Energy Department offers $4 billion loan guarantee program for renewable energy and efficiency projects

The U.S. Department of Energy has announced a $4 billion loan guarantee program for renewable energy and energy efficiency projects.

The Renewable Energy and Efficient Energy Projects Loan Guarantee program is intended to support the first commercial-scale deployments of the next wave of innovative clean energy technologies. Through the program, the Energy Department solicits applications for loan guarantees.  When a successful applicant borrows money for project finance from a commercial bank, the federal government promises to assume the borrower's debt obligation if that borrower defaults.  This guarantee serves as a credit backstop for the borrower, ultimately reducing its cost of financing because the lender knows it has resort to federal funds if the borrower cannot repay the loan.

The current program follows a series of previous Energy Department loan guarantee programs.  These programs have helped finance projects including the NRG Solar, LLC's 290-megawatt Agua Caliente solar photovoltaic array (the world's largest), NRG Energy, Inc.'s 392-megwatt Brightsource concentrating solar power (CSP) plant (also the world's largest), the 845-megawatt Caithness Shepherds Flat wind project, and Abengoa Bioenergy Biomass of Kansas LLC's cellulosic ethanol plant.  While not all of the previous programs' awardees have been successful -- for example, failed solar panel maker Solyndra -- the Department touts the programs as aligned with President Obama's Climate Action Plan, by supporting investment in domestic energy resources and reductions in greenhouse gas emissions.

To be eligible for the present solicitation (48-page PDF), a project must be located in the United States and meet both of the following criteria:

1. Use renewable energy systems; efficient electrical generation, transmission, and distribution technologies; or efficient end-use energy technologies; and

2. Meet both of the following requirements : a) Avoid, reduce, or sequester anthropogenic emission of greenhouse gases; and b) employ new or significantly improved technology as compared to commercial technology in service in the United States. 

Beyond these general criteria, the Energy Department's Loan Programs Office has identified five target areas for awards:

• Advanced Grid Integration and Storage: mitigating issues related to variability, dispatchability, congestion, and control of renewable energy systems by incorporating technologies such as demand response or local storage, enabling enhanced integration of renewable energy into the grid.
• Drop-In Biofuels: developing biofuels that are more compatible with today’s engines, delivery infrastructure and refueling station equipment, enabling nearly identical bio-based substitutes for crude oil, gasoline, diesel fuel, and jet fuel. 
• Waste-to-Energy: projects using waste materials which are otherwise discarded, such as landfill methane and segregated waste, as energy sources.
• Enhancement of Existing Facilities: incorporating renewable generation technology into existing renewable energy and efficient energy facilities to significantly enhance performance or extend the lifetime of the generating asset. 
• Efficiency Improvements: projects incorporating new or improved technologies to further improve on energy efficiency that would substantially reduce greenhouse gases. 

Under the solicitation, the first round of application materials is due on October 1, 2014.  For more information on the opportunity, contact the Energy Department, or consult a professional experienced with financing and developing energy projects.

The Preti Flaherty team advises our clients on all aspects of energy project development, including the pursuit of federal funding and financial support. For more information, please contact Todd Griset at 207-623-5300.

Solar energy led new installations in October 2013

Solar-powered projects led new electric generation capacity installed in October 2013.  According to the Federal Energy Regulatory Commission's October 2013 Energy Infrastructure Update, most of the electric generation placed in service in October relies on solar energy technologies.  Developers placed 504 megawatts of solar capacity online in October, out of 699 megawatts of total new capacity for the month.  Solar also led the month in terms of the number of projects installed, accounting for 12 of 21 projects.

Solar photovoltaic panels line the roof of the visitor center at the Parker River National Wildlife Refuge in Massachusetts.

The solar energy projects placed in service last month vary widely in scale and in technology.  The largest, Abengoa SA's Solana Generating Station in Arizona, generates up to 280 megawatts of power using a thermal concentrating solar power technology.  2,700 parabolic trough mirrors focus the sun's rays on a pipe containing a synthetic oil.  This heat transfer fluid can reach 735 degrees Fahrenheit, and is sent to boilers where it produces steam from water.  The steam turns turbines attached to generators, much as in a conventional thermal power plant.  The Solana plant also features energy storage in the form of molten salt tanks that can enable it to generate electricity for up to 6 hours after sunset.

