Obama administration approves solar loans in Nevada, Arizona

WASHINGTON (AP) - The Energy Department on Wednesday approved two loan guarantees worth more than $1 billion for solar energy projects in Nevada and Arizona, two days before the expiration date of a program that has become a rallying cry for Republican critics of the Obama administration's green energy program.

Energy Secretary Steven Chu said the department has completed a $737 million loan guarantee to Tonopah Solar Energy for a 110 megawatt solar tower on federal land near Tonopah, Nev., and a $337 million guarantee for Mesquite Solar 1 to develop a 150 megawatt solar plant near Phoenix.

The loans were approved under the same program that paid for a $528 million loan to Solyndra Inc., a California solar panel maker that went bankrupt after receiving the money and laid off 1,100 workers. Solyndra is under investigation by the FBI and is the focal point of House hearings on the program.

SolarReserve LLC, of Santa Monica, Calif., the parent company for Tonopah, is privately held. The Energy Department said its rules prevented it from discussing the company's financial information. Sempra Energy of San Diego, which owns Mesquite, is publicly held.

Energy Department spokesman Damien LaVera said the two projects had extensive reviews that included scrutiny of the parent companies' finances.

Chu said the Nevada project would produce enough electricity to power more than 43,000 homes, while the Arizona project would power nearly 31,000 homes. The two projects will create about 900 construction jobs and at least 52 permanent jobs, Chu said.

"If we want to be a player in the global clean energy race, we must continue to invest in innovative technologies that enable commercial-scale deployment of clean, renewable power like solar," Chu said in a statement.

Senate Majority Leader Harry Reid, D-Nev., is a strong supporter of the Nevada project, which he says will help his state's economy recover. Former Gov. Jim Gibbons, a Republican, also supported the project.

The loan approvals came just two days before a renewable energy loan program approved under the 2009 economic stimulus law is set to expire. At least seven projects worth more than $5 billion are pending.

A government watchdog group said the Solyndra bankruptcy shows the need for greater oversight of all the department's loan guarantee programs.

"It is time for a full audit of their activities, their management and their results," said Tom Schatz, president of Citizens Against Government Waste, Washington-based advocacy group.

"Candidly, it might be time for the federal government to rethink the whole idea of loan programs," Schatz added, calling the government's track record on loan guarantees "lousy."

Too often, the government either backs risky or failing ventures, resulting in a loss of taxpayer money, or subsidizes companies and industries that are mature and profitable and don't need the money, such as the oil and gas industry, Schatz said.

Scott Crider, a spokesman for Sempra Generation, a Sempra Energy subsidiary that is developing the Arizona project, said its loan guarantee was far less risky than the Solyndra loan. Most importantly, the project has a 20-year agreement with Pacific Gas & Electric Co. to buy power supplied by the solar plant, he said.

The purchase agreement is a key element of the project and will "provide assurance that there are sufficient revenues in place to support the loan guarantee," Crider said.

A similar agreement is in place in Nevada. NV Energy, the state's largest electric utility, has agreed to purchase power from the Tonopah tower, which will connect to NV Energy's power grid.

Solyndra, of Fremont, Calif., was the first renewable-energy company to receive a loan guarantee under a stimulus-law program to encourage green energy and was frequently touted by the Obama administration as a model. President Barack Obama visited the company's Silicon Valley headquarters last year, and Vice President Joe Biden spoke by satellite at its groundbreaking ceremony.

Since then, the company's implosion and revelations that the administration hurried Office of Management and Budget officials to finish their review of the loan in time for the September 2009 groundbreaking has become an embarrassment for Obama as he tries to sell his new job-creation program.

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