eyelashviper]

07:20 PM on 09/16/2011

Thank you Philip, your composition is fine, and your points are clear.
Consider me fan #2

[givemtheirwish]

12:10 PM on 09/16/2011

Wonder if it'll be as successful as SOLYNDRA, Evergreen, Spectra, et al (the shining lights & DIMULUS cash recipients) who've all filed Chapter 11.
Now we know why it's referred to as "GREEN TECH"; it takes substantial amounts of "Green" to fund them into Chapter 11.
Well, it's only taxpayer's cash; doesn't really count!!!!!

[AJH]

12:52 PM on 09/16/2011

you do understand the difference of giving money to an emerging technology that has to sell that technology and guaranteeing money to a company that will sell energy we can't do without and which california under our renewable energy portfolio standards must have online by 2020.

In short this is a safe loan guarantee, that will also help PG&E comply with California standards.

Now I support the factory guarantee's but recognize they come with significantly higher risks.

[eyelashviper]

07:21 PM on 09/16/2011

No doubt there were complainers when the government helped develop computers and the internet...

[givemtheirwish]

02:14 AM on 09/17/2011

The only difference is computers were real, whereas "Green Tech" is a figment of the Green Imperialist's imagination. Re the Internet; when Rev ALGORE invented the Internet he did it completely by himself without any assistance from anyone else. I know that's the case as I heard it at one of his sermons at the Church of Climatology.

[ekg]

11:29 AM on 09/16/2011

Solyndra part deux?

[grrchrds]

08:21 AM on 09/16/2011

How much above market is PG & E going to pay for this energy? In other words, how much are the electric rate payers of PG & E going to be forced to pay above market price for this energy?

[ThinkCreeps]

11:00 AM on 09/16/2011

Based on reading the article, at $1.6bn for the 250MW solar plant, for interest charges at 5% that's $80m a year, about six-eight times more for a natural gas plant - say $12m there. The solar plant should be able to do better than that, especially with a loan guarantee.

Operating 80% of the time, with an annual energy output of 1.8GWh, that's an absolute minimum income of $60M, with current wholesale power prices of 3.5c/kWh.

If gas is at the current $4 per MBTU, fuel cost of generating a kWh in a 55% efficient plant is 2.5c, so fuel costs are $45m per year for the gas plant.

So, annual costs are $60M for the solar plant and $57M for the gas plant, both plus maintenance.

It's about even today. The question is, where are natural gas prices going? Looks like the advantage is with solar.

[AntiSocialistfighter]

12:59 PM on 09/16/2011

Please clarify something please. You just compared recovery cost of a solar plant to the operating cost of natural gas. First, you must assume zero operating cost for the solar plant and a zero failure rate. For 1.6B you can build a lot more that 250MW of natural gas generation that runs 100% of the day. Capacity would still have to be built to cover night time loads and that must always be factored in when calulating the cost of solar. You must have the cost of the solar plus the cost of generation sitting idle. Secondly, I don't think I've ever heard of any natural gas plant being damaged/ruined by a hail storm or lightning strike! One storm and 1.6B is all gone and the 250MW will still need to be supplied from some where. It's not just the cost, it's the limited availability, the cost of idle generation and the reliability that the untilities MUST maintain (or be fined!). We pay to fund it then we pay again when we use it.....makes no sense at this time. Have I missed something?

[Samuel Huntington]

01:20 AM on 09/16/2011

I wonder if the owner is one of Obama's big campaign contributors, like Kaiser.

Did they fast track the loan even though the firm is financially insolvent?

Did they fast track the loan after a bunch of meetings with Valarie Jarrett?

Did they fast track the loan after the prior administration stopped the loan over financial concerns?

Did they restructure the loan when it was clear that the project/business was in big trouble, to put the public's from first on the creditors list to second, after private investors.

Finally is this just another FOO project, for a Friend Of Obama?

[captioned]

11:59 AM on 09/16/2011

"I wonder if the owner is one of Obama's big campaign contributo­rs"

You mean like Madrone Capital Partners?

"Did they fast track the loan"

No, Solyndra also raised about $250 million from private investers too..

"Did they fast track the loan after the prior administra­tion stopped the loan"

Nope, they restructured it. so as to avoid the 'fast track' the W. Bush admin gave it..

http://cleantechnica.com/2011/09/15/solyndra-advanced-by-bush-for-2-years-solyndra-timeline/

[Samuel Huntington]

12:54 PM on 09/16/2011

No I mean like Kaiser (principal in the Solyndra deal)

Solyndra raised the $250 M after Obama knew Solyndra was in trouble, and/or doomed from the start. The public loans were gifted first position by the Obama for the coming bankruptcy. The administration was so committed to getting the photo op moment and pushing through their green demonstration project, that they invited private investors, by agreeing to allow the private investors to take the first position in bankruptcy as priority lenders..the private money was given priority. During this time period Kaiser visited the White House, meeting with Valarie Jarrett and others.

Your last comment is factually incorrect. The Bush administration stopped Solyndra loans due to concerns over the economic viability of Solyndra, 9 days after taking office the Obama administration reinstated Solyndra and put it on a fast track.

This story will have legs and will be fully investigated. The public's money $500M will be squandered, as the $250 priority private lenders (due to the administration's ill considered zeal and allowing second place in line for assets) will likely take anything and everything of value before the public gets there.

Yesterday annoucement: $1.2 billion solar project in Mojave. Given Solyndra they didnt even take the time to review the applications and reconsider if they are economically feasible. (Note they they review cases, illegal aliens under order of deportation, but they cant take the time to review the solar projects)

This smells bad.