Washington (Platts)--20Mar2009

The US Department of Energy on Friday said it has offered a $535-million
loan guarantee to Freemont, California-based Solyndra to support the company's
construction of a commercial-scale manufacturing plant for its proprietary
cylindrical solar photovoltaic panels.

The offer marks the first-ever award of a loan guarantee under a program
authorized in the Energy Policy Act of 2005, a program also criticized for its
slow pace in awarding guarantees.

DOE said the company expects to create thousands of new jobs in the US
while deploying its solar panels across the US and around the world.

"This investment is part of President [Barack] Obama's aggressive
strategy to put Americans back to work and reduce our dependence on foreign
oil by developing clean, renewable sources of energy," Energy Secretary Steven
Chu said in a statement.

"We can create millions of new, good-paying jobs that can't be
outsourced. Instead of relying on imports from other countries to meet our
energy needs, we'll rely on America's innovation, America's resources, and
America's workers," he added.

DOE's loan guarantee program has attracted particular criticism for its
slow pace, but Chu came into office vowing to speed up the process. Congress
established the program in EPAct 2005 to support high-risk but promising
"clean" energy technologies, including advances in renewable, fossil,
electricity and nuclear technologies.

Before the stimulus bill was passed, DOE was authorized to issue $42.5
billion in loan guarantees. Obama's economic stimulus package added another $6
billion to the program's authorization. Before Friday, it had not issued a
single one in three rounds of solicitations over several years.

Chu has said he is personally involved in streamlining the process, but
there are still concerns that there is insufficient program staff at DOE to
deal with the applications. In late February, DOE's inspector general issued a
report outlining a program with too few staff and too few management controls
in place to "successfully manage the program."

Chu has also said he is attempting to reduce the amount of paperwork
involved in loan-guarantee applications and said he is instituting a
"rolling" review process to speed the applications through DOE.

The department said Solyndra's photovoltaic systems are designed to
provide the lowest installed cost and the highest solar electricity output on
commercial, industrial and institutional roofs, which it described as "a vast,
underutilized resource for the distributed generation of clean electricity."

The company's proprietary design transforms glass tubes into photovoltaic
panels that are seen are simple and inexpensive to install, DOE said.

The agency said the company is now ramping up production in its initial
manufacturing facilities. DOE said the loan guarantee will allow the company
to build and operate its manufacturing processes at full commercial scale.

Chu on Friday signed a conditional commitment for the loan guarantee and
the the agency's Credit Review Board approved the proposal. Solyndra must meet
certain conditions, including making an equity contribution, to qualify for
the guarantee.

--Derek Sands, derek_sands@platts.com