California's clean energy future threatened by federal
delays, state officials say
Jul 28 - McClatchy-Tribune Regional News - Marc Lifsher Los Angeles
Times
Plans for a massive expansion of clean energy in California are being
jeopardized by federal foot-dragging, according to state officials who
say that more than 20 nearly shovel-ready solar and wind projects are
being held up by the U.S. Department of Energy.
Seven major solar-mirror projects -- enough to provide power to 3
million Southern California homes -- along with plans for at least a
dozen wind-turbine and solar-panel complexes have been cleared or almost
cleared by state authorities and the U.S. Department of Interior.
The projects are valued at as much as $30 billion, according to
estimates by Gov. Arnold Schwarzenegger's office.
But the Department of Energy's laborious procedures to guarantee loans
threaten to stymie construction financing for many of the projects, and
builders could lose out on more than $10 billion in federal stimulus
funding if they can't start digging by the end of the year.
At stake are more than 12,000 new, high-paying construction and
manufacturing jobs and the opportunity to replace a large portion of the
state's fossil fuel-powered electric generation with nonpolluting
energy.
Schwarzenegger, in a letter to Energy Secretary Steven Chu last week,
said the delays in getting loans approved threatened state plans for a
tenfold increase in solar-thermal power output, the biggest jump in
almost 30 years.
"Without immediate and urgent attention from the DOE, many of these
projects will not be financed and built," Schwarzenegger wrote.
Chu's agency said it was committed to speeding action on loan guarantees
while still protecting taxpayers' interests. It has streamlined
environmental reviews, hired new management and improved communication
with applicants. The changes should result in decisions on about six new
loan guarantees by the end of the summer, said Department of Energy
spokeswoman Ebony Meeks.
As part of the federal economic stimulus act, Congress charged the
department with providing loan guarantees to renewable projects and
authorized the U.S. Treasury Department to hand out stimulus subsidies
of as much as 30% of the cost of building a new power plant once the
guarantees are in place.
Complaints about the Energy Department's handling of applications have
been mounting. Although it has $77 billion available in loan guarantee
funds, the department issued only one guarantee for $535 million and
nine conditional guarantees as of April 10, the General Accountability
Office said in a report early this month.
On Tuesday, the department announced it had approved a final loan
guarantee for the Kahuku Wind Power project on the island of Oahu in
Hawaii.
For California, the federal agency has issued a conditional loan
guarantee to only one of eight pending solar-thermal applicants, the
three-plant Ivanpah Solar Complex being developed by BrightSource Energy
Inc. in the Mojave Desert near the Nevada border.
The Energy Department's slow pace in approving loan guarantees also is
worrying some private solar power developers, the California Energy
Commission, U.S. Sen. Dianne Feinstein (D- San Francisco) and other
powerful lawmakers and the GAO, the federal watchdog agency.
But not all of California's alternative energy developers are waiting
for federal assistance before they start building. On Tuesday, Terra-Gen
Power officially broke ground on its $1.2-billion Alta Wind Energy
Center in the Tehachapi Mountains in Kern County -- closing financing
without a federal loan guarantee.
For many large projects, however, the loan guarantees and subsidies are
key to successful financing plans, experts said. The deep recession
tightened credit markets, driving developers to seek federal help
getting low-interest loans. Guarantees provide lenders and investors
assurances that expensive renewable technologies can be commercially
viable.
So far, the Energy Department has shown little urgency in approving
guarantees, critics said.
Michael Picker, Schwarzenegger's senior advisor for renewable energy
facilities, said Energy Department officials told him in May that,
nationwide, they were processing only two loan applications a month and
that they expected to boost the monthly total to five next year.
"We're really concerned that a lot of the projects won't get built
because they can't get the cheap loans they'd get if the department ...
could give assurances in a timely fashion," Picker said.
The GAO concluded that the department's loan guarantee program "has
treated applicants inconsistently and lacks mechanisms to identify and
address their concerns."
Feinstein has written three letters to Chu since October complaining
about delays in approving loan guarantees. At an April 28 Senate
subcommittee hearing, she called herself "an unhappy senator from
California" as she publicly castigated the energy secretary.
"The Department of Energy simply has not fixed the problems that I
believed a commitment was made to fix," she said.
To reiterate their displeasure and to goad the department into action,
Feinstein and her committee colleagues last week directed the agency, as
part of next year's budget, to address the GAO's concerns
"expeditiously" and report back to lawmakers in 90 days.
Feinstein said that Chu, in a recent meeting with her, committed to
communicating more frequently with loan guarantee applicants and to
coordinate better with other federal agencies. But she said she still
had "serious concerns" about the department's failure to meet deadlines
and what she sees as a bias against California projects.
Such coordination is badly needed to make sure that projects that are
ready or close to being approved can start construction by the end of
the year, said John Clapp, chief financial officer for Solar Trust of
America.
The Cleveland company is close to starting work on two Mojave Desert
projects, one near Blythe and one near Palm Springs, that could generate
a total of 1,500 megawatts. Each is expected to cost about $1.5 billion
and needs federal loan guarantees and subsidies to garner financing.
The Mojave region, Clapp said, is one of the best places in the world
for generating thermal power.
It "would certainly help to move things along faster," he said. "My fear
is it hasn't happened yet."
marc.lifsher@latimes.com
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