LAS VEGAS -- When Energy Secretary Steven Chu announced on Sept. 28 that the Energy Department finalized a $737 million loan guarantee for a proposed solar power plant outside Tonopah, it was one of the last hurrahs for a loan program sullied by the Solyndra bankruptcy.
The funding from what was then known as the 1705 loan guarantee program went to Tonopah Solar Energy to develop the Crescent Dunes Solar Energy Project 14 miles northwest of Tonopah in Nye County. The 110-megawatt facility was billed as first of its kind in the United States that will use molten salt as its primary heat transfer and storage medium.
Chu said at the time: "If we want to be a player in the global clean energy race, we must continue to invest in innovative technologies that enable commercial-scale development of clean, renewable power like solar. Solar generation facilities, like the Crescent Dunes Solar Energy Project, help supply energy to local utilities and create hundreds of good, American clean energy jobs."
But that statement was made just two days before expiration of the 1705 program, which was funded through the massive economic stimulus package enacted early in President Barack Obama's administration.
Though renewable energy advocates say that the federal loans have helped stimulate development of solar power, last year's bankruptcy of solar panel manufacturer Solyndra of Fremont, Calif., provided the grist congressional Republicans who opposed the stimulus needed to criticize the loan program. Solyndra received a $535 million guaranteed loan in 2009, the first given under the 1705 program, but wound up as a failed venture that led to the layoff of 1,100 workers in August.
The controversy surrounding Solyndra guaranteed that the 1705 program, which expired Sept. 30 under federal law, wasn't going to get renewed as long as congressional Republicans had their way.
The Energy Department has said that the 1705 program and two other guaranteed loan programs that still exist are expected to produce more than 60,000 renewable energy jobs
nationwide, power 3 million homes and save more than 300 million gallons of gasoline a year. But one of the surviving programs, the 1703 loan program, is limited to cutting-edge projects that don't use commercially available technology and currently funds only three facilities nationally. The other guaranteed loan program is for the manufacture of advanced technology vehicles such as those that run on electricity or produce greater fuel efficiency.
Solar power advocates have been quick to defend the 1705 program. They cited a report late last year from Bloomberg Government, a branch of the Bloomberg financial information empire, concluding that most of the 1705 loans were low risk and that Solyndra represented only 3 percent of the loan portfolio. The report stated that not only was the focus on Solyndra disproportionate to its impact on the loan program, but also that the program was in good financial health.
Bloomberg's news service reported separately last fall that congressional Republicans who criticized the Solyndra loans supported similar federal loan guarantees for cleaner-coal projects in their states. Republican House Speaker John Boehner of Ohio also reportedly sought a $2 billion loan guarantee for uranium enrichment in his state to support nuclear power production.
The Obama administration and congressional Democrats also have repeatedly charged that Republicans care more about protecting oil company tax subsidies than developing clean-burning renewable energy.
Such criticism didn't dissuade Republicans on the House Oversight and Government Reform Committee from issuing a blistering report in March titled "The Department of Energy's Disastrous Management of Loan Guarantee Programs." The report concluded that Solyndra's collapse was only the beginning of problems with the loans.
"This report will demonstrate how DOE loan commitments exposed taxpayer funds to excessive risk as a result of DOE's bias toward approving loans without regard to warning signs," the report stated. "The committee identified many cases where the DOE disregarded their own taxpayer protections, ignored lending standards and eligibility requirements and, as a result, amassed an excessively risky loan portfolio."
The report also criticized the Tonopah project from the standpoint of 1705 loans that the committee said created conflicts of interest for members of the Obama administration who had worked for green energy investment groups. The committee stated that Michael Froman, deputy assistant to the president and deputy national security advisor for international economic affairs, was part of a "revolving green door" because he previously managed infrastructure and sustainable development investments for Citigroup.
Citigroup, the report said, became a major investor in SolarReserve, a California power production company affiliated with Tonopah Solar Energy.
Tonopah Solar, meantime, is pressing ahead with plans to open its power plant by January 2014. Construction, which began in August, will feature a 640-foot tall molten salt tower, tallest of its kind in the world. The facility will use 17,500 heliostats, or mirror assemblies, to gather the sun's thermal energy and heat the salt. The heated salt will then circulate from the tower to a storage tank, where it will be used to produce steam and generate electricity.
Thermal energy that builds up in the heated salt is such that the facility will be able to produce additional electricity even at night or when direct sunlight isn't available. NV Energy will purchase the electricity, which will be enough to power up to 75,000 homes during peak demand.
The project is expected to create as many as 600 construction jobs and 50 permanent jobs, Tonopah Solar states on its website.
Four other projects with Nevada ties also received 1705 loans. One involves the installation of rooftop solar panels on industrial buildings owned by global real estate developer Prologis, including property in Southern Nevada. A geothermal facility in Reno and two other projects in rural Nevada also received guaranteed loans.
Combined the Nevada projects are expected to reduce environmentally harmful greenhouse gases by the equivalent of the emissions produced by 313,000 passenger vehicles annually.