Nevada solar project to get $737 million federal loan guarantee

WASHINGTON -- The largest solar project in Nevada was granted a $737 million federal loan guarantee Wednesday that will assure its construction near Tonopah and grow the state's profile for renewable energy.

The government is getting behind the Crescent Dunes plant, which will feature 17,500 mirror assemblies that will focus the sun's thermal energy to heat molten salt flowing through a 653-foot tall tower, about half the height of the Stratosphere Tower in Las Vegas.

The loan guarantee is coming from the same program that left taxpayers holding the bag on a $535 million loan backing for California-based Solyndra LLC. The solar panel manufacturer shut down operations, fired all 1,100 employees and declared bankruptcy Sept. 6.

Sponsors of Crescent Dunes maintain it is a safe investment.

Electricity from the 110-megawatt plant -- enough at peak operating periods to power 75,000 homes, about the number of households in Reno -- already has been committed to NV Energy under a 25-year contract.

Also, general contractor ACS Cobra has signed a full performance guarantee that will pay damages if the plant is late or doesn't perform as intended, said Kevin Smith, chief executive of Solar Reserve LLC, the Santa Monica, Calif., company developing the project.

A 30-month construction schedule that could provide up to 600 jobs also is being eyed as a shot in the arm for stagnant Tonopah in central Nevada.

"It has not been lost on us the number of cement trucks that have been seen," Nye County Commissioner Joni Eastley of Tonopah said.

Solar Reserve has an agreement with Nye County that 90 percent of its workers will be from Nevada.

Ground was broken on Sept. 1 at the 1,600-acre site, 13 miles northwest of Tonopah, and 20 to 30 workers have set a foundation for the tower to get a head start on winter weather, Smith said.

Smith said Solar Reserve executives were notified a few days ago that the loan backing had been approved. With that in hand, he said, financing was finalized last week for the project, which is expected to cost more than $900 million.

Once operational, the facility will carry a staff of 45. The company said it expects to generate $47 million in tax revenues in its first decade.

The backing for Crescent Dunes and a $337 million loan guarantee for Mesquite Solar 1 to develop a 150-megawatt solar plant near Phoenix were announced by the Department of Energy two days before the renewable energy loan program is set to expire. It was created through the 2009 Recovery Act .

One other Nevada proposal was awaiting an announcement on its application before the deadline. Fotowatio Renewable Ventures Inc. was seeking a partial guarantee of $45.6 million for a solar plant 25 miles northeast of Las Vegas.

The Energy Department earlier issued final approval to loan guarantees totaling $791.5 million for geothermal projects in the state and for the One Nevada transmission line to carry electricity from Ely to Las Vegas.

'BRUTAL' VETTING PROCESS

A congressman investigating the Solyndra bust expressed concern that the Energy Department was rushing to approve loans . Solyndra's failed deal has triggered multiple investigations into whether the Obama administration overlooked trouble signs or rushed through a flawed application to promote renewable energy, a political priority of President Barack Obama.

"DOE has known exactly how much time it had to perform due diligence and approve guarantees for fully vetted and worthy entities," said Rep. Cliff Stearns, R-Fla., chairman of the House energy oversight and investigations subcommittee.

"The administration's flagship project Solyndra is bankrupt and being investigated by the FBI, the promised jobs never materialized, and now DOE is preparing to rush out nearly $5 billion in loans in the final 48 hours before stimulus funds expire -- that's nearly $105 million every hour that must be finalized until the deadline," Stearns said. "Solyndra was the product of a bad bet rushed out the door, and taxpayers are now on the hook. We cannot afford DOE rushing out more Solyndras in these final hours."

William Gibbons, a DOE spokesman, said the applications were scrutinized.

"These are carefully vetted applications that have undergone many months of due diligence and typically have bipartisan support," Gibbons said. "We are confident that supporting these projects will help American companies compete in the global clean energy market."

Smith, of SolarReserve, said the federal requirements "were far beyond what I have experienced in other commercial deals. It was very high-level due diligence requirements, and it continued for a 12-month plus period."

Energy Department officials have said the review process was not altered after the Solyndra collapse to add requirements for loan guarantee applicants.

"I don't know if I can say we noticed a difference, but it was a pretty brutal process," Smith said. "We were in the pipeline since the fall of 2009, a two-year process."

Crescent Dunes and exploration at the Allied Nevada mining project on Hasbrouck Mountain are putting hotel rooms in Tonopah at a premium.

Joanne Campbell, general manager of the 88-room Best Western Hi-Desert Inn, said rooms are difficult to get, not only because of people working on the solar project, but drillers exploring for gold and employees doing a six-week stint at the Tonopah Test Range.

"It's very hard to get rooms at this point here. I guess we're going to be selling out probably through mid-November," Campbell told the Pahrump Valley Times.

Shirley Van Houten, manager of the 25-room Jim Butler Inn and Suites, said rooms are being booked by workers, not vacationers. "There's a room here and there, but not very many."

Peter Urban of the Stephens Washington Bureau and Mark Waite of the Pahrump Valley Times contributed to this story. Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.