If nothing else, the Solyndra bankruptcy and continuing political controversy about the Department of Energy’s $530 million loan/guarantee for the failed solar cylinder manufacturing company have put an unprecedented focus on the U.S. solar industry and green power sector. 

Terabytes of online commentary and blogged opinion have been unleashed, and even the leaders in the mainstream news media have assigned investigative reporters and columnists to ferret out fresh angles that can become headlines and editorials. 

Renewable energy advocates are in defensive posture, building a wall of statistics and case studies to allay the politically-based accusations that the solar industry is ready to fail and cannot survive without federal subsidies and supports.

I don’t intend to add to the babble here, although I want to point out an important thread of the story that will continue to unravel over the next few weeks; how the Solyndra loan fiasco is impacting other projects in the DOE loan guarantee program. 

SolarStrong weakens 

The first fallout is already visible. September 30 is the drop-dead date for finalizing applications and conditional agreements in the Section 1705 of the American Recovery and Reinvestment Act of 2009.  We already know of some applicants that will be unable to fit there projects in under the wire, but several others that are deep into the process are at risk.

While the Department of Energy has closed 21 loan guarantees (including Solyndra) for a little over $10 billion; there remain 11 projects seeking nearly $8.5 billion in “conditional commitment” – working desperately to complete paperwork. Separately, the Section 1703 program has about $10.5 billion in outstanding but incomplete commitments for two large nuclear projects and two relatively modest energy efficiency projects.

The Congressional inquiry into the program has caused DOE staff to conduct last-minute documentation on these applicants. Already it appears that a commitment with SolarCity will not make the cut, while a prior commitment to FirstSolar has already been cancelled and two others are up in the air.

The SolarCity “SolarStrong” program is based on a recently announced contract with the U.S. Department of Defense to install as many as 160,000 solar photovoltaic units on housing structures at 124 military bases located in 33 states.  This would effectively double the current number of residential PV installations in the country. SolarCity, based in San Mateo, is trying to secure a partial loan guarantee of $275 million for the $344 million program to back up its financing for the contract, but company executives have announced the new paperwork for DOE will not be completed in time.

Earlier this week SolarCity CEO Lyndon Rive sent a letter to the chairmen of various House of Representatives committees, including the Subcommittee on Oversight and Investigations, which sponsored the now infamous Solyndra hearings:

Rive wrote: “In the past 48 hours, the DOE has informed us that while they remain strongly supportive of Project SolarStrong, they will be unable to finalize their approval of the loan guarantee for SolarStrong prior to the September 30 deadline for the expiration of the Sec. 1705 loan guarantee program. The reason provided was the increased documentation requirements that are the result of the current congressional investigation into the Solyndra bankruptcy…”

Rive urged the lawmakers to provide an extension to the Sept. 30 deadline; however, the political climate in Washington, D.C., at this time does not appear to favor such an act of mercy on green programs, even if the U.S. Government is the ultimate client.

In preparation for a rejection of its loan support, SolarCity is reportedly scaling back SolarStrong, though how much has not been announced as of this posting.

Topaz Loses Luster 

FirstSolar is keeping its fingers crossed for two pending loan guarantees: $680 million for the 230 MW Antelope solar project in Lancaster County, and a $1.8 billion backup for the 550 MW Desert Sunlight project in San Luis Obispo County. Earlier this month, DOE terminated a prior commitment for $1.9 billion for FirstSolar’s 550 MW Topaz Solar Farm near San Luis Obispo because its documentation would definitely not be completed by Sept. 30.

First Solar is a Tempe, Arizona-based developer that has up until now seemed blessed with luck: obtaining timely permits from federal land agencies, securing power sales contracts with California utilities, and getting probable financing from CitiGroup and Goldman Sachs. It’s also been reported that when complete, the Desert Sunlight project will be sold to General Electric and NextEra Energy Resources—allowing First Solar a quick return on its development investments. Now, the DOE project documentation backlog has the company and its financiers worried.  The company is also scrambling for possible sale and financing of the ill-fated Topaz project.

Not to mention the uncertain fate of the seven other Section 1705 applicants, including solar, wind, geothermal, biofuel and transmission projects, holding now-shaky commitments from DOE.

Nuclear to the Rescue?  

There are influential folks in Washington political circles who would just as well see any or all of these projects fail to meet the current deadline, just to make the Obama Administration—and its support for green energy projects—look worse than it already does. 

However, there is one possible scenario in which lawmakers relent and issue an emergency extension of the deadline.  Remember I mentioned the two nuclear projects with conditional commitments under ARRA Section 1703? 

The same backlog that threatens Section 1703 projects could possibly undo Georgia Power’s $8.3 billion, 2,200 MW Vogtle nuclear plant in Georgia (which would be the first new nuke in over 20 years), or Areva’s $2 billion uranium enrichment project in Idaho. Both commitments have been pending since early 2010, but have not yet closed.

Even the harshest critics of the DOE loan program have not come out against the nuclear projects.  Perhaps $10.3 billion in nuke facilities will balance $8.5 billion in green projects?

We’ll know by the end of the week.

Learn more about the DOE loan guarantees:

https://lpo.energy.gov/?page_id=45

SolarCity’s SolarStrong program description:

http://www.solarcity.com/commercial/solarstrong-military-solar-inst...

SolarCity Letter to Congress 9/23

First Solar's Topaz News Release 9/22 

Learn more about the Vogtle nuclear project

https://lpo.energy.gov/?projects=georgia-power-company

and Areva’s Eagle Rock Enrichment Facility

https://lpo.energy.gov/?projects=areva

Arthur O’Donnell, The Energy Overseer, is an independent journalist and market analyst.  Follow his writings on EcoCloud, at www.energyoverseer.com and @energyoverseer on Twitter.