Demonstrating its desire to accelerate the disbursement of clean-energy loans, the U.S. Department of Energy (“DOE”) announced a “conditional commitment” to award a $535 million federal loan guarantee to California-based solar start-up Solyndra on March 20, 2009. Once finalized the guaranteed loan is expected to provide debt financing for approximately 73% of the project costs and will allow Solyndra to expand its solar panel manufacturing capacity. If it is finalized, the Solyndra guarantee would be the first to be approved by the DOE since guarantees for “innovative” renewable energy projects were first authorized by the 2005 Energy Policy Act. It also appears to mark the beginning of a wave of loan guarantees triggered by the enactment of the American Recovery and Reinvestment Act (“ARRA”). Beyond sparking new activity under the previously dormant Energy Policy Act loan guarantee program, the ARRA also established a temporary loan guarantee program appropriating $6 billion to support loan guarantees for commercially available renewable energy systems, leading-edge biofuel projects and electric power transmission projects. The deployment of these loans must be complete by late 2011 and DOE has said that it plans to release 70% of the funds authorized by the ARRA by the end of next year.
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