Washington, DC, USA — U.S. Energy Secretary Steven Chu this week announced a conditional commitment to provide a partial guarantee for a $1.3 billion loan in support of Caithness Energy’s 845-MW Shepherd’s Flat project in eastern Oregon. The $1.3 billion loan is expected to be funded by a group of institutional investors and commercial banks led by Citi, as lender-applicant and joint lead arranger, and three other joint lead arrangers: the Bank of Tokyo-Mitsubishi UFJ, Ltd., RBS Securities and WestLB Securities, Inc.
Caithness Shepherds Flat is the largest project to date to receive an offer of a conditional commitment for a loan guarantee under the Financial Institution Partnership Program (FIPP), a Department of Energy (DOE) initiative supported by the Recovery Act. Under a FIPP financing, DOE guarantees up to 80% of a loan provided to a renewable energy project by qualified financial institutions.
“Thanks to the Recovery Act, we are creating the clean energy jobs of the future while positioning the U.S. as a world leader in the production of renewable energy,” said Chu. “This project is part of the Administration’s commitment to doubling our renewable energy generation by 2012 while putting Americans to work in communities across the country.”
The project will be the first in North America to use GE’s 2.5xl model (2.5 MW) wind turbines, which have been deployed in Europe and Asia. GE will supply the turbines under a $1.4 billion contract announced late last year. GE Financial Services is also investing in the project. Once completed, the project will sell 100% of the power generated to Southern California Edison through 20-year fixed price power purchase agreements.
The wind facility will avoid 1.2 million tons of carbon dioxide per year, equivalent to the annual greenhouse gas emissions from 212,141 passenger vehicles, according to DOE. Caithness says the project will create 400 construction jobs, followed by 35 permanent positions on site.
The 338 turbines will be installed in 2011 and 2012. Currently the largest wind farm is E.ON Climate and Renewables’ 781.5-MW facility located near Roscoe, Texas.
DOE, through the Loan Programs Office, has issued loan guarantees or offered conditional commitments for loan guarantees to support 15 clean energy projects, resulting in $15.9 billion in total loan guarantees.
This article first appeared in Wind Energy Weekly, and was republished with permission from the American Wind Energy Association.