An ambitious project to install thousands of rooftop solar panels at more than a hundred military bases in as many as 33 states is likely to have to be cut back for now because of a House Energy & Commerce Committee investigation into the Department of Energy’s handling of its loan guarantee program, according to a solar company CEO.
SolarCity, a solar company based in San Mateo, California, had in early September been awarded a conditional loan guarantee of $275 million from DOE for a $1 billion project that would have installed solar panels and provided power to 160,000 military residences across he country.
But on Monday, the company’s CEO Lyndon Rive told the San Francisco Business Times that it would have to scale back the project to the 11 states it already operates in because he expects that the company may not obtain the loan guarantee from the DOE in time as a result of the fallout from the Solyndra bankruptcy.
The DOE had pitched the SolarCity loan guarantee to the public as a project that would generate jobs and training for veterans.
The point of the DOE loan guarantee was to lower SolarCity’s cost of borrowing, which in this case was from the US Renewables Group and Bank of America Merrill Lynch.
The deadline for finalizing the DOE’s stimulus-backed loan guarantees for renewable energy companies like SolarCity is this Friday, September 30th. In all, there are 14 renewable energy projects amounting to $8.9 billion.
But last week the Republican leaders of the House Energy & Commerce Committee sent in a last-minute request to Energy Secretary Steven Chu demanding details and documentation of all the monitoring and reviewing that has gone into approving the last batch of loans that are due to be finalized by the end of this week.
House Energy & Commerce Committee leaders said that given Solyndra’s bankruptcy, the DOE should take the time to fully check out the companies applying for the loan guarantees.
The loans in question are known as “Section 1705 loans.”
“With so much of DOE’s Section 1705 Loan Guarantee portfolio not yet finalized, and the September 30, 2011 stimulus deadline to close these guarantees just days away, we are concerned that another rush to meet stimulus deadlines will result in DOE closing these deals before they are ready,” wrote full committee Chairman Fred Upton, (R-MI,) Oversight and Investigations Subcommittee Chairman Cliff Stearns, (R-FL) and Energy & Power Subcommittee Chairman Ed Whitfield in a latter to Chu dated September 20th.
According to SolarCity’s CEO Lyndon Rive, the demands in the congressional Republicans’ September 20th letter resulted in DOE loan staff saying that they wouldn’t be able to finalize the loan guarantee to SolarCity by the end of September.
“The reason provided was the increased documentation requirements that are the result of the current congressional investigation into the Solyndra bankruptcy, and reference was made to the committee’s recent letter dated September 20,2011 to Secretary Chu regarding the Section 1705 Loan Guaranter program,” Rive wrote in a letter to committee leaders dated September 23.
Rive had asked the leaders of Energy & Commerce to extend the deadline for the loan guarantees in the Friday letter, but by Monday, Rive told the San Francisco Business Times that the company would have to move forward without the loan guarantee.
Asked about the status of the Solar City loan guarantee, DOE spokesman Damien LaVera told TPM’s Idea Lab that the department is doing its due diligence.
“Failure to close a loan application does not indicate that a project doesn’t have merit or a strong business case to succeed, but rather that all of the extensive due diligence and legal documentation simply cannot be completed by September 30,” he said. “We are absolutely committed to ensuring that every deal we close is fully vetted and will not corners on any deal that is unable to meet the 1705 deadline. The Department has requested additional funding for the loan program in our FY 2012 budget request. If Congress provides those funds, additional projects can be considered based upon the availability of that funding.”
