U.S. Backs New Loans
by Matthew L. Wald
As the federal fiscal year ends, and with it the part of the stimulus program that finances some energy loans, the Energy Department issued $1.07 billion in loan guarantees on Wednesday afternoon, for two solar energy production plants, and on Thursday it plans to announce $156 million in grants for high-risk but potentially high-reward research projects.
The department is under scrutiny by House Republicans after it arranged $528 million in loans to a California solar equipment maker, Solyndra, that went bankrupt; Republicans warned the department again Wednesday not to rush through the remaining loan guarantee applications before the program's deadline, Sept. 30. Representative Cliff Stearns of Florida, chairman of a subcommittee of the Energy and Commerce Committee, estimated that nearly $5 billion in loan guarantees could be finalized by Friday. The department announced it would wrap up all the applications by Thursday.
On Wednesday, the department said it was giving final approval to a loan guarantee of $737 million for the Crescent Dunes Solar Energy Project, near Tonopah, Nev. That project, to be built by SolarReserve, does not involve the panels that turn sunlight directly into electricity. Instead, the builders will install 17,500 mirrors, each swiveling over the course of a day to focus the sun's light on a black-painted tower 640 feet high. Inside the tank is salt. Heat from the molten salt will be used to boil water for steam, which will be used to make electricity. The technique allows storage of the sun's energy, as heat, for hours when the sun is not shining. The plant is expected to generate up to 110 megawatts.
The Energy Department also announced a $337 million guarantee for Mesquite Solar 1, which will use solar panels to generate electricity. That project, 45 miles west of Phoenix, will use an unusual system to convert the electricity into alternating current, the kind that is transmitted on the power grid.
Both of those guarantees are for projects to generate electricity, considered a relatively safe credit risk because the electricity can be sold by contract for years in advance, even before the plant is built. Solyndra was manufacturing hardware, which could not be presold that way.
The loan guarantees are made to companies that the government expects to earn a profit and repay the loans, but the grants are in a different category; they go to researchers who have interesting ideas that the government recognizes have a high risk of failure but also the potential of great rewards. On Thursday it will issue $156 million in grants for 60 research projects said to have potentially "game-changing" ideas in energy production and efficiency, including plants that grow fuel molecules in their leaves and electricity generators and high-efficiency motors that do not need any rare-earth materials.
The department is under scrutiny for its management of its loan guarantee program for new energy projects, but in contrast, most of the grants are expected to fail. They come under the department's Advanced Research Projects Agency - Energy, known as Arpa-e and modeled after the Pentagon's Defense Research Projects Agency, which incubated such technologies as the Internet. Arpa-e has already given out $365.7 million, and has had one notable success: a company that found a way to halve the cost of silicon wafers used in crystalline solar cells. Eleven companies that got seed money from the department have attracted about $40 million from venture capitalists, said Arun Majumdar, director of the program. All together, 120 companies have received grants averaging $2 million to $3 million.
The new grants span a variety of areas. Lawrence Berkeley National Laboratory will get $4.8 million to re-engineer tobacco plants to make their leaves generate fuel molecules. North Carolina State University, in Raleigh, will get $3.7 million to work on increasing the yield of oil per acre from the camelina plant, in a project to make a fuel that can substitute for jet fuel or diesel. Fourteen institutions or teams will get grants to develop magnets of the kind used in wind generators and in electric car motors that have reduced need for -rare-earth materials.
Dr. Majumdar said the competing approaches would use materials like iron and nickel. "We don't know which one will win," he said. But if any of them does, "we will be in better shape."
learn more on topics covered in the film
see the video
read the script
learn the songs