Solar Companies to Tap U.S. Funds Halted Since Solyndra
Two solar manufacturers are preparing to tap financing from the U.S. Energy Department under the same loan-guarantee program that backed the failed Solyndra LLC and Abound Solar Inc.
1366 Technologies Inc. and SoloPower Inc., which qualified for guarantees last year, are working to meet milestones needed to access the credit and may receive approval as early as the end of this year, executives at the two companies said. That would be the first funding disbursed to U.S. solar manufacturers since Solyndra’s September bankruptcy filing that spotlighted President Barack Obama’s support for the program.
The bankruptcies of half the solar manufacturers that received loan guarantees generated congressional inquiries into the program and raised questions from Republican lawmakers about the influence White House officials had in lining up funds. Those failures won’t prevent the government from honoring other guarantees, said Damien LaVera, a spokesman for the Energy Department.
“As long as they meet the terms and conditions of their agreement, including milestones, they can expect to receive funding as agreed,” LaVera said in an e-mail.
The Energy Department program was designed to support innovation at companies developing new energy technologies, and not every recipient is expected to succeed, LaVera said. House Republicans proposed a bill yesterday that would bar the agency from issuing additional loan guarantees.
The department has provided almost $35 billion in loans, loan guarantees and conditional commitments to clean-energy companies. About 35 percent of that is for solar power- generating projects, compared with less than 4 percent for solar manufacturers, LaVera said. The remainder went to support wind, geothermal, biofuel, electric vehicles and other ventures.
The Energy Department’s plan to continue funding solar manufacturers will trigger new criticisms of Obama’s energy strategy during an election year, said Ben Cole, a spokesman for the Institute for Energy Research, a free-market analysis group in Washington.
“This program has been particularly wasteful of taxpayer money and the administration should freeze additional payouts until Congress concludes their investigation,” Cole said in an interview. “We shouldn’t be throwing good money after bad.”
Solyndra took $527 million in loans from the program. Abound Solar, which filed for court protection from creditors July 2, was awarded a $400 million loan guarantee in 2010 and borrowed $70 million against that. The Energy Department expects taxpayer losses of $40 million to $60 million from Abound’s failure.
Representative Mike Kelly, a Pennsylvania Republican and member of the House Oversight and Government Reform Committee that’s looking into the guarantee program, said loaning more money to solar manufacturers is “foolhardy and arrogant.”
“The Department of Energy is flagrantly using hard-earned taxpayer dollars to invest in a product that is simply not ready for market,” Kelly said in an e-mailed statement.
A global oversupply and slowing demand dragged down the price of solar panels by half last year, driving Solyndra and Abound out of business. Abound suspended operations June 28.
“The Department of Energy should not continue to gamble with taxpayer money on these risky projects,” Representative Cliff Stearns, a Florida Republican who has led the investigation into Solyndra’s loan guarantee, said in an e- mailed statement.
SoloPower was awarded a $197 million guarantee to make rolls of flexible solar panels. The company is building its first commercial production line in Portland, Oregon, funded in part by $219 million in private equity and state incentives.
“We haven’t taken any DOE loan money yet, and we won’t until we have the first line up and running,” Chief Executive Officer Tim Harris said in an interview. “When that line is hitting certain metrics, before the end of the year or first quarter next year, we’ll take the first tranche of the DOE loan funding.”
SoloPower’s products don’t use glass, making them lighter than standard photovoltaic panels, he said. The San Jose, California-based company is betting that will help it expand the market for panels installed atop roofs. “Our panel really enables that whole rooftop market, and we don’t face very direct competition from the Chinese low-cost vendors.”
1366 Technologies won approval to borrow as much as $150 million to produce silicon wafers for solar panels. The Energy Department established two conditions for the company to access the funding, said Chief Executive Officer Frank van Mierlo.
“They said first we want you to eliminate most of the technical risk by building and operating a demonstration plant, and then find private money to match the loan so it’s 50 percent loan, 50 percent equity,” he said in an interview. “There’s still some risk, but we are trying to mitigate most of the risk before drawing on the loan.”
1366 is seeking to raise $50 million to build a demonstration plant that may prove its technology is cheaper and more efficient than existing polysilicon production methods, van Mierlo said. The company has raised $47 million so far and he expects the plant to be complete in the second half of 2013.
The company is using technology developed by co-founder Ely Sachs, formerly a Massachusetts Institute of Technology professor, in which molten silicon is poured directly into a wafer-shaped mold. That wastes less than half the silicon from the conventional method of cutting wafers from ingots, 1366 said.
“We’ll be able to sell solar modules at half the current prices and still be profitable and be truly cheaper than coal,” van Mierlo said.
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