* BrightSource loan guarantee to help build 3 solar plants
* Largest federal loan guarantee for a renewable project
* BrightSource CEO says to raise equity financing
(Recasts, adds comments from BrightSource CEO, background on
solar thermal and byline)
By Poornima Gupta and Ayesha Rascoe
SAN FRANCISCO/WASHINGTON, Feb 22 The United
States on Monday gave its biggest backing yet to a renewable
energy project, guaranteeing $1.37 billion in loans for a
California development by BrightSource Energy Inc that uses the
sun's heat to power a steam turbine.
BrightSource's proposed solar thermal plants are expected
to generate about 400 megawatts of electricity and power about
140,000 California homes, giving it the heft to compete with
plants fueled by coal and natural gas.
President Barack Obama's administration has touted green
energy investments as a way to create jobs and increase
international economic competitiveness.
"We're not going to sit on the sidelines while other
countries capture the jobs of the future -- we're committed to
becoming the global leader in the clean energy economy,"
Energy Secretary Steven Chu said in a statement.
The sector has seen projects being launched and agreements
being signed with utilities, who count on solar thermal to meet
California clean energy goals, but construction has yet to
start on a large scale for the solar thermal industry.
Financing of projects has been a big challenge with the
tightening of the credit markets as capital requirements of
these green energy companies are very large.
Solar thermal technology is different from its better-known
rival, rooftop photovoltaic. Solar thermal companies like
BrightSource and rivals Abengoa Solar, eSolar Inc have
technology that uses the sun's rays, reflected by thousands of
small mirrors, to heat liquids to create steam in turbines and
The conditional loan guarantees from the U.S. Department of
Energy, the largest federal loan commitment offered to a
renewable energy firm, would help BrightSource build three
utility-scale solar thermal plants for its Ivanpah project,
which will be located on federally-owned land in the Mojave
Desert in southeastern California.
"It's a good beginning for the industry," BrightSource CEO
John Woolard said in an interview. "It really allows Ivanpah to
be the first (solar thermal) project to be constructed in
almost 20 years now" in California.
California, and other parts of the world, are betting
heavily on solar thermal. About a quarter of the clean energy
contracts approved in 2009 in California by capacity was solar
thermal, according to the Public Utilities Commission.
Construction on the first Ivanpah plant is expected to
begin during the second half of this year, with commercial
operations beginning in 2012.
All three plants are expected be on line by 2014.
The loan guarantee is conditioned on BrightSource meeting
financial and environmental requirements, including local,
state and federal regulatory approvals.
BrightSource has run into trouble from environmental groups
who are concerned that the construction would harm desert
plants and wildlife, including the desert tortoise.
The company earlier this month agreed to reduce the
footprint for the Ivanpah project to minimize the environmental
TO RAISE EQUITY FINANCING
The company, which counts search giant Google (GOOG.O) and
Silicon Valley fund VantagePoint Venture Partners among its
investors, already has contracts to deliver more than 2,600
megawatts of power to California utilities PG&E Corp (PCG.N)
(PG&E) and Edison International's (EIX.N) Southern California
PG&E will purchase approximately two-thirds of the power
generated at Ivanpah and SCE will purchase approximately
Woolard said that the key value of federal loan guarantees
is that it helps strong renewable energy projects get financed,
especially since the credit markets have yet to reach normal
levels of activity.
It "replaces or helps shore up that component," he said.
Woolard did not reveal the total funding needed for the
project but said the company would be raising equity financing
from sources such as private investors, energy companies and
"There is an equity commitment," Woolard said. "We will be
going out to raise equity (financing) in the next four to six
months. So that will be the next step in the process."
The loan guarantee is the sixth such offer to renewable
energy companies by the Obama administration, which has touted
green energy investments as a way to create jobs and increase
international economic competitiveness.
Under the program, the Department of Energy issues a
conditional commitment to guarantee loans to be provided by the
U.S. Treasury's Federal Financing Bank.
(Additional reporting by Tom Doggett; Editing by Peter
Henderson and Marguerita Choy)