Obama announces conditional commitment offer for $1.45 billion federal loan guarantee for Abengoa Solar

WASHINGTON, D.C., USA: US president Obama recently announced in his weekly video address that DOE has offered a conditional commitment for a $1.45 billion loan guarantee to Abengoa Solar, Inc. The loan will support the construction and start-up of Solana, a 250 net megawatt (MW) concentrating solar power (CSP) plant in Arizona.

“After years of watching companies build things and create jobs overseas, it’s good news that we’ve attracted a company to our shores to build a plant and create jobs here in America,” said President Obama.

Solana will include six hours of molten salt thermal energy storage capability, which will allow energy to be dispatched as needed during cloudy periods and after sunset. With this capability, Solana will be able to generate electricity well into the evening to help meet the summer peak demand.

The plant will be located 70 miles southwest of Phoenix, near Gila Bend, Arizona. Solana will produce enough energy to serve 70,000 households and will prevent the emission of 475,000 tons of CO2 per year compared to a natural gas burning power plant.

DOE’s Title XVII Loan Guarantee Program was created to support the deployment of innovative clean energy technologies pursuant to Section 1703 of Title XVII of the Energy Policy Act of 2005 (Title XVII). Title XVII of the Energy Policy Act of 2005 was amended by the American Recovery and Reinvestment Act of 2009 to create Section 1705, a new program for the deployment of renewable energy and electric power transmission projects. Solana is eligible for a loan guarantee under both sections of Title XVII.

Santiago Seage, CEO of Abengoa Solar, said: “This conditional guarantee could allow us to start construction of Solana this year. I want to recognize the leadership and effort of the DOE in making Solana possible through this guarantee.”

Seage added that Solana is in a very advanced stage of development and permitting, having received most of its authorizations from local, county, and state authorities. Recently, DOE conducted an Environmental Assessment study and issued a finding of no significant impact (FONSI) for the project. “What the project needs now is for Maricopa County and the state to continue their support and work expeditiously on the last remaining permits needed for construction to begin,” said Abengoa Solar’s Seage.

The construction and operation of Solana will bring many economic and environmental benefits to Arizona and will support the nation’s goals for energy independence through a “green” economy. The plant will create significant tax income for local communities and the state over the life of the project.

Abengoa Solar’s Arizona Vice President Kate Maracas stated: “The building of Solana will also create between 1,600-1,700 new construction jobs, and operation of the plant will add another 85 permanent jobs. These construction and operating jobs will create a few thousand additional indirect jobs. Taken together, 98 percent of the jobs created by Solana will be American jobs – primarily from Arizona, and a smaller portion from neighboring states.”

Abengoa Solar signed a power purchase agreement with APS, the state’s largest electric utility, to sell the energy produced by Solana for a period of 30 years. “APS has demonstrated a strong commitment to solar energy and has shown leadership in moving solar energy toward the mainstream,” said Maracas.

Abengoa Solar has made it a priority to utilize US-made components wherever possible for the Solana plant. More than 75 percent of the equipment and supplies required to build Solana will be manufactured in the US These include steam generators, heat exchangers, power equipment, glass, steel, concrete and other construction materials.

As a direct consequence of the construction of Solana, a mirror manufacturing factory will be built in Surprise, Arizona. The mirror factory will employ almost 180 people, adding to the number of direct jobs created by Solana. This new facility will provide Arizona with the foundation upon which to expand its solar energy technology manufacturing capabilities and to support future CSP projects.

From an environmental perspective, Solana will provide Arizonans with clean, pollution-free and greenhouse gas free energy while, at the same time reducing Arizona's need for fossil fuel based generation facilities, eliminating the emission of nearly a half-million tons of carbon dioxide per year. These reductions will contribute to state goals for renewable energy deployment as well as national targets for climate change abatement.

In late 2009 Abengoa Solar signed a power purchase agreement in California to supply electricity generated by a 250 MW CSP trough plant located in the Mojave Desert, 100 miles northeast of Los Angeles. The company also has several projects under development in the Southwest.

Abengoa Solar is currently building 350 MW of solar plants worldwide, and with an additional 142 MW already operating, it is the only company worldwide building and operating both trough and power tower CSP plants. The Solana plant will be Abengoa Solar’s tenth CSP plant worldwide.