First Solar (FSLR) Antelope Valley Solar Ranch crimped by DoE loan delay

First Solar’s Antelope Valley project seems to be running into some headwinds. Construction has been proceeding, but “an outstanding construction permit issue” has held up the initial funding, the company claims in a SEC filing.

February 13, 2012 – First Solar was a major beneficiary of last year’s Department of Energy loan guarantee program, inking nearly $4 billion in loan guarantees last fall for more than a gigawatt of solar projects. Two of them have since changed ownership, partly dependent upon receiving those commitments; one of them was the the 230MW Antelope Valley Solar Ranch 1 project in the western Mojave desert, which secured $646 million in federal loans and loan guarantees, and was subsequently bought by Excelon. (A third, the 550-megawatt Topaz Solar Farm, failed to pull together a $2 billion DoE loan consideration but was eventually bought by MidAmerica Holdings.)

Now, the Antelope Valley project seems to be running into some headwinds. Construction has been proceeding, but “an outstanding construction permit issue” has held up the initial funding, the company claims in a SEC filing. If the situation isn’t resolved and the monies received within four months of the original commitment — a date they peg at Feb. 24, including an extension — First Solar would have to repurchase AVSR for the original purchase price of around $75 million “plus certain other costs incurred by Exelon related to the project.” FSLR says it does have the funds for such a buyback, and that the project is still expected to contribute revenue once the loan comes through.

It’s hard to say what this all means in a broader scope. Large utility-scale projects, particularly the hundreds-of-megawatt-sized ones, have run into all sorts of delays and snags with permitting and financing issues, so investors shouldn’t be too put off by this. On the other hand, it’s a little unnerving to get a snag at this late date, which apparently endangers the Antelope Valley project ownership. (FSLR depends on the higher margins on the project end.) Analysts suggest, though, that the DoE backing itself is not at risk, and that Excelon probably won’t call it quits over a “minor issue like a construction permit.”

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