FSLR scores $4.5B DoE loan guarantees for 1.3GW CA projects

The US DoE has pledged $4.5B in loan guarantees to First Solar, covering three of the CdTe giant’s projects in California with 1.33GW of combined capacity.

June 30, 2011 – The US DoE has pledged $4.5B in loan guarantees to First Solar, covering three of the CdTe giant’s projects in California. FSLR had recently said it expected to close these DoE commitments soon, following a $967M DoE loan guarantee back in January for its 290MW Agua Caliente CSP project (committed to NRG Energy).

The new DoE loan guarantee details are as follows:

– $680M for the 230MW Antelope Valley Solar Ranch 1 project in the western Mojave desert. This project will feature a US-first utility-scale deployment of inverters with voltage regulation and monitoring technologies. It’s under a PPA to Pacific Gas & Electric.

– $1.88M in partial loan guarantees to support the 550MW, 8.8M-module Desert Sunlight project on BLM land in eastern Riverside County. This project will happen in two phases: Phase I will generate 300MW of power for PG&E Company, and Phase 2 will send 250MW to Southern California Edison. Funding for these DoE loans will come from a syndicate of institutional investors and commercial banks led by Goldman Sachs and Citibank.

– $1.93B in partial guarantees to support the Topaz Solar project in eastern San Luis Obispo County, also a 550MW project, this one sporting 8.5M modules. Backing is from the Royal Bank of Scotland

FSLR will supply modules for all three projects from two US locations, its site in Mesa, AZ where it is expanding operations, as well as its plant/R&D hub in Perrysburg, OH. The company also is building two utility-scale PV projects in Arizona: the 290MW “Agua Caliente” project in Yuma County for NRG Energy, and the 17MW “Paloma” solar plant in Gila Bend for APS.

Together these three projects bring two key elements to California state and its citizens: jobs (roughly 1400 during peak construction), and clean energy to power homes (~54,000 for Antelope Valley, 110,000 each for Desert Sunlight and Topaz Solar), noted Energy Secretary Chu in a statement.

“They still have to get some of the equity commitments for some of the plants,” but interest in these projects should carry that through, noted Ardour Capital analyst Adam Krop, quoted by Reuters.

Credit Suisse’s Satya Kumar calls the announcements a “home run,” having expected FSLR had the best shot at winning maybe one of the DoE loan guarantees. Landing all three of them should provide ~$0.25-$0.30/W in additional system price upside “at least” — for a company that at the same time is already well below the $1/W threshold for solar PV manufacturing ($0.75/W as of 2Q11, with targets of $0.52-$0.63 by 2014), and closing in on $0.85/W for BOS costs, down from Kumar’s expectation of $1.00-$1.10/W. Moreover, “The loan guarantee on all four projects [including Agua Caliente] will imply that a high EPS level will be sustained even into 2013, assuming the panel business runs close to zero operating margins in that period,” he writes.

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