A Department of Energy loan program under the Recovery Act intended to streamline the approval process issued its first guarantee this week. The program, which was originally intended for breakthrough technollgies, is now being used to promote geothermal energy.
The first federally guaranteed loan under a new program for renewable energy projects was awarded this week by the Department of Energy (DOE).
Nevada Geothermal Power Inc. (NGP) closed the $98.5 million loan with John Hancock Financial Services as lead lender and the DOE for 80 percent of the loan amount or $78.8 million.
NGP is the first renewable power development company to complete a loan guarantee through the DOE's Financial Institution Partnership Program [3] (FIPP), which was created the American Recovery and Reinvestment Act.
The FIPP represents a couple significant changes from previous loan guarantees. DOE was seeking projects that use commercially available technology, while previous solicitations required projects to use technologies that were not yet commercially available. The new rules permit geothermal, solar, wind and other technologies to qualify.
"This was meant to fast-track some of these projects while the lending institution, in this case, John Hancock, already did most of the due diligence," said DOE spokeswoman Ebony Meeks.
Also, applicants under the FIPP program are not project developers, but financial institutions. Meeks said this has the effect of freeing up investment capital for additional projects.
Energy Secretary Steven Chu announced a partial guarantee for the 49.5 megawatt Blue Mountain geothermal project in northwestern Nevada. The loan guarantee is being issued to John Hancock Financial Services to support a loan to a subsidiary of the Nevada Geothermal Power Company [4].
The Blue Mountain project consists of a geothermal well field and fluid collection and injection systems that enable energy to be extracted from rock and fluid below the Earth's surface. NGP continues development work on the Faulkner 1 project in order to achieve its full power output capacity.
"Closing the loan is a huge step for NGP, as it represents a major milestone in the development of the Blue Mountain project and of the company as a whole," said NGP President and Chief Executive Officer Brian Fairbank.
"John Hancock is very pleased that Blue Mountain is the first project to have closed a DOE loan guarantee through FIPP. We have been working very hard to develop FIPP financings over the last year," said John C.S. Anderson, head of Power & Infrastructure Finance at John Hancock.
With $750 million available under the FIPP program through fiscal year 2011, meaning September 30, 2011, this could be only the first of many projects to qualify.
The Department of Energy has issued loan guarantees or offered conditional commitments for loan guarantees to support 14 clean energy projects.
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[1] http://www.renewablesbiz.com/author/bill-opalka
[2] http://www.renewablesbiz.com/sites/default/files/article/12242669-566x849.jpg
[3] http://www.lgprogram.energy.gov/CTRE.pdf
[4] http://www.nevadageothermal.com/s/Home.asp
[5] mailto:bopalka@energycentral.com