On the other end of the spectrum, Constellation Solar New York LLC placed its 2 MW Owens Corning Delmar Solar photovoltaic project online.  The project, located at an Owens Corning factory in Delmar, New York, consists of about 9,000 ground-mounted, photovoltaic panels covering over 9 acres.  Power produced by the project is sold to Owens Corning under a long-term power purchase agreement for use at the thermal and acoustical insulation factory; the project is expected to cover about 6 percent of the plant's annual electricity need.

While the use of solar energy is increasing rapidly, it remains a relatively small component of the nation's overall energy mix.  Solar powered projects account for 6.79 gigawatts of capacity, just 0.59% of the 1,158 gigawatts of existing electric generation capacity nationwide.  Nevertheless, the relatively small market penetration of solar technologies suggests that rapid growth may continue for the near term.

UAE opens first 100 MW solar project

The United Arab Emirates has recognized the start-up of its largest solar energy project to date.

The Shams 1 solar plant generates of electricity by concentrating solar thermal energy to vaporize a fluid into steam, which in turn spins a turbine.  Shams 1 can produce up to 100 megawatts of power, making the project the world's largest concentrating solar power projects.

Concentrating solar power, or CSP projects, use mirrors to heat a working fluid and ultimately to produce steam.  Shams 1 uses parabolic trough mirrors to focus the sun's energy on pipes full of a working fluid, while other concentrating solar projects focus mirrors on a central tower containing the working fluid.  That working fluid's heat is then exchanged into water, which vaporizes into superheated steam.  It is this steam that spins the turbine attached to an electric generator.  Concentrating solar thermal projects differ from those using photovoltaic technology, in which the sun's energy is converted into direct current electricity using specialized semiconductors.

Shams 1 was developed by Shams Power Company PJSC, a special purpose vehicle owned 60% by UAE-owned Masdar and 40% by the Total Abengoa Solar Emirates Investment Company, a vehicle in turn jointly owned by Total (50%) and Abengoa (50%).  These companies are said to have invested $600 million in building Shams 1.

With its commissioning, Shams 1 becomes the first utility-scale renewable power project in the UAE.  Other first and "biggests" include the largest financing transaction for a solar power project (US$600 million) the largest operating single pure concentrating solar plant in the world. 

UAE is blessed with energy resources.  For years, interest has focused on its oil and gas production.  Shams 1 is a small step toward resource diversification.  Will UAE continue to invest in alternative and renewable energy?

June 2, 2010 - Integrated Solar Combined Cycle: piggybacking of solar thermal onto combustion

Yesterday I wrote about FPL's Martin Next Generation Solar Energy Center, which uses "Integrated Solar Combined Cycle" technology. FPL describes the Martin plant as the "first hybrid solar facility in the world to connect to an existing combined-cycle power plant". The idea is to use parabolic trough reflectors to concentrate sunlight to help heat a special heat-transfer fluid that will be used to make steam -- steam that will be mixed with the steam produced by gas- and oil-fired boilers, and used to power generators.

Through discussions, I learned that others are experimenting with integrated solar combined cycle technology. In August 2009, Abengoa Solar announced its plans to build the first CSP installation integrated with a coal-fired plant. The Abengoa modification to Xcel Energy's existing Cameo plant, located near Grand Junction, Colorado, could add up to 4 MW equivalent (MWe) to the installed capacity.

The ISCC plant that is farthest along appears to be a 470 MW plant located at Ain Beni Mathar, Morocco. To be operated by nationalized utility Office National de l'Electricité (ONE), the Ain Beni Mathar plant combines parabolic trough solar technology and a conventional gas-fired power plant. Projections suggest that the solar component will supply 20 MWe, with the remaining 450 MW coming from the conventional thermal plant. On a production basis, the solar output is projected to be about 40 GWh, or just over 1% of the project's annual net production of 3538 GWh per year. Ain Beni Mathar is just one part of an ambitious 2000 MW solar program underway in sunny Morocco.

Here's a link to the Ain Beni Mathar project page on the African Development Bank Group site. The site lists a project cost of 179,073,180 Euro -- or about $218 million in US dollars at today's exchange rates.

Yesterday, we looked at the price tag of FPL's Martin plant: $420 million for 75 MW of solar. Dividing this linearly, we get a cost of $5.6 million per MW installed solar capacity. By comparison, Ain Beni Mathar offers about 20 MW of solar equivalent, or $10.9 million per MW.

Can these numbers be right? From the technology perspective, this is really neat stuff -- but are these prices reasonable?