WASHINGTON (Reuters) - The U.S. Energy Department on Friday offered its first loan guarantee, worth $535 million, to solar company Solyndra Inc under a long delayed advanced clean energy program created by a 2005 energy law.
"This investment is part of President Obama's aggressive strategy to put Americans back to work and reduce our dependence on foreign oil by developing clean, renewable sources of energy," said Energy Secretary Steven Chu.
The Obama administration has touted the development of clean energy as a way to boost the lagging economy and protect the environment, pledging to double renewable energy production in three years and to generate 10 percent of U.S. electricity from renewable sources by 2012.
The Fremont, California, company will use the loan guarantee for the construction of a commercial scale solar panel manufacturing plant. Solyndra makes cylindrical solar panels designed to be mounted on flat commercial roofs.
The department said about 3,000 people will be employed during construction of the new plant, and more than a thousand jobs will be created once the plant is operational.
Hundreds of jobs will also be created to install these panels, the department said.
Although Chu signed a "conditional commitment" offering the loan guarantee Friday, the deal still has to be approved by the department's credit review board before it is final.
The department won't provide an actual loan to Solyndra, but instead will guarantee to repay the commercial loans the company got for the project if Solyndra defaults on them.
The guaranteed loan is expected to cover debt financing for approximately 73 percent of the project's costs, allowing Solyndra to begin construction of a second solar panel fabrication facility in California. When finished, the plant is expected to have an annual manufacturing capacity of 500 megawatts per year.
"The DOE loan guarantee program funding will enable Solyndra to achieve the economies of scale needed to deliver solar electricity at prices that are competitive with utility rates. This expansion is really about creating new jobs while meaningfully impacting global warming," said company president Chris Gronet.
Over the life of the project, the Solyndra fabrication plant will produce solar panels to generate enough clean, renewable electricity to avoid spewing 300 million metric tons of carbon dioxide emissions.
The plant's construction, if the loan is finalized, will begin later this year with first production in late 2010 or early 2011, said Truman.
The company, founded in 2005, said it had over $1.5 billion in orders as it entered its second year of international commercial shipments to customers in Europe and the United States. More than half its shipments go to Europe.
The company said that commercial rooftops are often overlooked as a source of solar generation. Amassing panels on rooftops avoids most of the real estate costs associated with solar farms on vast swatches of land, and it provides power where it is needed.
That helps cut down on the need to build power lines to remote areas, said Kelly Truman, Solyndra vice president of marketing, sales and business development.
Facing a massive backlog of applications, the department under Chu's leadership has been working to streamline its loan guarantee process.
In addition to the billions of dollars authorized under the 2005 law, the department was also allocated $6 billion for clean energy and transmission loan guarantees in the recently passed stimulus package.
Speaking at a Washington Post Company conference Friday, Chu said "we'll be announcing other loans in the coming weeks" for more renewable energy projects.